My Town 2025: The Pipeline Is Real, but the Cash Is Still Trapped on the Way

Company Overview

My Town is not the kind of residential developer you can read through one year of reported earnings. A large part of the economic value sits inside projects that have not yet completed the full cycle: permit, financing, construction, occupancy, and only then surplus release. That is why 2025 looks very weak at first glance, and fairly so, but also why the first read can be misleading. Anyone who looks only at the loss and the year-end cash misses the project pipeline. Anyone who looks only at the pipeline and the expected project surpluses misses the actual bottleneck: the funding bridge until those surpluses become cash at the company level.

What is working now? The company still sits on a broad project stack, with 2,671 housing units and 23,096 square meters of office and commercial space across construction, planning, land reserve, and urban renewal stages. It has projects already under way, new permits, a major financing package for Kiryat Malachi, and a clear rebound in signed sales after year-end. What is not clean? At the end of 2025 the company had just NIS 0.8 million of cash and cash equivalents, operating cash flow was negative NIS 56.4 million, and after year-end it already had to take a NIS 9.3 million bridge loan because Biltmore 12 was delayed in receiving Form 4.

This is also not a standard listed-equity story. The company is listed as a bond-only issuer, and the main tradable security is Series A. So the right screen is not “when does the market rerate the development value,” but “when do the near-term projects actually start releasing surplus, how much of that reaches the company, and does the interim funding period remain manageable.” For the public market, this is first a financing test and only then a development value story.

Structurally, the company operates in one main segment: residential development in Israel, mainly urban renewal. At the end of 2025 the group employed 20 people, which means this is a relatively lean development and management platform rather than a large execution contractor. Revenue in 2025 was NIS 72.4 million, or roughly NIS 3.6 million per employee. That says something about the model: a small corporate platform, a large project base, and value creation driven by origination, planning, coordination, marketing, and project management rather than by heavy fixed operating mass.

That is the core point from the start: the pipeline is large, but the pipeline is not cash. In a small bond-only development issuer, that distinction is the whole thesis.

Events and Triggers

The first trigger: In November 2025 the company closed a Kiryat Malachi financing package with a total framework of up to NIS 732 million. This is a major event because it moves a large project from planning rhetoric into financed reality. At the same time, My Town has an effective 33% share there, and the partnership agreement includes a surplus distribution waterfall that does not send every early shekel straight to My Town shareholders. The value is real, but it is not simple or directly accessible.

The second trigger: In December 2025 the company received building permits for Aharonovitz 3 in Tel Aviv and Aristo 10-12 in Jaffa, and also received a positive committee decision for Barelly in Tel Aviv. That matters because 2025 looked like a year of weaker sales and thinner recognition, yet on the planning side the company actually moved projects forward for 2026 and 2027.

The third trigger: In March 2026 Nordau 78 received an occupancy permit. This is smaller than Kiryat Malachi in strategic scale, but much more relevant to the near-term funding bridge because it moves a near-complete project toward actual cash release.

The fourth trigger: After the balance-sheet date, 18 additional binding sale agreements were signed for NIS 38 million. The investor presentation adds that first-quarter 2026 sales reached 18 units and NIS 37.9 million, versus just 4 units and NIS 13.4 million in all of 2025. That materially changes the short-term reading of the year.

The fifth trigger: The nearest project, Biltmore 12, also shows why the story is still not clean. After year-end, Form 4 was delayed beyond expectations, surplus release was postponed, and the company took a NIS 9.3 million bridge loan. That is a textbook example of the gap between project value on paper and cash available at the company level.

The market, and here the bond market matters more than an equity tape, is likely to focus on a simple pair of questions: is the sales rebound real, and does it translate into released surplus rather than just a better operating headline.

Efficiency, Profitability, and Competitive Position

2025 looks weak, and it deserves to

Revenue fell 22.2% to NIS 72.4 million. Gross profit fell 68.2% to NIS 10.0 million, and gross margin dropped from 33.9% to 13.8%. At the operating line the company moved from NIS 35.8 million of operating profit to an operating loss of NIS 10.1 million, and at the bottom line from NIS 21.2 million of profit to a NIS 14.2 million loss.

But the comparison needs normalization. In 2024 the company recorded NIS 27.0 million of other income, so the 2024 operating result was flattered by a one-off gain. Even after normalizing, 2025 is clearly weaker, but not in exactly the dramatic way the reported headline suggests. The core business still deteriorated: the sales pace in the active projects, mainly in Tel Aviv, was slower, and management explicitly links the revenue decline to slower sales in the markets where the current projects are located.

The profitability decline was not driven only by slower sales. The company also explains that in Remez 3 and Shlomzion Hamalka 3, which were delivered through self-execution, additional costs surfaced at delivery that could not be forecast earlier. So part of the 2025 weakness is also the tail effect of older projects rather than only weakness in the new ones.

