Mega Or: how much headroom is really left in the secured debt layer
Mega Or's secured layer looks comfortable at first glance: 62% LTV on pledged assets and NIS 5.1 billion of unencumbered real estate and investments. This follow-up shows that the room is not evenly distributed: Series H still leaves room for collateral release after March 2026, while Series 12 is already at 79.4% against an 80% ceiling.
The main article already argued that Mega Or's 2026 question is not the quality of the core assets, but how much flexibility is left to fund the investment jump and the maturity wall without tightening the balance sheet too much. This follow-up isolates the part of that story that is easiest to misread: the secured debt layer, its collateral ratios, and whether the headroom there is really as wide as the headline numbers suggest.
The short answer is that the room exists, but it is uneven. At group level the picture looks comfortable: secured debt of NIS 2.014 billion, pledged asset value of NIS 3.271 billion, a 62% LTV on pledged assets, and NIS 5.1 billion of unencumbered real estate and investments. At series level the picture is much less symmetric: Series 12 stands at a 79.4% collateral ratio against an 80% ceiling, while Series H stands at 74%.
That distinction matters because it changes how 2026 should be read. The big maturity wall of the coming year does not mainly sit inside the secured layer. But the secured layer determines how much freedom Mega Or still has to refinance, release, and re-pledge assets when it needs flexibility most.
The Aggregate Picture Is Comfortable, But The 2026 Wall Does Not Mainly Sit Here
Mega Or's principal-maturity schedule shows NIS 1.491 billion of principal due in 2026 and another NIS 1.300 billion in 2027. That is a heavy wall. What is much less obvious on first read is that only NIS 264 million of the 2026 amount is secured debt. The company itself makes the same distinction by presenting annual principal repayments of NIS 1.227 billion in 2026 after stripping out the secured components.
That chart matters because it reverses the usual reading. The secured layer is not the core of the 2026 wall. It is the flexibility layer around the wall. If Mega Or wants to get through 2026 without using up too much of its unencumbered asset base, the secured layer needs to stay a working tool rather than a pocket that is already nearly full.
The director's report reinforces that reading. Secured debt accounts for only 23% of the total value of investment property plus the equity investments in BIG and DSKSH, and 63% of investment-property value remains unencumbered. That is a comfortable framework at group level. It simply does not guarantee that every individual collateral pocket carries the same cushion.
One more distinction needs to stay clean. The 62% LTV and the NIS 4.066 billion of net financial debt are presented on an expanded-consolidated basis. In the financial-instruments note, net debt used for the capital-ratio calculation stands at NIS 4.161 billion. The gap is not large, but it is still a reminder not to mix every debt number with every collateral number. The secured layer should be read inside the same framework in which the 62% LTV was calculated.
Where The Real Cushion Actually Sits
Mega Or's secured layer is not made up only of Series H and Series 12. It also includes secured bank debt and Series 10, which is secured by BIG and DSKSH shares. But once the question becomes real-estate collateral headroom, the most useful disclosed detail sits in Series H and Series 12. Those are the pockets where the company also discloses the actual collateral ratio.
| Layer | Main collateral | Indexed principal outstanding at 31 Dec 2025 | Actual collateral ratio | Ratio limit | Cushion to limit | 2026 principal due |
|---|---|---|---|---|---|---|
| Series H | BIG Galil Elyon, BIG Tiberias, BIG Kiryat Gat, BIG Afula, Mega Or REIT 1 Modiin, Nisko management center, Management Lot 61, Management Lot 12A | NIS 717.3 million | 74% | 80% under the current rating setup | 6.0 percentage points | NIS 239 million |
| Series 12 | BIG Pardes Hanna, Management Lot 63B, Modiin Commercial Center 2, Lahavim industrial center, the Ariel payment stream, and the Mega Or IKEA Ashdod payment stream | NIS 471.8 million | 79.4% | 80% | 0.6 percentage points | NIS 0 |
That is the heart of this follow-up. At macro level Mega Or can fairly talk about only 62% LTV on pledged assets. At pocket level, Series 12 is already almost touching the ceiling. That is not the same story.
What is especially interesting is that the nearer-term secured series is actually the one that looks looser on collateral. Series H carries NIS 239 million of principal in 2026 and another NIS 478 million in 2027, but it closes 2025 at 74%. Series 12, by contrast, is already almost at the ceiling, even though its principal does not begin amortizing in 2026 or 2027. Forty-five percent of the principal is pushed out to 2028-2030, with the balance due in 2031 and 2033.
So the tighter series is not the series that creates the 2026 cash wall. It is the series that reduces freedom over assets that are already pledged to it. That is a very important difference. It means the 2026 question is not only how much needs to be repaid, but also from which collateral pocket the company can still extract flexibility.
The Planned Release Of Series H Collateral Is Not A Technical Footnote
This is where the immediate report dated February 26, 2026 becomes material. Mega Or said it intends, after the scheduled principal payment on March 31, 2026, to release two assets from the Series H collateral package: the Nisko management center in Modiin and Management Lot 61 in Modiin. The bondholders' annex in the annual report had already prepared the ground for that move by stating that the company intends to release part of the existing collateral after the principal payment due on March 31, 2026.
This is not a side note. It is the mechanism through which headroom in the secured layer is meant to turn into actually free assets. If the move is completed, Mega Or will not only reduce debt in Series H. It will also turn scheduled amortization into the release of two specific assets, in other words it will restore financing raw material in precisely the year when the total maturity wall is heaviest.
One wording constraint matters here. At the reporting date this is still an intention, not a completed fact. But the choice of two named Modiin assets already shows that management is actively recycling the collateral layer rather than merely sitting passively inside the covenant.
The analytical implication runs both ways. On one hand, the move supports the view that Series H carries real room, enough not only to survive technically below the ceiling but also to release collateral. On the other hand, it is a reminder that balance-sheet flexibility is not measured only by how much debt exists, but by how many assets can be returned to the unencumbered layer without damaging covenant compliance.
What This Means For The 2026 Test
If the evidence is compressed into one line, Mega Or's secured-debt headroom is wider than the 79.4% number on Series 12 suggests, but tighter than the 62% headline suggests.
The group-level room is real. Mega Or has NIS 5.1 billion of unencumbered real estate and investments, only 23% of total real estate and investments sits against secured debt, and the nearer-term secured series, Series H, enters 2026 at 74% with an explicit plan to release two assets after the March repayment. That is a base from which management can refinance and reorganize collateral.
But that room is not uniform. Series 12 sits only 0.6 percentage points below its ceiling. So the secured layer cannot be read as if it all sits on the same cushion. Part of it is still flexible. Another part is already almost full.
That also defines the real checkpoint for 2026. The year will not be judged only by whether Mega Or refinances NIS 1.491 billion of total maturities. It will also be judged by whether it can do so without turning too much of the NIS 5.1 billion unencumbered pool into fresh pledged collateral, and whether the Series H collateral release is actually carried out and proves that the secured layer remains a flexible tool rather than a pocket that is gradually closing.
The practical watchpoints from here are clear: the actual release of Nisko and Management Lot 61 after March 31, 2026; any move in the Series 12 collateral ratio back toward a more comfortable level, or at least the absence of further tightening; and the way the 2026 maturity mass is funded without letting the secured layer become too large a share of the capital structure.
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