Alben: What The Shift From Deposits To Rent Really Does To Cash
Alben is replacing front-loaded tenant-deposit funding with steadier monthly rent. The problem is that in 2025 cash flow still leaned on a NIS 4.9 million net contribution from deposits, so revenue quality improved faster than funding flexibility.
What This Follow-up Is Isolating
The main article already established the bigger point: Alben’s shift from deposit contracts toward rent improves revenue quality, but it also changes how the house is funded. This follow-up isolates only the cash layer. Not valuation, not the broader strategy, only the practical question of what the company gains and what it gives up when it prefers rent over deposits.
The core point is that this is a funding swap, not just a billing-model change. Under the deposit model, a large amount of cash comes in at the beginning of the resident relationship and is eroded over time. Under the rent model, cash comes in more slowly, month after month. That is better for revenue quality, better for stability, and better for limiting new CPI-linked liabilities. But it also weakens the upfront funding stream that used to help carry the business.
Three non-obvious points matter here:
- The move to rent does not create the monthly component from scratch. Monthly usage fees exist under all models. The real economic change is the upfront base amount versus monthly rent that embeds it over time.
- The resident-liability balance looks almost entirely current, but only a small part is actually expected to run off within a year. At the end of 2025, the company expected only NIS 11.8 million of a NIS 118.1 million resident-related liability to unwind within 12 months.
- Even so, 2025 cash still depended on deposits. Net cash from tenant deposits was NIS 4.9 million, while cash flow from operations was only NIS 3.7 million. Arithmetically, without that funding layer, operating cash flow would have been negative.
The Shift From Deposits To Rent Is A Source-of-Funding Shift
Management frames this move as a way to strengthen and stabilize the house’s cash flow over the years ahead. That framing is directionally right, but it needs to be unpacked.
Under the deposit model, the resident pays the base amount up front, usually in several payments, and the company makes annual deductions over the resident’s stay, for up to 11 years. The remaining deposit is CPI-linked and returned when the contract ends. Under the rent model, the resident does not pay the base amount as a deposit or entry fee. Instead, the resident pays fixed monthly rent linked to CPI. The company highlights two economic advantages to that model: it does not build new tenant-deposit liabilities, and it reduces the burden of indexation on the deposit balance.
What matters is what does not change. Residents pay monthly usage fees under every model. So this is not a clean shift from one-time revenue to recurring revenue. That is the key distinction. The recurring layer was already there. What the company is really moving is the timing of the base amount: less cash at the start, more cash spread across the resident’s stay.
That creates a very different cash profile:
| Component | Deposit model | Rent model | Cash implication |
|---|---|---|---|
| Base amount | Paid up front, usually in several payments | Spread into monthly rent | Less upfront cash under rent |
| CPI-linked liability | Deposit balance is linked to CPI and returned at exit | No base deposit balance is accumulated | Lower indexation burden, but also less funding |
| Turnover dependence | High, because each new resident can generate a deposit inflow | Lower, because collections are ongoing | More stability, less front-loaded funding |
| Collateral | The deposit itself | Security deposits tied to several payments | The shift does not eliminate collateral, it just lightens it |
That is why the company says most new contracts have been signed under the rent model since 2021, and 53 units were already on that model at the reporting date. From a business-quality perspective, that direction makes sense: less exposure to resident longevity, less growth in CPI-linked liabilities, and more predictable monthly income. From a funding perspective, it is a tougher trade in the near term because the initial cash check is smaller.
In 2025, Cash Still Leaned On Deposits
This is the right place to use the all-in cash view, not a normalized one. The question here is not how much steady-state earning power the business may have. The question is how much funding flexibility remains while the model is changing.
In the 2025 cash-flow statement, the company reports positive cash flow from operating activities of NIS 3.7 million. At first glance, that looks like evidence that the rent model is already producing a decent cash base. But in the same year, the company received NIS 14.8 million of tenant deposits and repaid NIS 9.8 million to residents. Net deposit cash was therefore NIS 4.9 million. That is the key number. It is larger than total operating cash flow. So, arithmetically, without that support layer, 2025 operating cash flow would have been negative.
The chart above shows why better revenue quality has not yet become cash independence. Even after positive operating cash flow, the company still finished the year with a NIS 4.2 million decline in cash and only NIS 204 thousand of cash on hand. Investment-property additions were NIS 3.0 million, and financing activities consumed another NIS 6.7 million net. In other words, in 2025 the house still did not generate enough internal cash to absorb both investment and financing outflows without leaning on other layers.
That is exactly the price of the transition. The deposit model gives the company front-loaded funding, albeit with a CPI-linked liability attached to it. The rent model gives the company better-quality income, but at a slower cash pace. A transition year like this will almost always look better in terms of revenue quality than in terms of cash accumulation.
The Balance Sheet Explains Why The Immediate Pressure Is Lower, But Also Why Deposits Still Matter
Note 10 helps break down the accounting tension. At the end of 2025, total liabilities tied to deposits, security deposits, and refundable deposits stood at NIS 118.1 million, down from NIS 121.0 million at the end of 2024. Within that total, the core deposit balance fell from NIS 109.9 million to NIS 107.8 million. But the security-deposit line rose from NIS 8.0 million to NIS 9.6 million. So the shift to rent is changing the liability mix, not making it disappear overnight.
The more interesting point is the expected runoff schedule. Out of the NIS 118.1 million total, the company expects only NIS 11.8 million to run off within 12 months, with NIS 106.3 million beyond that. That means almost 90% of the balance is not expected to leave within the coming year, even though the whole amount is presented as current because of its demand-feature accounting treatment.
That matters in two opposite ways. On the one hand, the balance sheet looks tighter than the actual one-year cash runoff the company expects, so a reader who focuses only on working capital will miss part of the story. On the other hand, that does not mean deposits have stopped funding the business. Quite the opposite: the fact that most of the liability runs off slowly is exactly what made deposits a multi-year funding source in the first place. When the company pushes new residents toward rent, it is not only reducing a future liability. It is also slowing the renewal of that funding pool.
That is the paradox. The move is good for the economics of the house, but it weakens front-loaded funding before monthly rent is large enough to fill the gap. That is why 2025 shows three things at once that look contradictory but actually fit together: less deposit liability on the balance sheet, more security deposits, and cash dependence that has not disappeared yet.
Bottom Line
If this continuation is reduced to one sentence, it is this: Alben is replacing a CPI-linked liability and front-loaded funding with better-quality monthly income, but in 2025 cash had not yet completed that transition.
That is why the right reading is not “rent good, deposits bad,” but rent is economically cleaner while being more cash-expensive during the transition. As long as net deposit inflows are still large enough to support operating cash flow, the company is partly enjoying both worlds. But if the rent mix keeps rising before monthly collections grow enough, that funding source will weaken before the new model proves it can carry cash on its own.
So the next test is not the headline of “more units on rent.” The real test is harder: can operating cash flow stay positive without surplus net deposit inflows, and can the cash balance start rebuilding without leaning on front-loaded funding from new residents. Until that happens, the shift to rent remains strategically sound, but its cash cost is still visible.
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