Shinkin Looks Nearly Done, But The Cash Is Not Free Yet

The main article argued that Shinkin is both Levinski Ofer’s current operating engine and one of its main bridges into 2026. This follow-up isolates the point that matters most now: a project that looks almost finished is not the same thing as cash that is almost free.

By year end, Shinkin was already 90% complete, 15 of its 20 saleable apartments had been sold, and the sensitivity of the still-unrecognized profit to the remaining five units was already fairly limited. Yet the company still ended 2025 with a sharp build in apartment-sale receivables, a weaker expected project margin, and projected withdrawable surplus that remained subject to a long list of release conditions that had not yet been met.

Four points need to stay in view before going deeper:

Shinkin looks nearly finished operationally, but not financially.
Half of the project’s saleable inventory was sold under a structure where only 20% to 30% is paid at signing and the balance arrives close to occupancy.
Expected project gross profit fell to NIS 8.507 million and expected gross margin fell to 9.4%, even though total expected revenue barely changed.
The projected NIS 21.125 million of withdrawable surplus includes recovery of equity already invested, not just project profit, and at year end it was still not withdrawable.

What Is Basically Locked In, And What Is Not

Operationally, Shinkin no longer looks like an early-stage project. Engineering completion reached 90% at the end of 2025 versus 46.3% a year earlier. Out of 20 saleable apartments, 15 had been sold, leaving only five units with 584 square meters of main area still unsold. No additional contracts were signed between year end and the report-signing date, so the final stretch is already narrow.

That means the key project risk is no longer mainly about proving demand. The sensitivity table shows how limited the remaining commercial exposure already is. A 10% change in selling prices for the still-unsold area changes the expected still-unrecognized gross profit by only NIS 186 thousand. A 10% change in remaining construction costs changes it by NIS 400 thousand. That is not nothing, but it is also not the kind of number that can by itself rewrite the 2026 story.

Focus	End-2025 position	Why it matters
Execution	90% engineering completion	Most execution risk is already behind the project, so the debate shifts from construction to cash release
Marketing	15 of 20 saleable apartments sold	Most revenue is already contracted, but not all of it converts into the same kind of cash
Remaining sales exposure	5 unsold apartments, 584 sqm	The residual sales risk is now small relative to what has already been recognized
Price sensitivity	NIS 186 thousand for a 10% change in prices on the remaining units	The bottleneck is becoming less about price and more about collection quality
Cost sensitivity	NIS 400 thousand for a 10% change in remaining construction costs	Some execution risk remains, but it is no longer the core issue

That is the real setup for this continuation. Shinkin looks almost done in operational terms, which is exactly why the question now shifts from whether the project works to whether it actually releases value on time.

20/80 Kept Sales Going, But Pushed Cash Out

The project was not sold only on normal payment terms. The company explicitly says that in some sale contracts, 20% to 30% of the consideration is paid at signing and the balance is paid before occupancy. Ten out of the 20 saleable apartments in the project were sold under this model. In other words, half of the saleable inventory, and a very meaningful share of the project’s executed sales, depends on deferred collections.

This becomes a hard numerical issue in the project’s revenue-and-advance table. By the end of 2025, Shinkin shows NIS 64.832 million of revenue recognized or to be recognized from signed contracts, against only NIS 18.429 million of advances received or expected to be received by that date. In 2026 the pattern almost reverses: only NIS 7.204 million of signed-contract revenue is still left for recognition, but NIS 32.998 million of advances and collections are still expected to come in.

Shinkin: revenue moved ahead of collections

That chart says more than a page of narrative. Most of the accounting revenue tied to signed contracts is already sitting in 2025, while a large part of the cash is still pushed forward. That is exactly how a project can look almost complete in the income statement and still leave the company dependent on interim financing.

The filing also makes clear that not all project revenue is clean buyer cash. The expected-revenue figures include NIS 19.302 million of in-kind revenue from construction services to tenants and another NIS 2.729 million of imputed interest on that in-kind revenue. At the same time, the project data excludes NIS 1.422 million of significant financing component embedded in some sale contracts, which is classified as finance income. The accounting is effectively telling the reader, in plain numbers, that a meaningful part of what shows up around Shinkin is not straightforward current-period cash collection.

The balance sheet already reflects that tension. Apartment-sale receivables rose to NIS 28.499 million from NIS 8.944 million a year earlier, and the company says the increase comes mainly from revenue recognition in Shinkin as the project progressed. That does not mean all of the 2025 operating cash burn came from Shinkin, but it does mean Shinkin is a major contributor to the gap between recognized profit and money actually collected.

There is another quality issue here as well. The company says it has no inflation hedges, and it explicitly states that 80/20-type sales in Shinkin increase both financing needs and inflation exposure. So the sales model is not only postponing cash. It also leaves the company carrying more risk until the project fully closes.

The Margin Weakened Exactly As The Project Moved Toward The Finish Line

The second point that should not be smoothed over is that the project is not moving forward on the same economics it appeared to have a year ago. Total expected project revenue rose only slightly, from NIS 89.810 million to NIS 90.671 million. Against that, expected project cost rose from NIS 79.526 million to NIS 82.164 million. The result is a decline in expected gross profit from NIS 10.284 million to NIS 8.507 million, and a decline in expected gross margin from 12.7% to 9.4%.

