Wallenberg: When NIS 182 million of value starts to look like NOI

Wallenberg is the cleanest test case for the main article’s central bottleneck. There is no real debate here about whether the asset exists, whether the location is strong, or whether construction has progressed. By year-end 2025 YBOX was already carrying NIS 182 million of value for its share. By the report publication date of March 31, 2026, most construction work had been completed, marketing had started, and the project was in the stage of completing the conditions for occupancy approval. Yet as of that same publication date there were still no binding lease agreements, and the company also had no income or expense generated by the asset.

That is the gap. On paper, Wallenberg is already starting to look like an income-producing property. In the financial statements, it still does not behave like one. So the question is not whether the appraiser can produce a number. The question is when that number begins to be validated through contracts, tenants, and NOI.

That matters even more because 2025 was no longer a pure “finish the build” year. It was the year when construction moved closer to the background and commercialization moved to the front. Precisely at that point the appraisal turned lower: the asset value on a 100% basis fell to NIS 364 million from NIS 377 million in 2024, and the company recorded a NIS 32.0 million fair-value loss on a 100% basis, or roughly NIS 16.0 million on its share. Put differently, pressure started exactly when the asset was getting close to the point where it should begin producing income.

What is already sitting in the financials

From an accounting standpoint, Wallenberg already occupies a meaningful place on the balance sheet. The asset is located at 16 Raul Wallenberg Street in Tel Aviv and includes roughly 24 thousand square meters of office space, about 600 square meters of retail, and 228 parking spaces. YBOX holds 50% through Wallenberg Towers, and the asset is presented under proportional consolidation at 50%.

The picture across December 31, 2025 and the March 31, 2026 publication date is straightforward:

That table tells a sharp story: construction is no longer the main bottleneck. Commercialization is. Once most of the work has been completed and there are no major further upgrades planned, it becomes much harder to explain value through “a bit more execution.” What is missing now is the other side of income-producing real estate: contracts.

The chart captures the shift from 2024 into 2025. Through 2024, Wallenberg supported the story through rising appraisal value. In 2025 that flipped. The revaluation line no longer reinforced the thesis. It demanded proof that the building could actually lease up.

What the NIS 182 million value already assumes

Note 8 does not present the NIS 182 million as a value supported by existing contracts. Quite the opposite. It says the valuation was carried out using both a comparison approach and an income-capitalization approach because the asset is at an advanced stage. It also says the fair value includes the additional rights under Plan TA 3561. In other words, part of the value already reflects what the asset is expected to become, not just what it currently earns.

Under the income approach, the assumptions are explicit:

This is exactly where the analysis needs to slow down. When the appraisal assumes 100% occupancy, defined rent levels, and a 6.75% cap rate, but at the same time there are still no signed leases and no current income from the asset, the fair value is effectively a capitalized operating forecast, not a description of a completed commercial reality.

That is also where the title gets its meaning. If you apply the 6.75% cap rate used in the income approach to YBOX’s NIS 182 million share value, the implied stabilized annual NOI is roughly NIS 12.3 million for YBOX’s share. On a 100% basis that is about NIS 24.6 million. That is obviously not reported NOI. It is an analytical derivation from the appraisal assumptions. But that is precisely the point: the NIS 182 million number is already pricing future NOI that has not yet been proven in contracts.

The sensitivity chart matters too. It shows that the Wallenberg debate is no longer just “will it lease,” but also “at what yield and at what rent level.” Moving from 6.75% to 7.25% reduces the asset value under the income approach by about NIS 12.1 million on a 100% basis, or roughly NIS 6.1 million on YBOX’s share. When contracts are still missing, even a relatively modest change in assumptions starts to eat into value.

Where appraisal value meets debt

If Wallenberg were already leased and stabilized, it would be easier to look at the NIS 182 million mainly as a base for future NOI. But in the actual year-end 2025 setup, the financing layer cannot be separated from the value discussion. YBOX’s share of the project carries a short-term bank loan of NIS 116.043 million. The loan is part of the land-and-construction financing for the project, bears interest at prime plus 0.4%, and carried an effective rate of 6.4% at December 31, 2025.

That creates a fairly thin gap between the language of the appraiser and the language of financing. These are not the same metric, so a debt cost should not be compared mechanically with a property cap rate. But as an economic reading, it is still striking that the cap rate used in the income approach is 6.75% while the project loan’s effective rate was 6.4%. That is not a wide cushion. Before the first tenant is signed, before occupancy is stabilized, and before NOI is real, the spread between the appraisal assumption and the financing burden already looks tight.

The practical side is even sharper than the rate comparison. The loan’s original maturity was December 31, 2025. In December 2025 it was extended to January 26, 2026, and after the balance-sheet date it was extended again to June 30, 2026. So by the report publication date, Wallenberg was still relying on more time, not on a natural shift from development financing into financing that fits an operating asset.

That chart does not say the gap between the two is accessible to shareholders. Quite the opposite. It shows how much of the value already booked on the balance sheet is still trapped in an intermediate stage. Between NIS 182 million of fair value and NIS 116 million of short-term debt, there is not yet signed NOI. There is a marketed building sitting just before its commercialization test.

This is also where the wider liquidity picture matters. In the directors’ report, the company presents NIS 29.5 million of cash, an adjusted 12-month working-capital deficit of about NIS 269 million, and negative operating cash flow of about NIS 148 million. The board says there is no liquidity problem, but its argument relies in part on new bond issuance, financial assets available for sale, surplus release from other projects, possible equity release from Gat Rimon at lender discretion, and expected extension of short-term bank lines. That does not make Wallenberg less important. It makes Wallenberg more important: for the group’s financing story to improve, Wallenberg has to stop being appraisal without contracts.

What has to happen now

The next stage for Wallenberg is already clear. The company no longer has to prove that there is a building. It has to prove that there is a market for the building on terms that come reasonably close to what has already been put into the valuation.

The first test is commercial: do meaningful leases get signed, and at what pace? If meaningful contracts are signed at levels close to NIS 70 per square meter for office space and NIS 140 for retail, the valuation starts to gain a real anchor. If tenants arrive only at lower levels, or much more slowly, then the gap between appraisal and actual economics stops being a patience issue and becomes a valuation issue.

The second test is financing: can Wallenberg move from short extensions into a financing structure that fits an operating asset? As long as the maturity keeps being pushed out while the asset still does not produce income, each extension buys time but does not resolve the central question.

The third test is accounting-operational: when does Wallenberg begin to generate an income line that looks like real income-producing property rather than just revaluation noise. That sounds like a small wording change, but it is a major business-quality change. Appraisals can be revised. Contracted NOI, even if still partial, already changes the quality of the value.

That leads to the bottom line of this continuation. Wallenberg is already too large to be treated as a footnote, but it is still too early to call it an income engine. As of year-end 2025, the NIS 182 million value on YBOX’s share is mainly a capitalized promise of NOI, not NOI that already exists. Once contracts are signed, that promise can begin to look like a working asset. Until then, it remains a near-complete project asking investors to believe one step before the numbers begin to speak for themselves.