Shapir and Ad 120: How Much of the Senior-Housing Value Is Actually Reachable

The main article argued that Shapir’s bottleneck is no longer demand or execution. It is the distance between value created inside projects and assets and capital that actually climbs up to the listed-company level. In senior housing that gap is almost measurable line by line. On the surface, Ad 120 ends 2025 with four active homes, NIS 55.939 million of NOI, 85% average occupancy, and about NIS 2.305 billion of senior-housing fair value. That looks like an obvious value pocket.

But this is still not the whole platform. Alongside the four active homes, the group also has four additional senior-housing homes at various stages of development. So right at the start, the analytical task is to separate Ad 120’s total strategic value from the value that is reachable today through the active homes and the current capital structure.

But that is only the gross layer. To understand how much of that value is actually reachable for Shapir shareholders, three deductions matter: resident deposits, minority interests, and the financing used to deepen control. Each is legitimate on its own. Together they explain why a value layer that looks very large on paper is still not the same thing as accessible shareholder value.

This is also not an attempt to dismiss Ad 120. Quite the opposite. Ad 120 itself ended 2025 with NIS 156 million of revenue, NIS 89 million of net profit, and NIS 74 million of operating cash flow. So this is no longer a conceptual platform. The issue is not whether value exists. The issue is how much of it is already mature, how much still belongs economically to residents, and how much still sits with partners and funders before it reaches Shapir.

What Is Left After You Strip Out The Deposits

Anyone who stops at NIS 2.305 billion of senior-housing fair value sees real estate. Anyone who keeps reading into the deposit note sees the real economic structure. Under the resident agreements, part of the consideration is paid as a deposit. In most agreements the annual forfeiture rate is 3% to 3.6% plus VAT, usually for 12 to 15 years, and the remaining balance is then returned to the resident or the estate indexed to CPI. There are also agreements where the deposit is fully amortized over 3 to 10 years. So the deposit is an important economic source, but it is not free capital that belongs to the shareholder from day one.

The board is right on one important point: NIS 817 million of resident deposits are presented as a current liability even though there is no economic expectation that the full amount will be repaid within one year. That is why the company explains that the 12-month working-capital deficit of NIS 53 million is driven mainly by accounting classification. But that does not make the money unrestricted. Under the sheltered-housing law, once the amount exceeds a threshold the operator must provide security for the resident’s refundable deposit through a trustee mortgage, a mortgage on the unit, an insurer or bank guarantee, or a transfer of 40% of the deposit to a trustee. The group states that it provided trustee mortgages or insurer guarantees, and year-end guarantees securing resident deposits stood at NIS 386 million.

That is why the right analytical question is not whether the deposits are current or non-current, but how much asset value remains after the deposit layer is netted out. A simple addition of the four active homes from the asset table, using the report’s rounded figures, gives about NIS 2.312 billion of gross fair value and about NIS 847 million of resident deposits. After that deduction, the remaining value layer is about NIS 1.465 billion. If the year-end minority-interest share, 32.02%, is then stripped out as well, Shapir’s approximate economic share comes down to about NIS 1.0 billion before any additional financing friction at group level. That is already a very different number from the NIS 2.3 billion headline.

That is the core difference between value that looks large and value that is actually reachable. The point is not that the fair value is unreal. The point is that the layer below it is not built like a conventional office building with ordinary rent. It is built like an operating business with CPI-linked resident deposits, legal protections, and a gradual forfeiture mechanism over time.

Four Homes, Not One Uniform Value Layer

The second problem with a flat read of Ad 120 is that the four homes are not the same asset in four locations. The asset value is concentrated in the least mature home, while the mature operating economics sit mainly in the smaller homes.

Tel Aviv alone holds almost 59% of the net value of the four active homes, yet it is also the weakest asset on current operating performance. Occupancy fell to 64.7% from 69.3% in 2024, NOI dropped to NIS 15.36 million from NIS 21.04 million, and actual yield fell to 1.78%. That is exactly the kind of asset that can look impressive in the valuation line while still not translating into accessible value. It pulls the gross value of the layer upward, but by year-end 2025 it is not yet pulling mature cash economics in the same direction.

