Beit Agish: NOI Still Supports the Story, but Value Already Depends on Rezoning, Amot and State Agreements

NOI Still Holds, but It Is No Longer the Core of the Story

The main article already made the broader point that, at Ravad, the interesting gap is not just between appraised value and market value, but between reported value and value that is actually accessible to shareholders. Beit Agish is the clearest example of that gap. On one hand, this is still a working asset: 89% occupancy, 13 tenants, ILS 5.4 million of NOI in 2025, and an actual yield of 4.77%. On the other hand, the 2025 value step-up no longer rests mainly on the old building and the rent it currently produces. It now rests on a new plan in preparation, on Amot entering as the dominant partner, and on a chain of planning and legal agreements that still have not been closed.

That matters because these are two different stories, current rent roll versus redevelopment optionality, and they require different lenses. The NOI answers one question, how much cash the existing building generates today. The new value answers a very different question, what the site might be worth if it is replotted with the state's adjacent parcel, if the plan is approved, if Amot and the company sign a binding framework, and if the old structure can actually be turned into a new tower. Anyone blending those two questions ends up with an asset that looks too stable on one read and too de-risked on another.

Three points stand out immediately. First: the current building still carries the waiting period, but it is not a fortress asset. Second: the clearest sign that value has shifted from current NOI to planning upside is the appraisal method itself, a comparison approach for building rights rather than an income-capitalization approach. Third: even after Amot bought the main private partner's rights at the end of December 2025, there is still no signed cooperation agreement, and the new plan still depends on agreements with the state and with other rights holders in the building.

What Actually Holds the Building Today

The right way to read Beit Agish starts with the fact that the asset has not broken. At the end of 2025 it was carried at fair value of ILS 113.26 million, with 3,853 square meters leased in practice, ILS 6.457 million of revenue, and ILS 5.4 million of NOI. The attached appraisal also states that monthly income from Ravad's areas stands at roughly ILS 462 thousand, excluding VAT, on 4,282 square meters of attributable marketing area. In plain terms, the building still produces enough current cash flow to buy time.

But this is where the difference between "holds" and "explains" begins. Average office rent stands at ILS 98 per square meter per month, and there are 465 square meters of office vacancy on the third floor at year-end. The two largest tenants, whose names are not disclosed, account for 14% and 17% of consolidated revenue, or 31% together. Beyond that, about 60% of Beit Agish rental income comes from high-tech tenants. That is still a reasonable base, but not the kind of base that alone explains a planning-led jump in value.

The more revealing detail sits inside the rent roll itself. One of the two largest tenants ran into financial difficulty. Its original leases covered roughly 780 square meters, and under an amendment signed in 2025 it remained only with 314 square meters and at reduced rent until October 31, 2026. The other 465 square meters were held through the end of 2025 without rent being paid, and the company was left with roughly ILS 0.2 million of receivables that were not recognized as income because of material uncertainty around collection. As of the report approval date, that space had already been returned and still had not been re-let. This is not an existential problem, but it is a reminder that the old building is not a frictionless NOI machine.

The lease schedule says the same thing. Beit Agish has signed fixed revenue of ILS 5.583 million for 2026, ILS 4.373 million for 2027, ILS 2.23 million for 2028, and only ILS 705 thousand for 2029, assuming tenant options are exercised. There are no variable rent components, which helps visibility. But there is also a relatively fast roll-off after 2027. That makes current NOI primarily a bridge through time. It does not provide a long enough anchor to carry the whole valuation uplift on its own.

That chart captures the difference between a stabilized office asset and a redevelopment option. Anyone reading Beit Agish as a fully stabilized office building gets a lease book that already requires meaningful renewal and replacement not far ahead. Anyone reading it as redevelopment optionality still has to accept that the current NOI is mainly there to fund the wait, not to provide the full valuation logic.

The Sharpest Signal, the Appraisal Has Already Moved to Building Rights

The clearest sign that value already sits on redevelopment rather than on current rent is the appraisal method itself. The attached valuation states explicitly that the appropriate approach here is the comparison approach, not the income approach, because the exercise is fundamentally an estimate of additional building rights. That distinction matters. Once the valuation is no longer built primarily around NOI and a cap rate on the existing building, but around comparable transactions for development rights, the story has moved from the economics of the current offices to the economics of the site after rezoning and demolition.

That is also exactly how the company describes the change in the business report. In the Beit Agish valuation section, it says the meaningful increase in value at December 31, 2025 versus 2024 and 2023 comes from the fact that the current valuation estimates the company's rights under a new plan that significantly expands the rights in the complex, whereas prior valuations were based on the built area, approved rights, and potential rights under the master plan.

