Shemen Nadlan: Haifa Is Both the Funding Cushion and the Value Engine, but How Stable Is the NOI There

The main article framed Haifa as the asset that carries two very different jobs at once. It is both the financing cushion for the transition period and the largest single value center in the portfolio. This continuation isolates the sharper question. If Haifa is simultaneously collateral, future development land, and a current income source, how much of the NOI there can really be read as stable, and how much is simply a byproduct of the interim period.

This is not a semantic issue. At the end of 2025 Haifa was carried at ILS 402.9 million, equal to almost 65% of the company's current market cap based on a share price of ILS 16.70 and 37.39 million shares outstanding. At the same time, the same asset backed a non-binding credit line of up to ILS 190 million that was still unused at year-end and was extended in January 2026 for another year. In other words, Haifa is not just another property in the portfolio. It is also the anchor behind the company's bridge-financing story while Ashdod, Ariel A, and the rest of the development pipeline have not yet fully turned into mature, financed NOI.

The problem is that Haifa's current income stream does not look like a stabilized income property. The company explicitly says the uses are interim uses and that it prefers relatively short lease terms in order to preserve planning flexibility. The appraisal adds that as of the valuation date there were more than 45 separate occupiers on the site. During 2025, leasing income, including municipal-tax reimbursements from tenants not billed directly by the municipality, amounted to ILS 10.912 million. But the binding lease income signed for 2026 up to the report date was estimated at only ILS 7.82 million. That is not a perfect apples-to-apples comparison, because the 2025 number also includes reimbursements, and Haifa's NOI in that year was hit by an approximately ILS 2.5 million municipal-tax assessment provision for 2024-2025. Still, that is the core of the thesis. Both the income line and the NOI read are shaped by transitional items, not only by normal lease economics.

Haifa Is Primarily Land With Optionality, And Only Secondarily A Stabilized Income Asset

The best way to read Haifa is to start with the valuation itself. The company carries the asset using a land-comparison approach for the site and a cost approach for the structures, not by capitalizing the income stream of a stabilized property. The valuer assigns ILS 362.5 million to the land and another ILS 40.4 million to structures and related investments. Put simply, almost 90% of value is attributed to land and only about 10% to the existing built layer.

That matters because Haifa's value is first and foremost the value of a large, unusual industrial land parcel in the hinterland of Haifa Port, and only at the margin the value of structures that already produce steady NOI. The valuation itself says explicitly that the site is intended for future development as port-hinterland land and is leased temporarily to multiple users in the meantime. This is not a normal income asset whose value rests mainly on long leases and a clean capitalization framework. It is development land with interim monetization while the longer-term use is still unresolved.

That is exactly why the question of how much of Haifa's NOI is truly stable matters so much. If current income is set against the ILS 402.9 million fair value, the gross income layer equals roughly 2.7% on 2025 income, about 2.3% on the annual rent level used at the valuation date, and only around 1.9% on the signed lease base for 2026 as of the report date. This is not a full yield analysis, because there is no clean, stabilized NOI base here, but it is enough to show that value is not being carried by mature operations. It is being carried by land, location, and future planning optionality.

What Looks Like NOI Today Is Mostly A Flexible Interim Layer

Haifa does have something working already. The company managed to turn an old industrial site whose production activity stopped in 2021 into a cash-generating holding asset while it waits. The site was split across several use zones, open storage, warehouses, silos, industrial structures, and offices, and income rose from ILS 7.438 million in 2023 to ILS 9.446 million in 2024 and ILS 10.912 million in 2025.

This chart matters because of what it does not show. It does not show a clean glide path toward a stabilized income property. It shows that the interim-use mechanism works, but it also shows that it works on a moving base. The appraisal states that the site has more than 45 separate occupiers, that leases are free-market leases, and that in most cases the company retained early-termination notice rights or kept lease terms short. That is good architecture if the goal is to preserve planning flexibility. It is weaker architecture if the goal is to build a clean, long-duration NOI base that can be treated like a normal logistics property.

Two more caveats matter here. First, the 2025 income number includes municipal-tax reimbursements from tenants not charged directly by the municipality. Second, Haifa's 2025 NOI was affected by an approximately ILS 2.5 million municipal-tax provision. So both the revenue side and the cost side include period-specific noise. Anyone taking 2025 as a straightforward stabilized run rate is missing exactly what the company and the appraisal state openly: Haifa is not there yet.

That is not necessarily negative. It is a choice. The company is deliberately keeping the site flexible so it does not lock in a long lease structure that could interfere with future development. But as long as that is the strategy, the current income layer has to be read correctly. It is interim-period holding NOI, not yet the NOI of a fully stabilized property.

