Megurit: The 2026 Funding Bridge, from NOI to the Maturity Wall
This follow-up isolates Megurit's funding bottleneck. A NIS 1.186 billion working-capital deficit, covenant cushion that exists but is not unlimited, and the January-February 2026 funding package show that the urgent question is no longer theoretical NOI, but how much time and flexibility the company actually bought before the next maturity wall.
Where This Follow-Up Starts
The main article argued that Megurit's NOI is finally moving in the right direction, but shareholder value still has to pass through the funding layer. This continuation isolates only that layer: what exactly created the year-end working-capital deficit, what the January and February 2026 raises actually bought, and where the maturity wall still remains even after the company went back to both the debt and equity markets.
Three quick conclusions:
- The January package did not solve 2026. It mainly took out the January pressure, released collateral, and pushed part of the burden forward.
- Series Tet and series Yod-Alef did not do the same job. Series Yod-Alef bought time higher up the maturity ladder, while the expansion of series Tet remained secured debt with a concentrated December 2028 maturity.
- The February equity raises widened the equity cushion, but not for free. They diluted shareholders, and at the same time the board updated its distribution policy so that, once the moves were completed, the dividend base would grow together with the share count.
What matters here is that Megurit did not end 2025 with an asset problem. It ended 2025 with a timing gap. On one side stood a larger apartment portfolio, rising NOI, and more assets entering lease-up. On the other stood maturities, credit lines, and short-term loans compressed into early 2026 and forcing an aggressive bridge-financing response. That is why Megurit's 2026 funding bridge cannot be measured only by how much debt it raised, but by how much short debt it replaced, which assets were released in the process, and how much room is still left before autumn 2026.
The Starting Point: The Deficit Was Not Just an Accounting Line
At the end of 2025 Megurit had a working-capital deficit of about NIS 1.186 billion. The headline number is large, but the composition matters more. The main pressure came from about NIS 495 million of series E, about NIS 371 million of series Vav, about NIS 51 million of series Het, an institutional loan of about NIS 250 million that was repaid in January 2026, bank credit lines of about NIS 90 million that were also repaid in January 2026, and a short-term bank loan of about NIS 110 million due at the end of March 2026.
That distinction matters because the combined NIS 1.186 billion number can sound like one single hole. In practice it was several kinds of debt with very different functions. Series E and series Vav are the real autumn maturity wall. The institutional loan, the bank credit lines, and the short-term bank loan were mainly immediate early-year pressure. In other words, even at the balance-sheet date there were already two different problems sitting inside the same number: near-term liquidity pressure and late-2026 refinancing risk.
The relatively better news is that the company was not facing this wall empty-handed. At the balance-sheet date it had about NIS 573 million of assets available to be pledged, and by the report-signing date that figure had already risen to about NIS 1.248 billion. That jump is not cosmetic. After the institutional facility was repaid in January 2026, the company reported that the liens over several of the assets behind that facility were canceled and released. In other words, part of the January oxygen did not just cover short debt. It reopened the ability to pledge assets again in the next round.
The less comfortable side is that this still is not a self-funding business. Even after the company points to pledgeable assets and NIS 80 million of unused bank lines, the logic of the bridge still rests on three outside moves: unsecured debt, secured debt, and new equity. That is the core of this follow-up.
What The January and February 2026 Raises Actually Bought
At first glance, the post-balance-sheet moves can look like one package. That is the wrong way to read them. Each had a different role.
| Move | Gross amount | Reported net amount | Stated use | What it actually did |
|---|---|---|---|---|
| Unsecured series Yod-Alef, January 6, 2026 | about NIS 441.5 million | about NIS 436.5 million | Repayment of an institutional loan of about NIS 252 million, repayment of bank credit lines of about NIS 90 million, and the balance for ongoing activity | Took out the January pressure and converted short debt into a ladder running from 2027 through 2033 |
| Series Tet expansion, January 19, 2026 | about NIS 153.3 million | about NIS 152.6 million | Ongoing activity and payment of the roughly NIS 171 million remaining consideration for the HaSolalim project | Added liquidity, but did not free the company from collateral dependence or from a concentrated 2028 maturity |
| Private placement of shares and options, February 2, 2026 | about NIS 147.5 million | not disclosed | Funding ongoing activity | Strengthened equity, but at the cost of immediate dilution and another option layer |
| Rights issue, February 26, 2026 | about NIS 130.8 million | not disclosed | Funding ongoing activity, including acquisitions | Added more equity cushion, but not free cash with no strings attached |
Together this is a package of about NIS 873.1 million gross. But not all of that amount is truly free liquidity. At least about NIS 342 million from series Yod-Alef went straight to repaying the institutional loan and the bank lines. The series Tet expansion was also not meant simply to sit in cash. It was explicitly marked as a source for the remaining payment on HaSolalim as well. So anyone who looks only at the total raised misses the key point: a large part of the money was raised to close existing holes or pay obligations that had already been created.
This is also where the true difference between the two debt raises becomes clear. Series Yod-Alef is unsecured debt rated ilBBB+, with amortization spread from September 2027 through September 2033. That is a classic time-buying move. Series Tet is secured debt rated ilA-, and it remains CPI-linked with a single December 2028 principal payment. That is a different job altogether: less long-duration smoothing, more extraction of funding capacity from the collateral layer.
