Isras: how much of the upside really sits in Brosh, Park Gissin, and Ramat Hahayal

The main article argued that Isras's balance sheet is not the bottleneck. Lease-up is. This follow-up isolates the next question inside that argument: how much of the upside the company presents really sits in Brosh, Park Gissin, and Ramat Hahayal, and how much of it is already backed by contracts versus how much still depends on marketing assumptions, fit-out work, and time.

The short answer is fairly sharp. In 2025 these three assets generated about ILS 62.3 million of NOI, while the company presents about ILS 133.0 million of annual NOI for them at full occupancy. That is a gap of roughly ILS 70.7 million. When measured against Isras's full income-producing portfolio, where the gap between actual NOI and full-occupancy NOI stands at about ILS 99.2 million, Brosh, Park Gissin, and Ramat Hahayal alone account for roughly 71% of the lease-up gap.

But that is also where the complication begins. The three assets do not carry the same kind of upside. At Park Gissin, most of the gap has already moved into the contractual stage, so the question there is mainly timing and maturation. At Brosh, there is already a signed layer, largely through the government-housing lease, but it still requires tenant improvements, capital spending, and time before it becomes clean NOI. At Ramat Hahayal, by contrast, most of the step-up still rests on reletting assumptions and valuation logic, not on a clearly disclosed signed bridge.

Where The Lease-Up Gap Really Sits

This chart clarifies why the lease-up debate at Isras is not a side issue. The operating gap across these three assets is almost larger than the NOI they currently generate. In other words, if the company closes that gap it will not just add some marginal growth. It will materially change the operating picture of the office layer.

What is especially interesting is that the concentration is not even inside the trio itself. Park Gissin holds the largest NOI gap, but also the highest-quality upside. Brosh sits in the middle, between a real contract and an expensive execution period. Ramat Hahayal is smaller in absolute numbers, but a larger part of its gap still looks like an option that first has to pass through a slow office market.

Park Gissin: most of the upside has already moved from story to contract

At Park Gissin, the sequence is unusually clean. Actual NOI in 2025 was about ILS 24.7 million. In the presentation the company already shows an annual estimate of about ILS 47 million including signed contracts, against ILS 57 million at full occupancy. That means that out of a total gap of about ILS 32.3 million between the current state and full occupancy, about ILS 22.3 million is already sitting on signed contracts, while only about ILS 10 million remains dependent on future lease-up beyond that.

This is the core distinction between Park Gissin and the other two assets. Here, the upside is not mainly a valuation concept. It is already connected to a large, defined lease. In March 2024 the company won a government-housing tender under which the tenant will lease 20.5 thousand to 26.0 thousand square meters plus 460 parking spaces, at annual rent and management fees of ILS 28 million to ILS 35 million. The lease term is 10 years, with an additional extension option.

But even here the quality of the upside still needs to be read carefully. The courts began their lease term during the third quarter of 2025, while the government-office portion is only due to begin during the second half of 2026. So this is signed upside, but not all of it is already running NOI. Anyone expecting to see the full step-up already in 2025 is being too demanding with the asset. Anyone ignoring the fact that part of the jump is still waiting for time to pass is missing the point.

That is also why Park Gissin is probably the asset where the gap between a conservative reading and an aggressive one is the smallest. Once the company is already presenting a separate annual estimate including signed contracts, it is effectively telling the market which part of the gap has already moved from theory into contract. There is still execution risk, there is still timing risk, but the bulk of the gap is no longer a question of whether. It is a question of when.

Brosh: the contract exists, but the path from there to NOI is still costlier and slower

Brosh is an in-between story. On one hand, the asset has clearly progressed. Occupancy stood at 34% at the end of 2025, and after the balance-sheet date the company signed an additional lease for about 6,000 square meters, lifting occupancy to above 50%. In the valuation report the split is even clearer: about 37% of the tower's space was already leased in practice, another 18% of tower space is tied to the government-housing agreement, and together that implies expected occupancy of around 55%.

On the other hand, this is still far from a mature asset. In NOI terms, Brosh produced only about ILS 12.7 million in 2025 versus ILS 36.0 million at full occupancy, a gap of about ILS 23.3 million. Unlike Park Gissin, the company does not provide a full signed NOI bridge to the midpoint. What it mainly gives us here is a space bridge, plus one major signed contract that still requires a lot of work before it fully rolls into the NOI line.

The local context is actually encouraging. In the older buildings of the complex, B, C, and D, occupancy had already risen to 92%, annual rent rose by about 9%, and only about 3,830 square meters remained available. So the problem at Brosh is not that the Har Hotzvim complex does not work. The older layer works quite well. The bottleneck sits in the new tower itself.

