Gat Rimon: The project holding up the balance sheet and dictating 2026

The main article already argued that YBOX's real bottleneck is the gap between project value and accessible cash. This continuation isolates the place where that gap becomes most concentrated: Gat Rimon. This is the project that now carries the full permit, the bank support agreement, the office-sale condition, the hotel component, the pledged-surplus structure, and the direct link into Series V bond pricing.

The short version is clear: Gat Rimon is already large enough to support the bullish side of the YBOX story, but it is still not resolved enough to release the balance sheet. The bank gave the company until April 30, 2026 to satisfy the conditions for the financing facilities, yet the bond market did not wait: because the full permit was still not in hand by January 30, 2026, Series V interest stepped up. At the same time, the roughly NIS 292 million projected surplus is not NIS 292 million of near-term flexibility. Part of it depends on refinancing the hotel and office components, part of it is only the gap between value and financing, and all of it still depends on execution pace, sales pace, and lender discretion.

That chart captures the shape of the bottleneck. Apartments are already through the gate. Offices and the full permit are not. Gat Rimon is therefore no longer a generic story of “more sales are needed.” It has become a much narrower and more precise project-level test.

The extension bought time, but did not stop debt cost from rising

At the end of December 2024, Gat Rimon signed a support agreement that provided up to NIS 350 million of cash credit and up to NIS 473 million of guarantees and sale-law support. By year-end 2025, about NIS 239.5 million had already been drawn from the cash facility, and roughly NIS 19 million had been utilized from the guarantee framework. This is not a pre-financing project anymore. The financing load is already sitting inside the balance sheet.

But that is exactly where the distinction between “financing exists” and “financing is fully activated” becomes important. The agreement required, among other things, commencement of the project under a full permit, sale of 25% of the apartments for at least NIS 95 million before VAT, and sale of 30% of the office area for at least NIS 78.5 million before VAT. On January 14, 2026, the company signed an amendment postponing the deadline to April 30, 2026 because the full permit had still not been received and the office-sale milestone had still not been met.

That means the extension was granted precisely on the two unresolved fronts: planning and office commercialization. Apartments were no longer the problem. By the report publication date the company had already reported sales of about 38% of the apartments for roughly NIS 142 million before VAT. Offices, however, stood at only about 22% and roughly NIS 52 million before VAT. The company says it expects the conditions to be satisfied by April 30, 2026, but at the report date that was still an expectation rather than delivery.

The sharper point is that the bank bought time, while Series V had already moved to a more expensive track. Series V was issued in December 2024 with a fixed annual coupon of 7.11%. The indenture says that if a full permit for Gat Rimon under the current zoning plan is not obtained by January 30, 2026, the coupon steps up by 0.3%. That is exactly what happened. In the February 1, 2026 immediate report, the company disclosed that the annual rate for future periods rises to 7.41%, while the June 2026 coupon payment will reflect a weighted semiannual rate of 3.65071%.

That is not a cosmetic detail. The same project received more time from the bank, but it already lost price in the public debt market. In other words, the permit at Gat Rimon is no longer only a trigger for construction finance. It has already become a mechanism that shapes YBOX's public cost of debt.

There is another, subtler layer inside the covenant structure. At year-end 2025 the company's equity-to-balance ratio stood at about 28%, against a 24% floor in Series V. But the same indenture also says that after publication of a new zoning plan relating to Gat Rimon, that floor falls to 23%. So Gat Rimon is not only supposed to create value. Its planning progress is also supposed to buy another point of covenant room. That matters, but it is still room created by planning progress, not by cash already received.

The schedule has also already moved out. The expected completion date for construction was pushed to the fourth quarter of 2029, and the company explicitly ties that delay to planning and permitting delays. Anyone reading the January 2026 amendment as a technical deferral is missing the sequence. It sits inside a broader timeline of slippage that keeps extending the carrying period of a project that is supposed to create flexibility rather than just more financing drag.

NIS 292 million of projected surplus, but the shorter path is NIS 192 million

At first glance, Gat Rimon looks like the project that gives YBOX an obvious cushion. In the project disclosure the company shows roughly NIS 144 million of expected gross profit, about NIS 90 million of expected economic profit, around NIS 162 million of expected surplus from the development component, and about NIS 130 million from the income-producing component, for a total of about NIS 292 million of projected surplus.