Hod Hasharon and Rishon LeZion already look very different. Hod Hasharon ended 2025 with NIS 22.69 million of NOI, 95.22% occupancy, and NIS 346.1 million of net value after deposits. Rishon LeZion delivered NIS 12.90 million of NOI, 93.90% occupancy, and NIS 171.8 million of net value. In both assets the actual yield, 6.56% and 7.51%, looks much closer to mature income-producing real estate. Put simply, this is where most of the short-term accessible value sits, not in Tel Aviv.

Gil Paz adds a different kind of complexity. The home entered the group only on August 20, 2025, so the NIS 4.97 million of NOI and NIS 12.73 million of revenue reflect only a partial period. Occupancy at 93.70% is encouraging. But this is still not a layer from which a full-year run rate, an effective deposit-forfeiture profile, or group-level cash contribution can be cleanly extrapolated. Gil Paz strengthens the portfolio value. It does not yet settle the accessibility question.

Even After The Stake Increase, Not All Of The Economics Belong To Shapir

The third deduction is other shareholders. At the end of 2025, the non-controlling-interest share in Ad 120 still stood at 32.02%, and the balance attributed to that interest was NIS 485 million. Out of Ad 120’s NIS 89 million of 2025 net profit, NIS 35 million was still attributed to non-controlling interests. So even once Ad 120 is already producing profit, not all of that profit climbs up to Shapir.

And this is not only an earnings-allocation issue. It is also a cash-flow issue. Ad 120 generated NIS 74 million of operating cash flow in 2025, but in the same year it spent NIS 413 million on investing activity and needed NIS 393 million of financing inflow to finish the year with only NIS 54 million of net cash growth. That is a sharp reminder that the senior-housing layer is now generating real operating economics, but it is still not behaving like a freely distributable cash source.

This is where the November 2025 purchase comes in. Shapir bought an additional 15% in Ad 120 for total consideration of NIS 279.75 million. The consideration structure included a private placement of series G bonds worth about NIS 110 million, a private placement of series D bonds worth about NIS 100 million, and a seller loan of NIS 69.75 million carrying prime interest and due no later than nine months after completion. In addition, the gap between the carrying value of the acquired minority interest and the purchase price, about NIS 59 million, was recorded as a reduction in equity.

The meaning is straightforward: the higher ownership stake increased Shapir’s claim on Ad 120’s future value, but that value was bought with debt and equity currency, not released as free cash. So it would be wrong to count the transaction itself as a moment when value became accessible. It is better understood as a move to own more of a value layer that is still in the process of maturing.

What Has To Happen For The Value To Become More Reachable

The first trigger is clear: Tel Aviv. As long as the largest asset in the portfolio remains at 64.7% occupancy and a 1.78% actual yield, a large part of Ad 120’s value still depends on what has to happen next rather than on what is already happening today.

The second trigger is investment intensity. Ad 120 proved in 2025 that it can generate earnings and NOI, but it also proved that investment still runs above operating cash generation. If 2026 and 2027 show a growing NOI layer without another comparable jump in investing cash outflow, the read changes.

The third trigger is funding. The NIS 69.75 million seller loan and the broader financing tied to the extra 15% purchase are reminders that even a transaction that looks like deeper control can temporarily weigh on accessibility. The market will need to see that this funding is absorbed cleanly, without opening a fresh round of dependence on outside capital.

That is why the answer to the headline question is that Ad 120’s value is real, but only part of it is already reachable. By the end of 2025 there is a promising portfolio here, with two mature homes, one very large home that still has to prove occupancy, one newly acquired home that has not yet completed a full year, resident deposits that reduce the free-value layer, and partners who still own about one-third of the economics. This is already far from a theoretical story. But it is also still far from the simplicity of saying Shapir has another NIS 2.3 billion of freely accessible value.