Hiron: How Much of Equity Really Depends on the Cap Rate
Hiron reports NIS 1.127 billion of equity, but the filing itself shows that a 0.5% move in cap rate would cut property value by about NIS 75 million. Most of that sensitivity sits in a handful of large assets, so the real question is not whether the balance sheet breaks, but how much of 2025’s comfort still depends on appraisal rather than rent and cash.
The main article already established that Hiron looks much stronger on the balance sheet than in the cash box. This continuation isolates the question that sat underneath that read: when year-end equity stands at NIS 1.127 billion, how much of that comfort rests on current NOI, and how much rests on the cap rates embedded in the property appraisals.
The short answer is fairly sharp: the filing itself shows that a 0.5% move in cap rate would reduce investment-property value by about NIS 75 million or increase it by about NIS 88 million. On a gross basis, that equals roughly 6.7% to 7.8% of year-end equity. More importantly, the NIS 75 million downside is slightly larger than the entire year-on-year increase in equity in 2025, which was NIS 72.5 million.
But the distinction matters. The company does not disclose a net-of-tax equity sensitivity. It discloses a property-value sensitivity. That is a real difference, because in the same year long-term liabilities rose partly because deferred taxes were booked on the increase in investment-property value. So the question here is not how much equity gets erased one-for-one. The question is how much of the 2025 improvement sits in an appraisal layer that can move even if underlying NOI does not change much.
That chart is the core of the issue. The 2025 fair-value gain was NIS 56.2 million. The increase in equity was NIS 72.5 million. Against that, a half-point move in cap rate already shifts NIS 75 million to NIS 88 million. So the question is not whether appraisal helped the year a little. The real question is whether the extra comfort created in 2025 was large enough to survive a fairly ordinary move in discounting assumptions. It was not, at least not in full.
Where The Sensitivity Actually Sits
This is the more important point than the headline number. The sensitivity is not spread across dozens of tiny assets. It is concentrated in a few very large ones. Just four properties, Haboesem in Ashdod, Beit Teper at 5 Tel Givorim in Tel Aviv, HaOman 16 in Ashdod, and the Teva Medical complex at 8 HaOrgim corner HaYahalomim in Ashdod, add up to NIS 812.2 million, almost 60% of Hiron’s investment-property value.
| Asset | End-2025 value | Key cap-rate assumptions | Sensitivity to +0.5% | Sensitivity to -0.5% |
|---|---|---|---|---|
| Haboesem, Ashdod | NIS 358.2 million | 6.5% on leased assets, 7.5% on vacant space | NIS 25.5 million- | NIS 29.9 million+ |
| Beit Teper, 5 Tel Givorim | NIS 167.9 million | 6.70% on leased space, 6.92% on vacant space | NIS 11.2 million- | NIS 12.8 million+ |
| HaOman 16, Ashdod | NIS 137.1 million | 6.20% to 6.75% | NIS 9.8 million- | NIS 11.4 million+ |
| Teva Medical, 8 HaOrgim | NIS 149.0 million | 5.75% to 6.25% on built space, 5.50% weighted on deferred land/interim use | NIS 7.0 million- | NIS 7.0 million+ |
| Total for the four assets | NIS 812.2 million | - | NIS 53.5 million- | NIS 61.1 million+ |
Those charts sharpen two issues: concentration and quality. On concentration, these four assets already explain about 71% of the downside shown in the filing and about 69% of the upside. In other words, most of Hiron’s portfolio-level sensitivity is not diffuse background noise. It sits in a small set of assets that the whole balance-sheet read leans on.
On quality, not every asset depends on the same kind of assumption layer. Haboesem and Beit Teper are valued mainly through income capitalization on leased space. That is still appraisal value, but appraisal value supported by current NOI. The Teva Medical complex is a bit different. The appraisal itself also uses a 5.5% weighted rate for deferred land value and interim use. So part of that NIS 149 million is not just a multiple on today’s rent roll. It is a blend of current use and delayed land value. That is a different kind of sensitivity.
There is one more point that is easy to miss. The real-estate activity breakdown shows that 62% of property value and 69% of NOI come from storage and logistics, while 75% of property value sits in the south of Israel. Put differently, Hiron’s valuation sensitivity is not mainly a side issue in one small retail asset. It sits inside the core logistics platform.
What Still Holds The Equity Up Without The Appraisal Tailwind
If the analysis stopped there, it would become too one-sided. Hiron is not a company whose equity rests only on a whimsical cap-rate assumption. The same note also gives harder anchors. Fixed contracted rent stands at NIS 77.0 million for up to one year, NIS 55.9 million for the following year, and NIS 42.8 million beyond that. So there is a real signed rent base under the portfolio even without another favorable valuation move.
That is the distinction worth preserving. The appraisal layer is sensitive, but it is not floating in the air. Hiron’s main assets are working assets, most are leased, and most of the value sits in logistics and storage rather than speculative development. So a 0.5% rise in cap rate is not a scenario that wipes out equity. It is a scenario that reminds investors that part of the 2025 buffer was a market-assumption buffer, not only an operating buffer.
That is why the conclusion here should be precise rather than dramatic. Reading Hiron only through the appraisal would understate the rent roll, occupancy, and logistics platform underneath it. Reading Hiron only through NOI would miss that the layer that really improved the 2025 balance-sheet impression was the valuation layer. Both are true at the same time.
So How Much of Equity Really Depends on the Cap Rate
The careful answer is this: on a gross basis, a NIS 75 million to NIS 88 million value layer, roughly 7% to 8% of year-end equity, depends directly on a cap-rate assumption moving by only 0.5%. The filing does not let that be translated one-for-one into a net-after-tax equity hit, and it also hints why through the increase in deferred taxes. But it does let one say something fairly direct: the additional comfort Hiron gained in 2025 from the balance sheet is not the same thing as cash, and it is not insulated from a relatively small move in cap rates.
So the right read is not that Hiron’s equity is somehow unreal. That would be too simplistic. The right read is that equity rests on real assets, but the improvement in 2025 rested to a meaningful degree on a valuation environment that supported those appraisals. If 2026 produces more NOI and more real cushion through rent rather than through another favorable rate assumption, equity will look stronger on a harder standard. If not, anyone reading Hiron only through reported equity will continue to see a more comfortable balance sheet than the underlying cash generation actually delivers.
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