That Is Why Haifa Matters At Least As Much As A Financing Instrument As It Does As An NOI Source

This is the point that makes Haifa the most sensitive asset in the portfolio. The company ended 2025 with working-capital deficit of about ILS 105 million, and the board explains why it does not see that as an immediate liquidity issue. One of the central explanations is Haifa. In February 2025 the company signed a non-binding credit framework with a bank for up to ILS 190 million against a pledge over the asset, for one year, and the line was extended in January 2026 for another year. The loans are revolving on a monthly basis and remain subject to bank discretion. As of December 31, 2025, the line was still unused.

That creates a double reading. On one hand, Haifa gives the company a real cushion. Not in the sense of cash already sitting in the bank, but in the sense of an asset that can, at least in theory and subject to the bank, buy time. On the other hand, precisely because the facility is non-binding and the usage is monthly and discretionary, Haifa's stability is not tested only by asking how many tenants sit there today. It is also tested by whether the asset continues to be financeable without damaging the development option embedded in it.

That is why Haifa cannot be read only as a value engine. It is also a funding tool. An asset valued mainly through land and future optionality can be excellent collateral as long as the bank accepts that read. But that is still not the same thing as cash. The more the company may need to lean on Haifa to bridge the transition period, the more central it becomes that the interim income layer holds and that the development option is not diluted or boxed in.

Put differently, Haifa finances the wait for future development. It does not yet prove that the future has already been monetized.

The New Energy Angle Is Interesting, But Still Small Relative To The Main Thesis

In December 2025 the company signed an agreement with an unrelated energy-storage developer to establish and operate a high-voltage storage facility with capacity of about 80 MWh on roughly 1 to 1.5 dunams out of an approximately 2.5-dunam plot, outside the main site. This is strategically interesting because it shows the company trying to create additional monetization layers in Haifa even before any broader planning resolution.

But scale matters. Estimated project cost is about ILS 40 million, with 80% to 90% expected to come from external financing. The company is entitled to annual land-use fees of ILS 180 thousand from the SPV and to milestone payments of up to ILS 270 thousand before commercial operation. During the reporting period, the company also extended a loan of about ILS 1.5 million to the project SPV. At the same time, the company estimates that once commercial operation starts, the SPV could generate annual income of about ILS 4 million after operating expenses and before financing.

What does that mean economically? The energy thread adds another route to monetization, but at this stage it does not change the core reading of Haifa. The direct contractual cash flows to the company are tiny relative to a ILS 402.9 million asset. Even the broader income potential sits inside a joint venture that still needs permits, financing, construction, and operation. So for now this is more evidence of functional optionality and management creativity in using non-core land pockets, and less evidence that Haifa has already found its long-term stabilized income model.

What The Public-Equity Screen Is Actually Saying

There is a double limitation in the public-market read. On one hand, Haifa is too large to be a side issue in the equity story. An asset worth ILS 402.9 million inside a company with market capitalization of about ILS 624.4 million means any change in the way Haifa is read can materially change the way the equity is read. On the other hand, the market signals themselves are weak. At the end of March 2026 short interest in the stock stood at only 148 shares, with SIR of 0.03 and short float of 0.00%, versus sector averages of 1.562 and 0.55% respectively. The last reported daily turnover was also only about ILS 1,485.

The right conclusion is not that the market is relaxed. The right conclusion is that the market is not expressing a strong borrow-based view here at all, and that trading liquidity is so thin that screen-based conviction is limited. So the correct near-term read is not through short positioning. It is through the thesis itself. If Haifa continues to look like an asset that preserves both bridge financeability and future development optionality, equity holders can live with the fact that the NOI there is still temporary. If one of those two roles weakens, Haifa can move quickly from source of strength to source of friction.

Bottom Line

Haifa is not just another income property inside a portfolio. It is three layers on the same land parcel: temporary income, financing collateral, and future development optionality. Those three layers coexist, but they are not the same thing. The current income proves that the asset is not sitting idle and that cash can be extracted during the waiting period. The bank framework shows the asset can also function as bridge collateral. And the valuation keeps reminding investors that the big value still sits in the land, not in NOI that has already matured.

That leads to a fairly clear answer to the question in the title. Not much of Haifa's current NOI looks highly stable yet. It works, and it matters, but it is still transition-period NOI. The occupier profile, the lease duration, the gap between 2025 income and the signed 2026 base, and the municipal-tax noise all say the operating base remains more flexible than fixed.

What is more stable than the current NOI is Haifa's role inside the company. As long as the asset continues to produce temporary income, support bridge financeability, and preserve additional monetization routes such as the storage project, it remains a core anchor. What is still missing is the conversion from smart interim holding to a clearer planning and cash-flow realization path that can turn ILS 402.9 million from value on paper into something the market can also read as durable NOI.