Nimrodi Tower: How Much of the NOI Is Truly Recurring and How Much Cushion the Collateral Still Has
Nimrodi Tower has already become Hachsharat Hayishuv's core Israeli asset and a fairly comfortable collateral base for Series 25, but 2025 NOI was not all plain base rent. Out of NIS 78 million of NOI, NIS 44 million came from fit-out recovery payments, while the lease-up read moves across the evidence set from 85% to 94% to 99% signed.
The main article already argued that the group got a real NOI step-up in 2025, but that the cash and quality test was still open. This follow-up isolates the Israeli asset that now anchors that story, Nimrodi Tower, and asks two linked questions: how much of 2025 NOI is rent that should repeat on its own, and how much of the cushion behind Series 25 really rests on hard collateral.
The short answer is sharp: Nimrodi Tower is no longer a promise. There is a real asset here, valued at NIS 810.6 million, with a reported 57% LTV against Series 25 and an unusually strong anchor tenant. But anyone reading the NIS 78 million of 2025 NOI as fully “clean” NOI misses that a material share came from fit-out recovery payments, not only from plain base rent. That does not make the NOI artificial. It does mean its quality is different from ordinary recurring rent.
The second issue sits in the disclosure itself. The year-end asset table shows 85% occupancy. The valuation for the same cut-off date already shows 94%. The presentation moves to 99% signed, while also saying the remainder is still under negotiation. Even inside the valuation there is friction: one page says the lease for floors 50 and 51 was signed after the cut-off date and was therefore excluded from value, while another page says those same floors were valued under the income approach based on the signed lease. The direction is clear, the tower is filling up. The accounting and commercial bridge between the numbers is less clean.
That matters precisely because the collateral behind Series 25 looks comfortable. If NOI quality were straightforward, the discussion would end quickly. But when part of the value rests on fit-out recovery payments, on one dominant tenant, and on a lease-up bridge that is not presented in one reconciled line, the question is not whether there is an asset. The question is what exactly holds it up today, and what will have to replace that support over the next few years.
| Item | What was disclosed | Why it matters |
|---|---|---|
| Actual 2025 NOI | NIS 77.955 million | This is the headline number the market sees for the asset |
| Fit-out recovery payments inside NOI | NIS 44 million | A large share of NOI reflects contractual recovery of tenant-improvement spending, not only base rent |
| Year-end occupancy in the annual asset table | 85% | This is the formal year-end number in the annual report |
| Occupancy in the valuation as of 31/12/2025 | 94% on 48,046 sqm leased out of 51,314 sqm attributable to the company | The valuation already shows a more advanced lease-up picture at the same cut-off date |
| Signed contracts in the presentation | 99% | Clear progress, but already at a later disclosure layer |
| Nimrodi value versus Series 25 | NIS 810.6 million versus indexed principal of NIS 461.925 million | The collateral does not look tight, but it still matters what sits behind the value |
How Much of 2025 NOI Was Plain Base Rent
The first number that has to be unpacked is the NIS 77.955 million of actual 2025 NOI. The annual report explicitly says that Nimrodi Tower revenue and NOI include NIS 44 million of fit-out recovery payments, versus NIS 28 million in 2024 and NIS 9 million in 2023. In the report’s glossary, those payments are defined as fixed amounts paid under some lease agreements in addition to rent, for a defined period, against tenant-adjustment costs borne by the company.
That is a material distinction. These payments are not fake income. They are real contractual cash flows. But they are also not the same thing as ordinary base rent. They reflect a structure in which the company funded tenant fit-out and is getting that money back over time through the lease.
The chart does not say the “real” NOI is only NIS 34 million and that the rest should be ignored. It does say the headline NIS 78 million is built from two different layers: rent and building operations on one side, and staged recovery of tenant-improvement spending on the other. If the question is how much NOI will still be there after the fit-out recovery schedules run down, that distinction becomes central.
The valuation makes the point even more concrete. Inside the value of the leased space, the appraiser assigns NIS 133.3 million to the present value of fit-out recovery payments. At the same time, the valuation deducts NIS 31.742 million of remaining fit-out costs still to be spent by the company in leased areas. So even at the valuation level, Nimrodi is not just a pure rent story. It is partly built on a clear economic trade: the company paid to accelerate lease-up, and the payback is embedded in both NOI and value.
There is also a time dimension here. The valuation lays out fit-out recovery schedules that run to 2026 on some floors, to 2027, 2028, 2029, and even to 2030 and 2032 on others. For the rest of the tenants, the fit-out recovery period runs about 7.5 to 10 years. So this is not a one-off accounting line that vanishes tomorrow morning. It is also not perpetual base rent. It is a contractual stream with a visible runway that gradually burns off and will have to be replaced by more base rent, lease renewals, and full occupancy.
The message to investors is simple. Nimrodi’s NOI already rests on a working asset and on real lease contracts, but it is less clean than a single headline about “NIS 78 million of NOI” suggests. In 2025, a large part of the step-up came from recovering fit-out spending, not only from stabilized rent.
