Sde Dov: Ravad's Employment-Land Option Between Appraisal, Funding and PFAS Checks

ILS 156 Million on Paper, but Not a Liquid Reserve

The main article already argued that the real debate in Ravad is not whether the assets exist, but whether they can be turned into accessible value. Sde Dov sharpens that point even more than Beit Agish or Antokolsky, because the same asset now carries a large appraisal number, existing bank collateral, a planning path still far from full permit, and a new environmental question.

By the end of 2025, the Sde Dov land was carried at ILS 156.32 million. That is a large enough number to tempt investors into reading Sde Dov as a shortcut to value. That read is incomplete. The figure comes from a debt-free land appraisal model while the plot is already pledged in reality; it sits on a project for which the company expects full permit only by the end of 2027; and after the balance-sheet date the company also received notice of preliminary PFAS findings in groundwater across the Sde Dov area.

Three points sharpen the story immediately. First: year-end 2025 did not produce an uplift gain here, but a fair-value loss of ILS 7.859 million, meaning the appraisal already sits below the carrying value before fair-value adjustment. Second: the same land that is supposed to represent future office and retail optionality is already being used today as collateral for a loan and a corporate credit line. Third: by the company's own wording, project financing will only be explored close to the start of construction, and as of report publication no financing approaches or checks had even been made.

The Appraisal Is an Anchor, Not Clean Upside

The first point to clear up is what the ILS 156.32 million figure actually means. This is not an NOI-based valuation, not a discounted-cash-flow read, and not a forward income model for a project about to start. The appraiser explicitly says the correct approach is the comparison method because this is land. The rights base used in the appraisal is 22 thousand square meters of offices and 7.6 thousand square meters of retail, converted into 44.8 thousand office-equivalent square meters. Pricing is anchored in nearby plots from Tender TA 304/2024, especially plots 301, 302 and 303. Ravad's plot, plot 305, was given ILS 3,460 per equivalent square meter, above the ILS 3,330 average, partly because it is a corner plot.

That matters, because it means the number is not detached from the market. But it also says something less comfortable: as of end-2025 there is no embedded uplift already proven in the accounts. Acquisition cost stood at ILS 162.87 million, another ILS 1.31 million of planning costs was capitalized during the year, and the carrying value before fair-value adjustment therefore reached ILS 164.179 million. Against that stood an appraisal of ILS 156.32 million, which is why the company booked a fair-value loss of ILS 7.859 million. In other words, Sde Dov may still create value for Ravad, but year-end 2025 does not tell a story of a cheap purchase already reflected as accounting upside.

The sensitivity range reinforces the same point. A 5% change in value per square meter moves land value to a range of ILS 148.57 million to ILS 164.07 million. So even inside the appraisal itself, the end figure is an anchor, not the equivalent of cash on hand.

Another important point sits inside the appraisal assumptions. The appraiser states that the land was valued as vacant and clear, after the tender and development payments had been fully paid, and with value assumed free of debt, charges, mortgages, or third-party rights. At appraisal level this is a normal assumption. At listed-company level it is exactly the important distinction: the appraisal gives a theoretical asset value, not clean equity already sitting there for common shareholders.

The Land Is Already Financing the Company Before It Finances the Project

This is where asset value and accessible value diverge. In the business disclosure on the property, the land is shown with first-ranking collateral in a secured amount of ILS 41.765 million at end-2025. In the banking note, the company's direct borrowing for the Sde Dov leasehold purchase is described as a ILS 36 million loan due on February 25, 2028, at prime plus 0.75%. During the period the company also took a ILS 22.5 million bridge loan for VAT and ILS 50 million of on-call loans that were repaid during the year. So even at the acquisition stage, the land was not funded by equity alone.

But that is only part of the picture. On March 27, 2025, the company also approved an ILS 80 million credit line for future liquidity needs, secured by the same pledges over the Sde Dov land. During the reporting period the company already drew ILS 5.5 million from that line for general needs. After the balance-sheet date, the bank informed the company that the unused ILS 74.5 million had been extended through April 6, 2027, at a lower rate of prime plus 0.4%. Then, at the company's own initiative, an amendment was signed that took effect on April 7, 2026 and reduced the active facility to ILS 40 million.