But this is exactly where the cost of the transition period begins. The government-housing agreement at Brosh relates to about 6,200 square meters, for a 10-year term plus options, and the company is carrying roughly ILS 27.1 million of remaining tenant-improvement cost for those areas. The valuation also says explicitly that the project is expected to post a management deficit of about ILS 1 million in 2026 and about ILS 0.5 million in 2027, with only 2028 expected to be operationally balanced.

That matters because it separates "there is a contract" from "the asset is already functioning." At Brosh there is now a real contract and real forward motion, but to move from that contract to clean NOI the company still has to spend, fit out, and occupy. More than that, the valuation says that roughly 16.97 thousand square meters still remain to be marketed, and the assumed pace is about 4.2 thousand square meters per year, implying roughly four years to full occupancy.

In other words, Brosh is not air. But it is not Gissin either. Part of the upside has already been placed on a signed track, while another large part still depends on marketing pace, the duration of fit-out work, and the company's ability to turn a new, partially leased tower into a stable NOI asset without continuing to carry an operating deficit.

Ramat Hahayal: here the gap still looks mainly like marketing work, not signed NOI waiting for time

Ramat Hahayal is the asset where the full-occupancy number deserves the most caution. NOI in 2025 stood at about ILS 24.9 million versus ILS 40.0 million at full occupancy, a gap of about ILS 15.1 million. On paper that looks smaller than Gissin and Brosh. In practice, it is probably the least-backed gap of the three.

The first reason is the occupancy history. The valuation describes that, in the years before a major tenant left at the end of 2021, occupancy in the property was around 95%. By the end of 2024 it had already fallen to 68%, and by the end of 2025 to 65%. During the last year another roughly 1,000 square meters were vacated. This is not just a matter of waiting for an already signed contract to begin. It is a repositioning process for an asset that lost a meaningful tenant and still has not regained its old occupancy base.

The second reason is that the valuation itself assumes time. For the vacant areas, it uses an 87.5% vacancy factor, reflecting a three-year leasing and marketing period. It also derives rent for the vacant office areas from average office rent of about ILS 75 per square meter, alongside a 10% to 20% discount relative to comparable use because of relative position and existing interior standard. This is no longer a bridge of "the contract is signed and we are just waiting for commencement." It is a valuation model that assumes search time, grace periods, and fit-out.

The third reason is subtler, but important. One of the floors in the property moved in September 2025 into an operating format run by Regus through short-term subleasing. At the valuation date this activity still was not generating profit for the landlord because expenses were higher than income. The valuation assumes that within about a year the company will begin to see rent or profit from that floor, and at this stage only minimal rent was taken into account. So even part of the forward bridge at Ramat Hahayal rests on an operating ramp that has not yet been proven.

This is where perhaps the sharpest point appears. According to the Natam survey for the first half of 2025, average office occupancy in Ramat Hahayal was about 92.08%, and average office rent was about ILS 77.04 per square meter. So the issue in this asset is not that the district is empty. The issue is that this specific property is sitting far below district occupancy, which means its upside is not only a market function but also a property-specific question of competitiveness, positioning, and re-leasing speed.

In that sense, Ramat Hahayal is the part of the puzzle where it is easiest to confuse theoretical value with near-term value. The full-occupancy NOI is tempting, but the path to it still runs through slow reletting, through rent levels that need to remain competitive, and through an asset that is still far from what the district itself is showing.

What This Means For Isras's Upside

If these three assets are boiled down to one line, the answer is not symmetrical. Yes, a large part of Isras's potential really does sit in Brosh, Park Gissin, and Ramat Hahayal. But no, that potential cannot be treated as one single unit of quality.

At Park Gissin, most of the gap already looks like signed upside waiting to mature. At Brosh there is already a signed upside layer, but it still comes with capital spending, temporary management deficit, and a lease-up pace that remains fairly slow. At Ramat Hahayal, most of the bridge forward still looks like reletting and valuation, not like incremental NOI that already sits on closed contracts.

That is why anyone looking only at the total full-occupancy NOI number and treating it as one equation is missing the most important economic distinction. Gissin is mainly a timing story. Brosh is a timing story plus execution and tenant improvements. Ramat Hahayal is still mainly a renewed proof story.

This is also why the market may still give only partial credit in the near term. If 2026 shows a step-up at Gissin and progress at Brosh while Ramat Hahayal continues to move slowly, the broad office-upside thesis will not break, but neither will it fully turn into accessible NOI. For that to happen, Isras will have to prove not just that it owns good assets, but that these three different layers of upside can mature at different speeds without requiring too many concessions along the way.