Tsilo-Blue: How Much Is the Levinsky Ofer Option Really Worth?

The main article already argued that, at Tsilo-Blue, reported value and reachable value are not the same thing. This follow-up isolates the sharpest new example of that gap: the Levinsky Ofer deal. It is the transaction that injected a large bargain gain into 2025 earnings, added a financial asset for the second step, and created the impression that a meaningful part of the upside is already "there". The real question is what part of that is actually accessible value, and what part still remains option value on paper.

The first number to remember is not NIS 4.657, but NIS 1.992. That was the year-end forward value per share for the second step of the deal. Why not the quoted Levinsky Ofer share price? Because on June 1, 2026 Tsilo-Blue still has to pay NIS 2.71 per share for another 9,893,524 shares. The option is therefore measured on the remaining spread after the exercise price, not on the full share price.

That is also the wider point. By year-end the deal already had a heavy accounting footprint: a NIS 33.507 million bargain gain, a NIS 31.698 million equity-accounted investment, and a NIS 19.708 million financial asset for the second step. But what is accessible to shareholders today is not the simple sum of those numbers. It is filtered through another cash payment, through shared rather than unilateral control, and through a project portfolio in which a large part of the value still sits in permits, marketing, and financing milestones rather than in cash.

The Second Step Is Worth the Spread, Not the Whole Share

The correct way to read the second step is through the spread between Levinsky Ofer's share price and the price Tsilo-Blue still has to pay. At the end of 2025 the quoted Levinsky Ofer share price was NIS 4.657, the contractual purchase price remained NIS 2.71 per share, and the present value of that cost was NIS 2.665. That is why the year-end forward value per share was NIS 1.992, or NIS 19.708 million in total.

This is a material distinction. A quick reader might take the 9.893 million future shares and multiply them by the market price. That produces a much larger number, but it is not the number the report gives. The report explicitly measures the asset as the fair value of the forward contract, meaning the value of the right to buy at an attractive price, not the full ownership value of the shares still to be issued.

The same discipline matters for the 2025 profit read. A very large part of Levinsky Ofer's contribution entered immediately through the acquisition itself. The bargain gain was NIS 33.507 million, against annual net profit of NIS 37.050 million for the group. At the same time, from the acquisition date to year-end the investment moved down by NIS 1.809 million through the group's share in the associate's losses and amortization of fair-value increments. In other words, 2025 already recognized much of the accounting upside, but it did not yet prove that the platform quickly translates into accessible operating profit.

The one direct monetization channel disclosed in the report is also modest relative to the accounting numbers. From September 9, 2025 Tsilo-Blue entered into a direct management agreement with Levinsky Ofer for three years, at a 50% scope, in return for fixed monthly management fees of NIS 69,444 linked to CPI. That is real cash economics, but it is tiny next to the bargain gain and the recorded financial asset.

So the option is real, but it is not equivalent to cash in the bank. It is a combination of a financial right to buy the second step on favorable terms and a strategic option to deepen exposure to an urban-renewal platform. That is worth something. It is just not worth everything a superficial read may want to assign to it.

The Levinsky Ofer Portfolio Supports the Story, but Not on One Uniform Timeline

To understand how much of the option is actually reachable, the analysis has to move from the booked value to the project portfolio underneath it. Here the report is unusually helpful. It states that out of 8 Levinsky projects that pass the quantitative materiality thresholds for Tsilo-Blue, only 4 were classified as "very material" after the feasibility screen. The other 4 did not pass that filter, among other reasons because management expects building permits only beyond three years or because key preconditions are still missing.

That is an easy point to miss on a quick read. Not every Levinsky pipeline asset deserves the same weight. Part of the value sits in projects that are closer to execution, while another part is still an option on planning, signatures, and permits.

HaKishor is the clearest example of why strategic value and accessible value are not the same thing. On the one hand, it is one of the more mature projects in the portfolio, with commercial and logistics space, and Levinsky and Panamera also entered into a conditional agreement to sell about 6,700 square meters of commercial and storage space, basements, and about 304 parking spaces for total consideration of NIS 125 million. On the other hand, by the report date some of the conditions had not been met, the buyer retained a cancellation right, and no consideration had yet been paid. So even in the project that looks closest to monetizable value, the money is still not on the table.

Just as important, the two HaKishor parcels carried short-term bank debt of NIS 18.0 million and NIS 20.06 million at the end of 2025, with principal repayment dates on March 31, 2026. That does not by itself mean distress. It does mean that Tsilo-Blue's option through Levinsky Ofer also runs through financing and rollover mechanics, not only through planning tables.

Bnei Ayish shows the other side of the read. The planning picture is more advanced here, with the plan taking effect in January 2025 and a conditional building permit approved in January 2026. This already looks like a project that can begin moving in 2026. But even here the report states plainly that no specific project financing had yet been taken. So the more mature upside in the portfolio still had not become flowing cash.

So What Is the Option Actually Worth

The clean way to answer that question is to separate three layers.

The narrow accounting layer: the second step alone was worth about NIS 19.708 million at the end of 2025. That is the figure the report gives, and it already captures the fact that Tsilo-Blue still has to pay NIS 26.811 million on June 1, 2026. If the question is the financial option value in the narrow sense, this is the answer.

The broader strategic layer: the option is worth more than that, because after the second step Tsilo-Blue is expected to reach roughly 39% ownership in Levinsky Ofer, alongside shared control and a business-separation arrangement under which new urban-renewal opportunities are funneled to Levinsky Ofer through a right-of-first-refusal mechanism. That is no longer just a cheap share purchase. It is a deeper position in the platform itself.

The layer that is truly accessible to shareholders: here the reading has to become more conservative. That value is lower than the sum of the numbers already recognized in the report, because the company still has to spend cash to complete the second step, because control is shared rather than unilateral, and because a large part of the portfolio still sits behind 2026 and 2027 milestones. Even in the more mature projects, especially HaKishor and Bnei Ayish, value still has to pass through permits, financing, or remaining conditions.

Put differently, the Levinsky Ofer deal has already created value. That part is real. But most of the value created in 2025 was accounting value and option value, not value that already flows freely upward. After the balance sheet date the company added about NIS 55 million from the exercise of conditional shares, so the June 1, 2026 payment now looks less like a liquidity wall and more like a capital-allocation decision. Even so, from this point forward the case for higher value will need to come mainly from real project progress, not from another accounting step.

That is exactly how the option should be read: not as free cash, not as the full market value of the future shares, but as staged optionality on a platform with real potential, and with time, conditions, and financing still standing between the booked value and the reachable one.