Sella Capital: Beit Mani, Moshe Aviv, and the Office Transition Test of 2026-2027

What This Follow-up Is Isolating

The main article already argued that offices still dominate the Sella Capital read. This follow-up does not go back through the whole portfolio. It isolates only the two assets that hold the real 2026-2027 transition test: Beit Mani and Moshe Aviv. The reason is straightforward. In the annual report, offices already account for 55% of investment-property fair value and 52% of NOI, while these two assets alone carry a combined fair value of NIS 983 million, almost 30% of office fair value and about 16.5% of total investment property.

What matters is that the two assets sit at opposite ends of the same problem. Beit Mani is already sitting on the balance sheet at NIS 469 million, but it ended 2025 with negative NOI of NIS 2 million, 22% occupancy at year-end, and only 32% occupancy by the publication date of the report. Moshe Aviv looks like the opposite case: NIS 514 million of fair value, NIS 39 million of NOI, and 94% occupancy at the end of 2025, yet almost half of its main area is leased to Bank Mizrahi Tefahot only until April 2026, and the company itself assumes just 50% average occupancy there in 2027.

That leads directly to the thesis here: this is no longer a generic office-market debate. It is a handoff problem between two assets. For offices to stop dragging per-share economics, Beit Mani has to turn from balance-sheet value into NOI, while Moshe Aviv has to get through a major lease rollover without giving back too much of the earnings base it still provides today.

That chart makes the structure clear. At Beit Mani, the company needs to build occupancy. At Moshe Aviv, it needs to avoid losing it too quickly.

The market backdrop does not offer an easy shortcut either. Management writes that more than one million square meters of office supply are expected to come to market in Tel Aviv and its close surroundings over the coming years, and that tenants in oversupplied areas are trying to negotiate more flexible lease terms. The rating report adds that 2026 is likely to remain a selective year, with high competition, targeted incentives, and pressure on owners in areas facing excess supply. So 2027 will not fix itself just because rates came down somewhat or because the wider portfolio is diversified.

Beit Mani: the value is already on the books, the income is not

Beit Mani is the cleaner conversion test. On one side, it is already a major balance-sheet asset. Its fair value at the end of 2025 stood at NIS 469 million. In the company presentation it is shown at a cost of NIS 649 million, which means it is still sitting roughly NIS 180 million below cost. On the other side, it is not there yet at the operating layer: 2025 rental income was only NIS 1.75 million, NOI was negative NIS 2.0 million, average occupancy during the year was just 3%, occupancy at year-end was 22%, and only by the publication date of the report had the asset moved up to 32%.

The key point is not just that occupancy is still low. The key point is that the valuation already embeds a much stronger economic target than the current run rate. The appraisal was based on a leasing forecast at an average rent of NIS 157 per square meter and a 6.5% cap rate, while also taking required investment in the asset into account. In other words, Beit Mani is already being carried like an office asset that should know how to lease itself at stabilized economics, well before actual NOI proves that outcome.

That is where the 2026-2027 gap sits. On the guidance slide, the company says 2026 is based on the current asset base, signed leases, and the completion of a NIS 580 million income-producing property acquisition. On the same slide, it adds a 2027 assumption of 75% average occupancy for Beit Mani. And on that same slide there is also a note saying that the forecast and the data relating to future events do not include income from Beit Mani. Even if that note is read mainly as a caution around 2026, the message is still clear: Beit Mani is not yet part of the hard earnings base. It is still sitting in the proof layer.

That is exactly the difference between accounting value and value that reaches the NOI line. Beit Mani is already large enough to matter for the balance sheet, equity, and the perceived quality of the office portfolio. But until it gets to occupancy levels that justify the model, it remains an asset that ties up capital before it adds the income that should come with that capital.

