Pai Siam: How Much of the Jerusalem Value Stack Is Actually Close to NOI

Why Jerusalem Needs Its Own Read

The main article argued that Pai Siam is no longer being tested on whether it has asset value, but on how quickly that paper value turns into funding, openings, and cash. Jerusalem is where that question becomes much sharper, because four very different assets sit under the same headline: Hanvi'im, Havatzelet, Mevasseret, and Shlomo Hamelech / Koresh.

That grouping is misleading. On paper, the four assets carry about ILS 1.28 billion of value at year-end 2025. In practice, only a small part of that stack is already attached to live rent that starts to behave like NOI. Hanvi'im is already leased. Havatzelet has a strong lease contract, but still sits behind construction and takeout financing. Mevasseret is closer to opening, but it is still a hotel under development with a management structure, not a property already producing clean NOI. Shlomo Hamelech is still mostly planning value.

That is exactly what the combined number hides. If Jerusalem is treated as one bucket, it can look as though a large part of the value is already close to monetization. That is wrong. The four assets sit on four different steps: rent that already started, contracted rent that still waits for delivery, an operating opening that keeps moving in time, and planning uplift that is still far from operation.

This chart explains the illusion. Almost 39% of the Jerusalem stack sits in Mevasseret, another 29% in Havatzelet, and another 22.5% in Shlomo Hamelech. In other words, most of the stack still sits in assets that require execution, financing, or opening. Hanvi'im, the only asset already connected to active rent, is less than 10% of the total.

Hanvi'im: The Only Asset Already Behaving Like Rent

If the question is what part of Jerusalem is already genuinely close to NOI, Hanvi'im is the cleanest answer. From September 1, 2025 through August 31, 2027, the site is leased to the Jerusalem municipality at annual rent of about ILS 10.17 million plus VAT, or about ILS 20.34 million plus VAT if the full term runs. This is no longer just a zoning story. It is an asset already producing rental income.

But even here, the easy conclusion would go too far. First, the tenant has the right to terminate during the second lease year with 90 days' notice. So the rent is real, but it is not the same thing as a long-dated, locked lease. Second, most of the upside the company attributes to the site does not come only from those two years of rent. It comes from the rights-intensification process. As of the report date there was still no statutory certainty around that plan, and only after year-end did the company disclose that the plan had been approved for deposit and an objections hearing had been scheduled.

There is another layer that makes Hanvi'im less straightforward than it first looks. The asset sits in a public-benefit company structure. The company consolidates it for accounting purposes, but legally that layer carries distribution restrictions. So Hanvi'im is the asset closest to income, but not necessarily the asset that most quickly turns into freely accessible value for shareholders.

That is the difference between "there is rent" and "the value is already locked in." The rent is real. The bigger future upside still depends on planning. And the accessibility of that value is not as clean as in a plain-vanilla property vehicle.

Havatzelet: The Lease Is Signed, But the Post-Delivery Path Is No Longer Signed

Havatzelet is the asset where it is easiest to get confused. On the surface, it has almost everything the market wants to see: a central Jerusalem hotel, 317 rooms after the added floors, and an Isrotel lease that implies minimum annual rent of about ILS 18.9 million on the updated room count. This is already contractual economics, not just a vague operating option.

And yet Havatzelet is still not as close to NOI as the headline lease can make it look. The updated appraisal values the asset in its current state at ILS 372.4 million, but that number is derived from a completed hotel and retail value of ILS 646.6 million, less roughly ILS 225.8 million of remaining cost and partial developer profit. In other words, a large part of the value is already recognized while a large part of the work is still ahead.

That chart is the center of the argument. Havatzelet still requires about ILS 215.4 million of additional investment before completion. The monitoring report cited in the appraisal described cumulative physical progress of only 15.8% and budget utilization of 18.7% as of November 2025. So even if the balance sheet already carries ILS 372.4 million of current value, the site itself is still much closer to an active construction project than to an operating hotel.

The more important point sits in the financing layer. In late November and December 2025, the project credit line was increased to ILS 423 million and the construction rate was reduced to prime plus 0.95% from prime plus 1.45%. On first read that looks like a double improvement. But at the same time, the bank canceled its commitment to provide the post-completion operating loan. In other words, the company improved the price of construction financing, but lost certainty on the layer that is supposed to bridge delivery into stable rental economics.

Isrotel also seems to understand that this matters. Its cancellation right in case of non-completion was first tied to July 2027, then pushed to December 2027, and finally to December 2028. Those extensions are important because they keep the lease alive. But they also remind the reader that the lease itself is still waiting for delivery. Havatzelet is therefore not a property already close to NOI. It is a property with contracted rent that still waits for completion, delivery, and takeout financing.