Sales quality is still not clean

This is one of the most important disclosures in the whole file. The company explicitly says it gives customers payment spreads, exemptions from indexation, and at times contractor loans. It also notes that in projects under construction, the cost of buyer benefits tied to payment terms has already been deducted from revenue and is therefore not included in the projected gross profit shown in the project tables.

That is good and bad at the same time. Good, because the company is not hiding the cost inside an inflated project margin. Less good, because it means demand is at least partly being supported by commercial relief and softer payment terms. Put differently, sales exist, but not all of them are being generated on perfectly clean terms.

For a residential developer, that is not a side note. It affects revenue quality, collection pace, working capital, and the company’s ability to get through the bridge period without more interim financing. So the post-balance-sheet improvement in sales matters, but the next question is whether that pace holds without yet another step-up in commercial support.

What actually supports future profitability

The files paint a much better picture at the project level than at the annual P&L level. The projects under construction still show meaningful projected gross profit. But this has to be read carefully: it is project-level economics, sometimes before all the costs that matter to the end shareholder, and in some cases before lenders and other claimants have taken their share.

Still, there is an important message here. The five pledged projects that form a large part of the 2026-2028 bridge show material expected surplus. The problem is not the lack of project-level economics. The problem is the maturity timeline.

That is exactly why a first-pass reader can misread the company. The reported 2025 year looks very weak, but the project inventory has not collapsed. The real issue is the sharp gap between project maturity and company-level cash absorption.

Cash Flow, Debt, and Capital Structure

The right cash lens here is all-in cash flexibility

In My Town’s case, the right cash framing is all-in cash flexibility, not normalized recurring cash generation. The reason is simple: the heart of the story is not how much profit the projects might eventually make, but how much cash actually remains after all real cash uses in the current period.

Under that lens, 2025 was very heavy. Operating cash flow was negative NIS 56.4 million, finance costs paid reached NIS 11.5 million, lease payments rose to NIS 2.7 million, and year-end cash was only NIS 0.8 million. Even adding restricted deposits and escrow cash does not create a comforting free-liquidity cushion.

The cash did not disappear. It moved into inventory. Inventory of apartments for sale jumped to NIS 194.8 million, long-term land inventory rose to NIS 27.4 million, and the cash-flow statement shows a NIS 99.1 million increase in inventory. That explains much of the burn. But for creditors, and for anyone trying to read the company now, the explanation still does not substitute for liquidity.

Not all balance-sheet growth is “real” financing pressure

There is also an important nuance. Part of the balance-sheet inflation comes from obligations to landowners, which jumped to NIS 74.3 million from NIS 36.4 million, and from the accounting recognition of construction-service obligations in projects such as Dizengoff 78, Zhabotinsky 105, Alexander Yannai 8-10, and Brandeis 9. In other words, not every increase in liabilities should be read as pure incremental financial debt, and part of the balance-sheet expansion reflects the accounting structure of urban-renewal transactions.

Even with that adjustment, though, the balance sheet became tighter. Equity attributable to shareholders fell to NIS 40.8 million from NIS 52.5 million, while financial debt stayed meaningful.

Covenants pass, but practical flexibility still depends on timing

The good news is that the company remains inside the bond deed covenants. Adjusted equity stood at NIS 40.8 million against a NIS 25 million floor, adjusted equity to adjusted balance sheet was 19.3% against a 12% minimum, and debt-to-collateral was 68.5% against a 270% ceiling. That is reasonable headroom, not a distress zone.

The less comfortable news is that covenant compliance does not solve the practical liquidity issue. The bonds total NIS 62 million par, carry a fixed 7.5% coupon, and face a first principal payment of 15% on April 1, 2026. At the same time, available credit lines for the company and its wholly owned subsidiaries stood at NIS 251.6 million at year-end, but actual drawn credit jumped from NIS 33.7 million at year-end to NIS 97.8 million by the report date. That is a very important data point: the bridge is already being used.

There is also one nuance that softens the pure rate story, though it does not remove it. A 1% change in prime is described by the company as roughly NIS 337 thousand of annual financing expense sensitivity. So the issue here is less “rates will kill the company” and more “will surplus release and project progress arrive on time.”

Not every future surplus belongs cleanly to the ordinary shareholder

Here sits one of the least intuitive findings in the whole file. Part of the future value is already pledged or pre-allocated. Bondholders have security over the surplus rights of key projects, and those surpluses are released only subject to project-level financing agreements and milestone completion.

On top of that, controlling shareholder and CEO Yossi Hasson has a variable compensation mechanism tied to apartment sales across 19 projects. The provision for that mechanism reached about NIS 14.4 million at December 31, 2025, and the company itself estimates the maximum possible payout could reach about NIS 18 million if all units in the relevant projects are sold. That is not cosmetic. It means that before ordinary shareholders see clean value, part of future project surplus is already carrying incentive claims, security interests, and other obligations.