This is exactly where the read needs to become more careful. In the very next surplus-reconciliation table, the company breaks that number into two different routes. In the first route, where the income-producing component remains with the company, total projected cash surplus is about NIS 192 million. In the second route, where the whole project is viewed as if fully sold, the number reaches NIS 292 million. The NIS 100 million gap is not cash already on the way. The company itself defines it as the difference between the value of the income-producing component and the amount of financing it expects to obtain against those assets.

That chart matters because it sorts the quality of the surplus. The number that sits closer to a cash route is about NIS 192 million, and even that still rests on assumptions. The extra NIS 100 million is value, not financing.

What are those assumptions? On the hotel side, the company assumes refinancing of about NIS 163 million against the 50% hotel portion that remains in its hands. On the office side, it assumes refinancing of about NIS 137 million against the 70% office area expected to remain in its hands. In both cases the company is assuming a roughly 75% financing ratio based on what it describes as market practice for similar assets and whatever market conditions prevail when refinancing is sought.

That means the project depends on two different capital-market tests at once. First, it needs to sell 30% of the office area in order to unlock the financing framework. Later, it assumes the remaining 70% of the office area can be retained and refinanced. This is no longer just a residential-sales story. It is a double dependency on the office market: first to open the construction-finance gate, and then to support the refinance story.

The income-producing component itself is also still far from behaving like a live asset. The company includes in it half of the hotel area, 70% of the office area, and the affordable-housing component. At year-end 2025 that component carried a fair value of NIS 160.6 million, against a book value of NIS 94.5 million. Yet the company also says there is no interim NOI from interim uses, and that it has not yet begun marketing the income-producing component. So a large part of that surplus currently sits in value, not in operating cash flow.

The filing goes even further and says that for purposes of releasing surplus, the bank is expected to view the project as one unified project that includes both the development and income-producing components. In addition, surplus release is usually conditioned on execution pace, sales pace, and in any case remains subject to the sole discretion of the lender. At the report publication date, there was no cash balance at all in the pledged surplus accounts.

Put more simply, Gat Rimon holds a lot of value, but that value still does not sit in a place where common shareholders can count it like cash already on the way.

Why Gat Rimon is holding up the 2026 balance-sheet story

That distinction matters because of YBOX's liquidity map, not just because of project quality. At year-end 2025 the company had NIS 29.5 million of cash and cash equivalents, down from NIS 74.4 million a year earlier. Operating cash flow was negative NIS 148 million, and in its 12-month adjusted liquidity check the company itself shows an adjusted deficit of about NIS 269 million.

Against that backdrop, management lays out the funding sources it is relying on. One of them is the release of roughly NIS 26 million of excess equity from Gat Rimon during the first half of 2026, as the project enters the bank-support stage. But here again, the caveat matters as much as the number. The company explicitly says that release of the excess equity depends on lender discretion and will be carried out through utilization of the project facility.

The bondholder disclosure adds another layer of caution. The company describes release mechanisms for excess equity and surplus from the pledged accounts only subject to debt-to-collateral tests, and under some Series V release paths also subject to a special approval by Series V holders and absence of any acceleration trigger. So even when Gat Rimon appears inside management's liquidity plan, it is still not a source that can simply be written down and assumed. It has to pass a chain of permissions and milestones.

That is exactly why Gat Rimon is the project holding up the balance sheet. If it clears the full permit, closes the office-sale gap, and fully activates the support agreement, it can begin to move from being a cost center to being a headroom generator. The company estimates that if the Beit Romano Gat Rimon plan is approved, project surplus could increase by about NIS 220 million to around NIS 500 million. But all of that upside sits one level above the more immediate 2026 test: solving the permit-and-financing gates without another extension of the bridge period.

That is the core of this continuation: Gat Rimon is not just YBOX's most important project. It is the project that physically connects appraisal, permit, support finance, bonds, hotel economics, office commercialization, and pledged surplus. As long as that chain is not closed, it is very hard to argue that the balance sheet is already “working.” If it does close, the same project can improve the quality of the 2026 story faster than any other single asset in the company.

So the right question from here is not only whether Gat Rimon contains value. The tables already show that it does. The real question is whether the next 12 months will turn that value into available financing, lower debt cost, and real balance-sheet breathing room. Until that happens, Gat Rimon is less a free cushion and more the project carrying the full weight of the balance sheet on its shoulders.