Mevasseret: Closest to Opening, Still Far from Clean NOI

If Havatzelet is a story of contracted rent that remains distant, Mevasseret is a story of opening that looks close but keeps sliding. On the one hand, this is the Jerusalem asset closest to becoming a full operating hotel. The updated appraisal values it at ILS 496.7 million in its current state, out of ILS 634 million as completed. Net remaining investment after grants is only about ILS 112.9 million. The monitoring report presented to the appraiser described 79% physical completion and 84.2% budget usage by year-end 2025, with structural work completed, four model rooms finished, and fit-out works underway.

That is a very different position from Havatzelet. On execution maturity alone, Mevasseret is clearly closer to monetization. But even here, it would be a mistake to treat it as almost-NOI already. First, this is a management agreement with Accor, not a passive lease. The company carries the operating structure, the employees, the management fees, and the reserve for furniture, fixtures, and equipment. That already pushes the economics much closer to a hotel operating platform and much further from the clean NOI profile of a classic income-producing property.

Second, the timing layer keeps slipping. The appraisal still cites a monitoring report that expected completion in June 2026, and even states that the parties had confirmed an opening by early June 2026. But the same local evidence set tells a very different story: the annual report discloses that on March 6, 2026 an addendum with Accor moved the expected opening date to December 31, 2027. So the asset that is closest to opening inside the Jerusalem stack is also the asset that best demonstrates how quickly "almost ready" can still move materially to the right.

The operating backstop also became weaker. The Accor agreement included a minimum EBITDAR floor of ILS 11 million in year one, ILS 16 million in year two, ILS 20 million in year three, and ILS 24 million from year four onward, backed by an ILS 18 million security cushion. But in the March 2026 addendum, the first-year minimum was canceled. That does not mean the project lost all operating protections. It does mean that even in the most advanced Jerusalem project, the jump from value to operating economics is still not fully locked.

The financing is not fully locked either. The ILS 280 million credit line was almost fully utilized and only extended to January 1, 2027. The company already says it is working to extend it to June 30, 2027 because the completion date has shifted. So Mevasseret is indeed the Jerusalem asset closest to converting into broad operating income, but anyone classifying it as nearly-ready NOI is understating both the operating structure and the repeated slippage in timing.

Shlomo Hamelech / Koresh: The Biggest Uplift Is Still the Furthest from NOI

Shlomo Hamelech sits at the opposite end of the spectrum. Here, the core value is not signed income, not a near opening, and not even late-stage shell work. It is planning uplift. During 2025, the project's value rose to ILS 288.6 million from ILS 93.95 million a year earlier after the district committee approved a new plan in July 2025 that expands the project to about 13,000 square meters above ground and 209 rooms at a five-star level, with accompanying uses such as an event hall, pool, spa, and parking.

That created a revaluation gain of about ILS 178.5 million in a single year. The accounting tells an important truth here: the new zoning really did change the economics of the land. But the question in this follow-up is not whether value was created. It is how much of that value is actually close to NOI. In Shlomo Hamelech, the answer is: very little.

There is no interim use generating income. As of December 31, 2025 the company had not found financing sources for the development. Remaining investment still to be made stands at about ILS 347.8 million, more than the asset's current state value, and expected completion is only in 2029. There is a ILS 42 million bank loan in place, but that is a small bridge relative to the scale of the project, not financing that meaningfully pulls the asset itself toward the finish line.

That is exactly why Shlomo Hamelech is the asset that inflates the Jerusalem stack while also pushing it away from any "near-NOI" description. This is real planning value, but planning value is still not cash flow, not rent, and not a near-term opening.

So How Much of the Jerusalem Stack Is Really Close to NOI

The short answer is sharper than the headline suggests. Out of about ILS 1.28 billion of value across the four Jerusalem assets, only about ILS 125.5 million, roughly 10% of the stack, already sits on an asset with live rent in place. That is Hanvi'im.

If the definition is widened to include an asset that already has a signed lease even if it still waits for delivery, then Hanvi'im plus Havatzelet together reach about ILS 497.9 million, or roughly 39% of the stack. But that still does not mean 39% is already producing NOI. It means 39% has some contractual monetization layer attached to it. Mevasseret, another 38.7% of the stack, is closer to opening but still belongs to the world of execution and operating setup, not current NOI. And Shlomo Hamelech, 22.5% of the stack, sits almost entirely in the world of planning uplift.

So the right way to read Jerusalem is not "a large asset pool about to become income." It is a ladder of four very different layers:

• Hanvi'im: rent that has already started.
• Havatzelet: contracted rent that still waits for delivery and post-delivery financing.
• Mevasseret: an almost-finished site that still waits for a stable opening and a working operating structure.
• Shlomo Hamelech: strong zoning uplift that remains far from a live hotel.

That also explains why Jerusalem can look very impressive in the financials and still remain far from a rapid conversion into NOI. The value is real, but it is spread across very different time layers. Anyone collapsing those layers into one number misses the real question: not how much Jerusalem is worth on paper, but how much of it has already crossed the distance between appraisal value and income.