Occupancy Is Rising, but the Disclosure Does Not Reconcile to One Number
The second point of friction is how much of the tower was actually leased at year-end 2025. In the annual asset table, year-end occupancy is 85%. In the same annual package, the board report says that by the report approval date about 50,000 sqm out of roughly 51,000 sqm had been leased. The valuation for the same cut-off date, 31/12/2025, shows 48,046 sqm leased out of 51,314 sqm attributable to the company, or 94% occupancy. The presentation moves one step further to 99% signed, while adding that the remainder is still under negotiation on the way to 100%.
This chart is not a perfect apples-to-apples comparison. The annual report is talking about occupancy, the valuation uses company-attributable marketing area, and the presentation moves to signed contracts. But that is exactly why it matters. It shows the business direction is positive while also showing that investors are not given one clean disclosure bridge.
Even inside the valuation itself, there is an unresolved edge. On page 50, the appraiser says that after the cut-off date a lease was signed for floors 50 and 51, lifting occupancy to 99%, but that the lease was not included in the value because it was signed after 31/12/2025. On page 66 of the same valuation, the appraiser says that as of the valuation date an agreement had been signed with a government body for floors 50 and 51, and that the value of those floors was estimated under the income approach based on that signed lease, delayed until occupancy. That is not a minor wording issue. It shows an asset moving faster than the disclosure fully settles.
What can be said with confidence? Three things. First, Nimrodi went through a rapid lease-up process in and after 2025. Second, the tower is already very close to full occupancy, even if the exact end-point shifts across the documents. Third, any conservative model should work with more than one number and put more weight on rent that has already started paying than on contracts signed around the cut-off date.
Tenant Quality Is Strong, and So Is Tenant Concentration
One of Nimrodi’s biggest strengths is exactly what can hide its concentration. The State of Israel is a very strong, long-duration anchor tenant. According to the valuation, about 73% of the area attributable to the company is leased to the State of Israel under several lease agreements with a total lease term of 20 years including options. That area represents 78% of all leased space at the cut-off date. Another 6% is leased to a government company, and only about 21% combined belongs to other tenants, retail, and the gym area.
From a credit-quality standpoint, that is a clear positive. The appraiser applies a 5.5% cap rate to the State of Israel and the government-company leases, versus 6.5% to 7% for the other tenants. That is an indirect way of saying the tower’s value depends heavily on who the tenant is, not only on where the asset is located.
But concentration always cuts both ways. In this tower it supports value, and it also concentrates exposure. That does not mean the State of Israel is a problematic tenant. Quite the opposite. It means Nimrodi’s value and NOI quality depend to an unusual degree on one tenant family and one set of leases. That is a feature while it works. It is also why Nimrodi should not be read like an ordinary diversified office asset.
How Much Cushion Is Really Left for Series 25
If we stop the NOI-quality discussion for a moment and look only at the collateral, the picture is fairly comfortable. Nimrodi’s year-end value stands at NIS 810.6 million. Series 25’s indexed principal stands at NIS 461.925 million, and the bond’s market value at the balance-sheet date was NIS 462.987 million. The annual report uses those figures to show a 57% LTV, against an 85% covenant ceiling.
The chart adds another layer of comfort. Under the valuation sensitivity table, a 0.5% increase in the cap rate, with no income change, reduces the asset value to NIS 745.2 million. Even in that case, the gap above Series 25’s indexed principal is still about NIS 283 million. So the collateral does not look tight.
It is also worth remembering that the NIS 810.6 million value already comes after deducting NIS 31.742 million of remaining fit-out costs, and that it is not mainly built on empty space. In the valuation, NIS 732.5 million of value is attributed to leased space, while only NIS 42.7 million is attributed to vacant space. That matters because the bond cushion is not mainly resting on a future lease-up fantasy. It is tied to an asset that is already working.
Still, the cushion does not solve the quality question. Inside that NIS 732.5 million leased-space value sits the material fit-out recovery component described above. So the right reading of the collateral is two-layered: there is real cushion here, and it is probably more stable than a quick headline reader might fear. But part of the value supporting that cushion capitalizes recovery of tenant-improvement spending and unusually high concentration in the State of Israel, not only plain diversified office rent.
Bottom Line
Nimrodi Tower is a strong asset, a well-covered pledge, and clearly one of Hachsharat Hayishuv’s central Israeli collateral anchors today. So anyone asking whether Series 25 sits on a real cushion gets a positive answer. A value of NIS 810.6 million against NIS 461.925 million of indexed principal leaves meaningful room, and a reasonable cap-rate shock still does not erase it.
But anyone asking whether the NIS 78 million of 2025 NOI is already “normal” stabilized NOI gets a more qualified answer. Out of that number, NIS 44 million came from fit-out recovery payments. That is genuine contractual cash flow, but it also reflects the price the company paid to bring tenants in and the way that price is being paid back over time. At the same time, the occupancy story is moving in the right direction but is not presented as one continuous bridge between 85%, 94%, and 99% signed.
So Nimrodi has already solved an important part of the group’s question about whether there is an Israeli asset producing real value. It has not fully solved what portion of that value is plain base rent, what portion is recovery of fit-out capital, and what portion still rests on the fact that the State of Israel occupies most of the tower. Those are exactly the points that will determine whether Nimrodi’s NOI stays high as the fit-out schedules roll down, and whether Series 25’s cushion continues to rest on asset quality rather than on a year-end valuation that simply arrived at the right moment.
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