The shift is visible in the inputs. In 2023 and 2024 the valuation base included 22,263 square meters of office rights, 701 square meters of retail, and 145 parking spaces. In 2025 that base jumped to 67,524 square meters of office rights, 368 square meters of retail, and 150 parking spaces, inside a plan in preparation that targets a new tower in place of the current building. The appraiser also writes explicitly that the highest and best use of the current situation, even under the already approved plans, is demolition of the old building and construction of a new office and commercial project, because of the building's age, the shape of the plot, and the need to demolish part of the basement area for the future tower core.

That chart exposes what the headline value number alone can hide. Fair value rose from ILS 100.18 million to ILS 113.26 million, a respectable move but not a dramatic one if all you read is the headline. The rights base that feeds the appraisal, by contrast, tripled. So anyone trying to explain the 2025 value through the 4.77% actual yield alone is missing the core point. The 2025 valuation case is not built on an unusual jump in NOI. It is built on a much larger planning scenario.

Amot's transaction strengthens that read. The appraisal uses, as a relevant reference point, Amot's December 2025 purchase of the rights held by Shabtai Cronfeld's asset company, which owned parts of the project and 50% of the building rights, for ILS 130 million. That matters because it shows that a large institutional player is willing to pay for the planning option. But even that does not make the option immediately accessible. The Amot deal validates interest in the site. It does not mean execution is already closed.

What Still Has to Happen Before the Option Becomes Real Value

What makes Beit Agish tricky is that, on a classic real-estate reading, there is still a functioning asset here, while on a planning reading there is an option that is much bigger than the current building. The problem is that this option still depends on several open layers. The company is advancing a new plan that is meant to replace Plan 4041 and align with the new Master Plan 5500, which itself has not yet been approved. The new plan includes reparcellation with a neighboring state-owned parcel, for the purpose of building two new towers, one future employment tower in place of the current building of roughly 71 thousand square meters, with the company's expected share at roughly 34 thousand square meters, and a second 100 thousand square meter tower that, to the best of the company's knowledge, is meant to serve the new government campus.

But nearly every part of that description comes with a condition attached. In December 2025 the plan was discussed in the city engineer's forum, and the decision was to advance it subject to solving several planning issues. Because district-level approval is required, representatives of the company, Amot, and the state held meetings with district planning officials, and the district planner approved continued advancement while additional planning issues are reviewed. In other words, there is not yet an approved route. There is a route that has been opened.

Beyond that, advancement of the new plan also depends on binding legal agreements with the state, with Amot, and with other owners of existing areas in the building. This is the place to stop and underline the point. Amot already bought the main private partner's rights at the end of December 2025, and that clearly improves the ownership quality around the site. Even so, at the report approval date there was still no signed cooperation agreement between the parties. So even after Amot's move, planning control has still not been translated into a contractual framework that actually pushes the project into the next stage.

Taxes and public burdens also remain part of the thesis, not a footnote. Because the land is privately owned, the additional rights created by the new plan will bear a betterment levy equal to 60% of the value of those rights. The appraiser makes clear that the valuation already factors in public burdens, additional public-benefit obligations, the need to acquire third-party rights, the delay until plan approval, and risk around the scope of the requested rights. So even when the planning option is translated into value, it is already translated net of a meaningful amount of friction.

The company itself is still at a relatively early stage in terms of money actually invested to advance the plan. As of December 31, 2025 the company's share of planning and consultant costs stood at ILS 370 thousand, and the estimated amount still required to complete the process was another ILS 1 million. There is also an expectation of approval in 2026, but the company states explicitly that there is no certainty the plan will be approved in its proposed format, on the proposed timetable, or at all. That is why anyone reading Beit Agish as an asset that has already "crossed over" into redevelopment is reading too quickly.

Conclusion

Beit Agish still generates enough NOI to hold the story together, but it no longer defines that story. The right 2025 reading is that the old office building provides current income and buys time, while the new value already rests mainly on a planning option that still has to clear district approval, be contractually aligned with Amot, be contractually aligned with the state, and be clarified against the remaining rights holders and public burdens.

That is exactly why the asset looks strong and fragile at the same time. Strong, because at the end of 2025 it is not an empty building but an asset with 13 tenants and ILS 5.4 million of NOI. Fragile, because most of the value uplift already rests on a world in which this building is basically an interim phase on the way to something else. If the plan moves forward, today's NOI will turn out to be the income stream that carried the wait. If the plan stalls, investors are left with a relatively old office building, high-tech tenant concentration, returned space that still has not been re-let, and a lease schedule that needs quicker renewal than the new value case first suggests.