Moshe Aviv: the NOI exists, but almost half the area is being retested

If Beit Mani is a lease-up test, Moshe Aviv is a retention test. This is an asset that already works. At the end of 2025 it carried NIS 514 million of fair value, NIS 40.2 million of rental income, NIS 39.0 million of NOI, and 94% occupancy. On the surface, that is exactly the sort of asset Sella Capital would want in order to get through 2026 cleanly.

But the report itself marks the real point of pressure. The asset has 26,820 square meters of main area, and 12,420 square meters of that are leased to Bank Mizrahi Tefahot until April 2026. That is about 46% of the asset's main area. So this is not a routine lease renewal inside a large building. It is a genuine test for a major asset that currently contributes roughly 21% of the company's office NOI.

The more interesting point is the tension between the appraisal and the 2027 operating assumption. In the year-end valuation, the occupancy rates used in the appraisal are 100%, even though actual occupancy at the end of 2025 stood at 94%. At the same time, the 2027 estimate assumes only 50% average occupancy for the Mizrahi Tefahot space in Moshe Aviv. That is already an important admission: the company itself is not assuming that 2025 NOI will simply roll forward.

So Moshe Aviv is not just a strong asset. It is also a transition asset. In 2025 it holds up the office results. In 2027 it is already being framed as an asset that may go through a year of much lower average occupancy. That is why anyone reading only the 2025 NOI line could miss the more important point: management is clearly signalling that the current lease base is not a safe two-year earnings base.

The rating report reinforces exactly that reading. Midroog says its base case for 2025-2026 includes partial income generation from Beit Mani, while also taking into account the end of the Mizrahi Tefahot lease at Moshe Aviv during 2026. That is useful confirmation that this is not a story of one good asset and one weak asset. It is a story about the speed of replacement between NOI that does not yet exist and NOI that may weaken.

Why this flows through to FFO per share

It would be easy to treat all this mainly as a valuation discussion. The company's own numbers show that it is first a per-share economics discussion. In 2025, real FFO was NIS 253 million and real FFO per share was 109.7 agorot. For 2026, the company guides to FFO of NIS 254-258 million, which is roughly stable to slightly up in absolute terms, but FFO per share actually falls to 100-105 agorot. Only in 2027 does the estimate move back to 107-110 agorot, which is basically a return to the 2025 level, not a big step beyond it.

That is the key number. Even after the company assumes completion of a NIS 580 million income-producing acquisition, and even after it points to NOI of NIS 376-382 million in 2026 and NIS 410-416 million in 2027, the translation to the shareholder layer remains much more muted. So the office test is not really about creating a bonus. It is about avoiding a drag.

Put differently, for offices to stop dragging per-share economics, two things need to happen almost at the same time:

• Beit Mani has to move fast enough to go from 22% occupancy at the end of 2025 and 32% at report publication into a path that can justify 75% average occupancy in 2027.
• Moshe Aviv has to erode more slowly than feared so that a possible Mizrahi Tefahot exit does not open too large an NOI hole just when Beit Mani is still climbing.

That is also why reading the two assets together matters more than reading each one separately. If Beit Mani fills, but only at rents or incentives that cut the quality of NOI, it does not really solve the problem. If Moshe Aviv keeps part of the area, but only through unusually flexible commercial terms, that can also weaken the per-share translation. So the thesis here is not just occupancy. It is occupancy on terms that can survive all the way down to FFO per share.

Conclusion

Sella Capital's office story in 2026-2027 will not be decided by a portfolio average. It will be decided by two assets telling opposite transition stories. Beit Mani still has to prove that it can turn high fair value into NOI. Moshe Aviv still has to prove that it can defend its earnings base after April 2026.

That leaves the thesis here quite clean: offices stop dragging Sella Capital only if 2027 becomes a clean handoff year between Beit Mani and Moshe Aviv. Beit Mani needs to add real NOI, not just carry valuation. Moshe Aviv needs to lose less than the 50% average-occupancy assumption seems to leave on the table. Until both points are proved, offices remain the core risk to per-share economics, even if the wider portfolio still looks diversified and stable.