Outlook

First finding: 2026 starts as a bridge-and-proof year, not a breakout year. The pipeline exists, the permits exist, sales are better, but the company still has to prove it can move value from schedules and project tables into cash at the company level.

Second finding: The critical bottleneck is not the number of projects but the conversion speed of a small set of near-term projects into releasable surplus. Biltmore 12, Nordau 78, Dizengoff 78, Brandeis 9, Zhabotinsky 105, and Alexander Yannai 8-10 matter far more to the next two years than Kiryat Malachi does.

Third finding: Kiryat Malachi is a major strategic option, but it is not the 2026 cure. It is large, but My Town owns an effective 33%, it has a 67% partner, it carries a complex distribution waterfall, and it sits on a longer time horizon.

Fourth finding: The sales rebound after year-end is strong enough to change the short-term reading of the report, but not strong enough to remove the need for another proof point. Anyone who looks only at the 18 post-balance-sheet agreements risks missing the fact that the company already needed bridge financing because one Form 4 slipped.

What actually needs to happen

The company says its near-term focus is to advance the existing projects and find new ones, with emphasis on large urban-renewal compounds outside Tel Aviv. Strategically, that makes sense. It reduces reliance on a narrow set of Tel Aviv boutique projects and opens room for scale. But it also increases project duration, capital needs, dependence on partners, regulatory processes, and financing complexity.

So the critical distinction for 2026 is between two kinds of value:

1. Value created on paper: projected gross profit, expected surplus, planned projects, future rights.
2. Value made accessible: cash actually released, debt actually repaid, surplus actually upstreamed, and reduced reliance on bridge credit.

If My Town manages over the next 2-4 quarters to convert some of the advanced projects into real cash at the company level, 2025 could retrospectively look like the bottom of a delivery cycle. If not, 2025 will instead look like the year that exposed how thin the gap can be between a large pipeline and a need for interim financing.

Risks

Risk 1: the funding bridge lasts longer than expected

This is the core risk. The projects are supposed to generate surplus, but any delay in Form 4, financing, construction pace, or lender release pushes the company back toward its credit lines and bridge facilities. Biltmore 12 already showed this is not a theoretical concern.

Risk 2: sales remain supported by costly commercial terms

The company explicitly uses payment spreads, indexation waivers, and contractor loans. That can support sales pace, but if the market backdrop does not truly improve, the company may keep funding part of demand itself through softer commercial terms. That weakens the quality of growth even when the sales count looks better.

Risk 3: part of the value stays above the ordinary shareholder layer

The bonds are secured by project surpluses. Joint ventures bring partners and distribution waterfalls. The controlling shareholder has a sales-linked compensation mechanism with a NIS 14.4 million provision already on the balance sheet. So not every “expected surplus” at the project level rolls directly and cleanly to the shareholder level.

Risk 4: strategic expansion also increases execution complexity

The move toward larger urban-renewal compounds outside Tel Aviv, especially projects such as Kiryat Malachi, can create real scale. But it also requires more capital, more coordination, more partner dependence, and more time to monetization. That is strategically positive but financially heavier during the bridge period.

Conclusion

My Town ends 2025 with a sharp gap between project economics and funding flexibility. What supports the thesis is not the reported earnings of the year, but the fact that the company still holds advanced projects that can release surplus, remains inside its covenants, and showed a sharp rebound in sales after year-end. What blocks a cleaner thesis is that the value is still not sufficiently accessible at the company level, so even a small delay quickly turns into a need for additional bridge financing.

The current thesis in one line: My Town has a pipeline that justifies patience, but 2026 will be judged on surplus release and cash, not on the size of the presentation.

What changed versus the earlier reading is that the question is no longer whether the company has projects, but whether it can move in an orderly way from project progress on paper to cash at the company level. The strongest counter-thesis is that the pipeline is so large, and the projects so diversified, that the weak year is merely temporary noise before a wave of deliveries and profit recognition. That is an intelligent objection, but it still needs to be proven in cash.

What can change the market reading in the short to medium term is a combination of three things: surplus release from near-term projects, sustained sales momentum without heavier concessions, and proof that the company is not being pulled into more and more bridge financing along the way. This matters because in a small development issuer with only listed debt, the difference between value created and value accessible is the whole story.

If over the next 2-4 quarters the company can turn Biltmore, Nordau, and the rest of the advanced projects into released surplus, lower credit usage, and a sustained sales improvement, the reading of 2025 will improve materially. If surplus release keeps slipping and the bridge keeps stretching, even a pipeline worth billions will not erase the pressure at the company level.