This matters because it changes how the asset should be read. Sde Dov is not just a plot sitting there until the day construction starts. It is already being used as a source of collateral for the parent company's liquidity needs. So even if the appraisal looks almost company-sized, it cannot be read as if the full ILS 156.32 million were free for shareholders. Part of that value has already been pulled into the banking layer, and another part may yet be used for future funding.

The point becomes sharper when reading what the company itself says about project financing. It states that it intends to sign a financing agreement with a bank close to the start of construction, but as of the report date no approaches or checks had yet been made because the project was still at an early stage. That wording matters. It says that between appraisal and a financed project, there is not even an open banking track yet. There is collateral. There is no construction financing.

Turning Land into a Project Still Requires a Lot of Capital and Time

The company is moving forward on a building permit under the existing zoning plan. On February 15, 2026, the Tel Aviv city engineer forum reviewed the project design and approved the advancement of the architectural design package to local committee discussion, subject to comments from city departments. That is real progress, but it is still not a full permit.

The official timetable is also farther out than a quick first read may suggest. The company says full building permit is expected by the end of 2027, although it may examine an earlier excavation and shoring permit. At the same time, the lease agreement with the Israel Land Authority requires the company to complete construction no later than December 2, 2029. The asset therefore comes with a clock. Not an immediate one, but not an open-ended option either.

Financially, the distance between land and an active project is even greater. By December 31, 2025, the company had spent ILS 1.31 million on planning and consultants, and estimated another ILS 6.6 million to complete the permit stage. That is only the small piece. The company's initial estimate for construction costs, excluding land cost and planning costs, already stands at about ILS 280 million plus VAT. The company explicitly says this is only a preliminary estimate.

This chart explains why Sde Dov is currently an option, not a project. The ILS 156.32 million provides a land anchor, but moving from land to an income-producing asset still requires more money, more time, and financing that has not yet been lined up. At shareholder level, that is not a footnote. It is the question.

PFAS Adds a New Unpriced Uncertainty Layer

After the balance-sheet date, the company received a notice from the Israel Land Authority, similar to other landowners in the area, saying that the Ministry of Environmental Protection had reported preliminary findings of PFAS deviations in groundwater sampling across the Sde Dov complex, linked to historical use of firefighting foam. The company states explicitly that as of report approval it does not know whether those findings also exist on its leased plot, and if so what the financial implications would be, if any.

The appraisal appendix adds detail but does not close the issue. On one hand, it states that according to the national soil-contamination map there is no suspected soil contamination at the plot location. On the other hand, a groundwater monitoring report submitted in August 2025 found cumulative PFAS deviations in the boreholes that had been drilled in the Sde Dov area, including near the subject plot. The appraiser says drilling and soil surveys are required across the plots in order to determine whether contamination exists on each plot and what treatment instructions would be required if contamination is found.

The key point here is not to overstate it. There is not yet a determination that Ravad's plot itself is contaminated. There is also no quantified cost, delay, or value haircut. But something changed meaningfully: an open environmental-check layer was added to the permit and financing path. What had looked like an office and retail land option with a planning and funding agenda is now also land that must pass an environmental clarification process before the route to execution can be described as clean.

So What Is This Land Really Worth to Ravad

The value in Sde Dov is real in one very important sense: it rests on actual nearby comparison transactions, defined building rights, and a strong location inside a new district. So this is not fantasy land without an anchor. But at listed-company level, the ILS 156.32 million figure is a useful anchor for the debate, not a complete answer.

At shareholder level, Sde Dov is currently doing three jobs at once. It is an accounting value anchor. It is bank collateral that helps support the parent company's liquidity layer. And it is a development option that still requires full permit, construction capital, and project financing that has not yet even been tested with a bank. Now a PFAS question has been added on top, with no known price tag.

So the right read is not that Sde Dov almost explains the whole of Ravad on its own. The right read is that it explains why Ravad owns an asset that can support a long-term thesis, but still does not explain why that value is accessible today. As long as the appraisal is cleaner than reality, dedicated project funding is not yet in place, and the environmental review remains open, Sde Dov is a pledged option with upside, not a liquid reserve.