My Town: What Kiryat Malachi Is Actually Worth to the Company After the Partner, Financing, and Distribution Waterfall
Kiryat Malachi looks like a major value engine, with projected gross profit of NIS 126.2 million and projected company surplus of NIS 71.4 million. But between that number and real cash for My Town sit a roughly 33% effective project stake, a financing package that was still not fully opened, and a distribution waterfall that pushes actual surplus release to the far end of the project.
The main article already argued that Kiryat Malachi is the option that could materially reshape My Town's story, but also that it is not yet a clean cash layer. This follow-up isolates only the project math. Not whether the project is large, but what part of that size really belongs to the company, what has actually been financed, and what can only be released after the partner, the lenders, and the waterfall.
Three numbers jump out on a first read: about NIS 460.5 million of projected revenue, about NIS 126.2 million of projected gross profit, and NIS 71.4 million of projected surplus for the company. The problem is that none of those numbers stands on its own. NIS 126.2 million is a 100%-basis project number. The roughly 33% stake is My Town's effective legal share, but not the final economic split. And NIS 71.4 million is already much closer to shareholder economics, yet it still sits behind financing, conditions precedent, and a release timetable that currently points only to the first quarter of 2030.
That is exactly why Kiryat Malachi deserves its own continuation. If one stops at 33%, one misses that the waterfall gives My Town more than one third of the projected withdrawable surplus. If one stops at NIS 71.4 million, one misses that this is still not near cash, and that as of the report date the project financing itself had not yet fully opened.
What the big headline number hides
This chart is the core of the right reading. The Zabotinsky Kiryat Malachi project is presented with projected revenue of NIS 460.491 million, projected cost of NIS 334.316 million, and projected gross profit of NIS 126.175 million. But in the same disclosure package the company already shows that the more relevant economic number is lower: NIS 107.353 million of projected economic profit, after NIS 18.822 million of measurement differences between accounting gross profit and the real economics, mainly layers such as financing, marketing, and selling costs.
From there one has to go down another layer. My Town's effective share in the project is about 33%, and the rights are held through a wholly owned subsidiary, while Ziv Israel holds about 67% of the project rights. If one stops there, the instinctive conclusion is that My Town should capture only about one third of the economics. That is only a partial reading. The surplus distribution mechanism is not a simple pro rata split, so the end result is not one third of the headline line.
In practice, the company presents a separate bridge titled projected gross profit and adjustment to surplus. There it already moves from project language to the language that actually matters for shareholders: NIS 127.353 million of projected withdrawable surplus before partner adjustment, and after a NIS 55.943 million partner adjustment, the company's projected share of withdrawable surplus stands at NIS 71.410 million. In other words, under the agreed waterfall, My Town is expected to capture roughly 56% of the projected withdrawable surplus, far above its 33% legal stake.
That is the sharp point. Kiryat Malachi is not a one-third-of-the-project story, but it is also not a NIS 126 million number falling straight into the company's cash box. It sits between those two layers. On the one hand, the waterfall improves the company's economics versus the legal stake. On the other hand, only NIS 71.4 million is currently presented as the company's share of expected withdrawable surplus, and even that is deferred to the far end of the project.
NIS 732 million is not NIS 732 million of cash
The financing layer also looks bigger at first glance than it really is for the listed company. On November 26, 2025, the project company signed a financing agreement with a local non-bank lender and a local insurer, and the headline number is a total framework of up to about NIS 732 million. But inside that number only NIS 180 million is actual cash credit: NIS 140 million of regular cash credit and another NIS 40 million for equity completion. The rest is a NIS 460 million insurance-policy framework and resident guarantees of up to about NIS 92 million.
So NIS 732 million is a project-lending, insurance, and guarantee envelope, not NIS 732 million of debt that becomes available cash for My Town. That distinction matters. More importantly, as of December 31, 2025, the dedicated specific-financing table still showed zero short-term loan balance and zero long-term loan balance. Even the NIS 140 million cash-credit line was presented as undrawn.
The report also makes clear that the financing friction did not disappear on signing day. The borrower had already provided the equity needed for the land stage, but as of the report date not all conditions precedent for opening the accompaniment had yet been satisfied. To reach voucher-book delivery and issuance of resident guarantees, the project faces a higher gate: equity of 15% of project costs and no less than about NIS 60 million, of which about NIS 20 million, including land-stage equity, must come from the borrower's own sources rather than through the equity-completion layer. In parallel, there must also be early sales of 21.5% of the apartment inventory, meaning 33 apartments, and or part of the commercial area, for at least NIS 64 million.
This creates a very important distinction. There is a signed financing agreement, but there is not yet a fully opened financing mechanism. By year-end only 2 apartments had been sold. By late March 2026 the cumulative number had already reached 18 apartments, and at that point the materials also showed an 11% marketing rate, so there was real progress. But even after that improvement, if one looks only at the apartment side, the project still remained below the 33-apartment threshold for voucher-book delivery, unless part of the condition is met through the commercial component.