Put differently, January 2026 did not just change the amount of debt. It changed the mix of debt. Part of the structure moved from short institutional and banking facilities into longer-dated market debt. Another part remained explicitly asset-backed. And the portion that actually strengthened covenant headroom arrived through dilution, not through internally generated cash.
Covenants and Collateral: There Is Cushion, But Not Unlimited Cushion
On paper, Megurit was not close to a covenant breach at the end of 2025. Equity to assets stood at 28.30%, above the 22.5% floor set for both series Tet and series Yod-Alef. Equity stood at NIS 1.864 billion, against a floor of NIS 1.1 billion. That is a cushion of about NIS 764 million.
But that is only half the picture. In the debt layer already outstanding at year-end, especially series Het, series Tet, and series Yod, the dividend-distribution restriction sits higher, at a 26% equity-to-assets threshold. So the extreme-event cushion was 5.8 percentage points, but the distribution cushion was only 2.3 percentage points. That is already a less generous margin, especially because in January 2026 the board updated the dividend policy so that, once the private placement and the rights issue were completed, the monthly dividend rate would be increased in proportion to the larger share count.
| Test | Actual at end-2025 | Relevant threshold | Cushion |
|---|---|---|---|
| Equity to assets | 28.30% | 22.5% | 5.8 percentage points |
| Equity to assets for distributions in series Het, Tet, and Yod | 28.30% | 26% | 2.3 percentage points |
| Equity | NIS 1.864 billion | NIS 1.1 billion | about NIS 764 million |
This is where the difference between a liquidity story and a collateral story matters. At the end of 2025, series Tet had pledged assets worth about NIS 423.2 million against a carrying balance of about NIS 335.3 million. That was a healthy cushion for the structure that existed on that date. But in January 2026 the series was expanded to NIS 529 million of par value, so the year-end snapshot alone is no longer enough to understand the collateral picture after the expansion. That is exactly why the private-placement bond report matters: the company explicitly certified that at the expansion date the collateral value of all pledged assets would not fall below 100% of the amount paid by bondholders for both the bonds already outstanding and the new bonds, plus accrued linkage and interest that had not yet been paid.
The analytical implication is straightforward. Series Tet still stands on the legs of the assets. That also helps explain the rating gap: ilA- on the secured expansion of series Tet versus ilBBB+ on the unsecured series Yod-Alef. Through the rating structure, the market is still drawing a clear line between money supported by specific collateral and money supported by Megurit's general balance sheet.
Another point the market may underappreciate at first glance is the contagion mechanism. In its covenant disclosures for both series Tet and series Yod-Alef, the company states that if either of those series were accelerated, that could trigger immediate-payment grounds across 12 company loans. In series Tet the aggregate amount is about NIS 4.602 billion, and in series Yod-Alef about NIS 4.631 billion. This is not a cushion the company can burn casually. The real room for error is materially smaller than the accounting ratio alone might suggest.
What Still Remains Open After The Package
Megurit's 2026 bridge improved materially, but it is still not closed. The cleanest way to see that is through the company's own math for series E and series Vav. As of December 31, 2025, the pledged assets behind series E were worth about NIS 654 million, and those behind series Vav about NIS 457 million. Based on an 80% financing rate, the company estimates it could refinance about NIS 523 million against series E and about NIS 366 million against series Vav.
That almost covers what needs to be covered, but it does not leave much room for slippage. Series E faced a maturity of about NIS 495 million, so on paper there is some surplus. Series Vav faced about NIS 371 million, so even on the company's own math the margin looks nearly one-for-one. When a company depends on refinancing rather than on internal free cash, "almost enough" is not the same thing as a thick cushion.
The second issue that remains open is the quality of the equity improvement. The two February equity raises added about NIS 278.3 million gross, and that clearly widened the equity cushion above the NIS 1.1 billion floor. But this is a cushion that arrives together with a larger share count, new options, and an explicit board intention to increase the monthly dividend rate after the moves are completed. So the new equity does not all sit quietly as pure deleveraging room. Part of it may quickly turn into a broader distribution base.
The third issue is that moving from short debt into market debt does not remove the problem. It changes the timing of the problem. Series Yod-Alef pushed repayments out to 2027 through 2033. That matters. But it did not create NOI overnight, and it did not solve the September and December 2026 maturities. In that sense, January 2026 bought Megurit time for 2026 NOI to start working on its behalf. It still did not prove that the NOI ramp will close the full chain, from finance cost through dividend capacity.
Bottom Line
The real news in January and February 2026 is not that Megurit managed to raise capital. That part was already visible. The real news is what kind of time it bought. Series Yod-Alef took out immediate pressure, repaid short debt, and released collateral. The series Tet expansion added another layer of funding, but in the language of collateral rather than in the language of a free balance sheet. The February equity raises widened the equity cushion, but at the price of dilution and a larger eventual distribution base.
That is why Megurit's 2026 funding bridge looks more stable now than it did at the end of December 2025, but it is still a bridge and not a paved road. If the new NOI base starts converting into cleaner surplus after financing, the company can reach autumn 2026 from a much better position. If not, the market may conclude that the early-2026 package mainly postponed the moment of decision.
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