The average price per square meter used to calculate the still-unrecognized gross profit also fell to NIS 31,914 from NIS 34,039 a year earlier. That is not a minor modeling footnote. It means the final stretch of project economics is now built on weaker or more conservative assumptions than before.

What really matters is the combination of the two trends. Shinkin is already highly mature from an execution standpoint, but its profit cushion is thinner. This is no longer a project with a lot of room for error, but it is also no longer a project whose main risk is a dramatic sales failure. The pressure point has shifted from “will the project work” to “how much usable cash will really come out at the end.”

It is also important to separate the two profit layers the project shows:

Expected accounting gross profit: NIS 8.507 million
Expected economic profit according to the escort monitoring report: NIS 14.347 million

That NIS 5.840 million gap explains why the 15% profitability covenant in the financing agreement cannot be read directly through the 9.4% accounting gross margin as if they were the same metric. The agreement says profitability is measured according to the supervisor’s report. A reader who sees 9.4% and assumes that tells the whole covenant story is mixing two different measurement layers. The filing itself shows there is another bridge between accounting profit and the project’s escort-bank economics.

NIS 21.1 Million Of Surplus Is Not NIS 21.1 Million Of Profit

This is probably the most important section in the whole continuation. The company presents a bridge from expected gross profit to projected withdrawable surplus, and that bridge is exactly why the headline number can mislead.

The bridge shown in the filing works like this:

Shinkin: what separates accounting profit from projected withdrawable surplus

The first step is the move from NIS 8.507 million of expected accounting gross profit to NIS 14.347 million of expected economic profit in the monitoring report. The second step is the addition of NIS 7.161 million of equity already invested. Only after that, and after deducting NIS 383 thousand of other adjustments, does the project reach NIS 21.125 million of projected withdrawable surplus.

This is not semantics. It means the projected surplus includes recovery of cash the company already put into the project. A reader who treats the NIS 21.125 million as if it were simply “profit about to hit the company’s cash balance” is missing the distinction between project-level profit and cash release, and between true profit and the return of invested equity.

Even the “other adjustments” line is a reminder that this bridge is not a clean, one-dimensional number:

NIS 525 thousand of capitalized financing
NIS 3.311 million of expenses not paid from the escort account
minus NIS 1.545 million of advertising and overhead
minus NIS 2.062 million of financing expenses
minus NIS 612 thousand of other differences

So even inside the bridge that leads to projected withdrawable surplus, there is a mix of profit, previously invested equity, and classification or payment-location effects. That reinforces the main conclusion: Shinkin’s economic surplus is real, but it is not the same thing as free cash at the company level.

Why The Cash Still Is Not Free

Even if one accepts the projected-surplus number at face value, it was still a conditional number at the end of 2025. The company explicitly says the conditions for releasing surplus had not been met. To get cash out of the escort account, the project still has to go through a full chain: completion of construction, receipt of Form 4, engineer approval, delivery of apartments to buyers in accordance with the sale contracts, repayment of the bank credit, cancellation of buyer guarantees or insurance policies, return of any other collateral provided by the bank or insurer, and tax clearance under Section 50 if required.

And that is before the discretion clauses matter. The agreement gives the bank and insurer two material rights:

They may release excess cash before all the conditions are met, at their absolute discretion.
They may also decide that even after all the conditions are met, the remaining project-account balance will not be transferred to the company and will instead serve as additional collateral for other company projects with the bank or insurer.

On top of that, the company gave an irrevocable instruction not to request surplus withdrawal if, as a result, the balance remaining in the account after project completion would fall below NIS 1.208 million, unless tax-authority approval for the withdrawal is obtained.

What still has to happen before cash can come out	Why it blocks an easy reading
Completion, Form 4, delivery, and loan repayment	A project can be almost done operationally and still fail to pass all cash-release checkpoints
Cancellation of guarantees, insurance policies, and other collateral	Cash that looks like “surplus” still sits behind lender and buyer protection first
Tax clearance under Section 50 if required	The tax layer can delay release as well
Bank and insurer discretion	Even after conditions are met, cash can still stay trapped as collateral for other projects
NIS 1.208 million floor in the account	Not every shekel of projected surplus is actually withdrawable

That is the difference between value created and value accessible. Shinkin has already created economic value. As of December 31, 2025, it had still not finished converting that value into free cash.

What This Means For Shinkin Inside The 2026 Story

Shinkin still matters enormously to the Levinski Ofer thesis. This continuation does not weaken the project. It defines it more accurately. At this stage the key risk is less about sales and less about execution, and more about timing, cash conversion, and structure. The project is producing:

accounting profit, much of it recognized before the main collections arrive
economic profit, which is higher than accounting profit but not identical to it
projected withdrawable surplus, which includes recovery of invested equity
cash that still sits behind escort-account conditions and collateral mechanics

That is why the real trigger over the next few quarters is not another generic headline that “Shinkin is progressing.” It is a much more concrete sequence:

actual handover and occupancy
collection of the NIS 32.998 million still expected in 2026 from signed contracts
closure of the project’s bank credit
actual release of surplus from the escort account

If that sequence happens on time, Shinkin moves from an accounting engine to a true liquidity source. If it slips, the company remains where the main article left it: with a good project that is moving, but a balance sheet that is still waiting for the cash.