There is another point. This is not clean ring-fenced project finance in the pure sense. The table explicitly says the financing is not non-recourse, and an unlimited guarantee was also provided by the company. So even if the financing sits at the project level, the risk does not stop entirely inside the project box.
The waterfall: the company does not stay with one third, but it also does not pull cash early
| Stage | Where the money goes | What it means |
|---|---|---|
| Current liabilities to third parties | Before everyone else | Surpluses do not start counting before current project obligations are settled |
| Shareholder loans, excluding the first shareholder loan | Before profit split | The funding layer that the company puts into the project ranks ahead of entrepreneurial profit |
| First NIS 40 million of approved distributable surplus | To Ziv Israel | Explicitly earmarked to repay the partner's first shareholder loan |
| Then NIS 40 million to the company, NIS 20 million to the partner, NIS 10 million to the company, NIS 40 million to the partner | A staged split, not pro rata | The partnership does not distribute on a simple 33% and 67% basis at this stage |
| Remaining distributable profits | 45% to the company, 55% to the partner | Even at the tail end of the waterfall, the company does not move to an equal split |
This is the part that is easiest to miss in Kiryat Malachi. The agreement with Ziv Israel does not say that My Town will simply receive one third of every surplus that comes out of the project. It sets a priority queue. First third parties. Then shareholder loans, excluding the first shareholder loan. Then the first NIS 40 million of approved distributable surplus goes to Ziv Israel, subject to being used to repay the first shareholder loan. Only then does the staged split begin: NIS 40 million to the company, NIS 20 million to Ziv Israel, NIS 10 million to the company, NIS 40 million to Ziv Israel, and only after that 45% to the company and 55% to the partner.
That is exactly why the end result in the surplus table does not look like 33% of the top line. On the one hand, the waterfall benefits My Town more than a simple one-third legal holding. On the other hand, it also explains why the NIS 71.4 million is not a near-cash layer sitting just around the corner. The partner stands ahead of it, project obligations stand ahead of it, and lender approval for surplus release also stands ahead of it.
The balance-sheet connection matters. At the end of 2025, loans given stood at NIS 12.407 million, and the company explains that the increase was driven by an additional loan to the partner in the Kiryat Malachi project. So the waterfall is not a distant theory. It already sits on top of an existing interparty credit layer, which is why early future surplus will not flow to My Town friction-free.
One more detail is crucial: timing. The company does not present the NIS 71.4 million as a surplus stream expected to start soon. It presents it as the company's share of projected withdrawable surplus, under the profit-distribution key, with an expected surplus-withdrawal date in the first quarter of 2030. So even under management's own working case, this is an end-of-project number, not a liquidity source for 2026 or 2027.
What still has to happen before this becomes real cash
This chart sharpens why Kiryat Malachi is still not an asset of near surplus. At the end of 2025 only 2 apartments had been sold. By late March 2026 that rose to 18. That is an important improvement, and the average price per square meter in contracts signed from the start of 2026 rose to NIS 15,896 versus NIS 15,161 in 2025 contracts. But from the perspective of opening the voucher and guarantee track, that pace still does not solve the financing gate on its own if the company relies only on apartment sales.
In other words, Kiryat Malachi has already moved beyond the idea stage. It has a full building permit from November 2024, a financing agreement from November 2025, a planned move into works in the first half of 2026, and better sales momentum in early 2026. But it still has not passed the test that turns a large project on paper into a genuinely open financing and collection route. This is a year of opening pipes, not a year of releasing surplus.
That is exactly where the gap between the project headline and shareholder economics sits. The disclosure that shows NIS 71.4 million of projected surplus is not wrong, but it is far from the whole story. For that number to become real value for My Town, a fairly long sequence still has to happen: the conditions precedent must be completed, the required self-equity for voucher books and guarantees must be provided, sales must reach a lender-sufficient pace, construction must be executed, budget and profitability must hold, project obligations must be repaid, and only then can surplus be released under the waterfall.
The bottom line
Kiryat Malachi can absolutely change My Town, but not in the simple way that a gross-profit headline or a financing-package headline might suggest. The right number to watch now is not NIS 126.2 million of project gross profit, but NIS 71.4 million of projected company share of withdrawable surplus. Even that number still has to be read correctly: it sits after a one-third effective legal stake, after a distribution mechanism that improves the company's economics versus one third but not quickly, and after a financing package that had still not fully opened.
So at this stage Kiryat Malachi is less a cash layer and more a leveraged execution option. If 2026 closes the financing, sales, and execution gates, the project can gradually move from a story engine to a value engine. If one of those stages gets stuck, the NIS 71.4 million will remain an end-of-route number, not a liquidity layer already sitting inside My Town.
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