HOPE TOWN after completion: what still stands between reported value and a real income asset
HOPE TOWN is completed and about 60% of the project area was under signed leases by the end of 2025, yet actual yield was only 1.7% versus 4.1% adjusted. The March 2026 financing amendment pushed out maturity and cut the spread, but it also underlined that the project still has to move from construction-style funding into long-term income-property financing.
The main article argued that finishing HOPE TOWN did not close the story. It merely moved the story from construction into leasing and refinancing. This follow-up isolates that exact point. The issue here is not whether the project has value. By year-end 2025, Shlomo Real Estate already carried its share of HOPE TOWN at NIS 334 million. The real question is how much of that value already behaves like a true income asset, and how much still sits inside a transition layer of lease-up, time and financing.
The company's own disclosure splits the picture in two. On one hand, the project received its occupancy certificate in January 2025, signed leases covered about 60% of the project area by year-end, and the company recorded NIS 6.903 million of rental income and NIS 5.676 million of actual NOI for its share. On the other hand, actual yield was only 1.7%, while adjusted yield was already 4.1%. That is not a footnote. It is the filing's own way of saying that the project is physically complete, but not yet economically stabilized.
The Value Is On The Page, The Income Asset Is Not There Yet
The right way to read HOPE TOWN at the end of 2025 is to separate the value layer from the financing layer. The property metrics in the material-asset section are presented at the company's 50% share, while the project-facility disclosure is presented explicitly on a 100% project basis. If those layers are blended together, the same asset can look as if it is both fully valued and already financed like a stabilized property. That is not the current reality.
| Layer | Year-end 2025 figure | Presentation basis | Why it matters |
|---|---|---|---|
| Fair value | NIS 334 million | Company share, 50% | The value is already recorded |
| Rental income | NIS 6.903 million | Company share, 50% | Cash generation only started |
| Actual NOI | NIS 5.676 million | Company share, 50% | This is the current earnings base |
| Actual yield | 1.7% | Company share, 50% | Still far from a stabilized asset |
| Adjusted yield | 4.1% | Company share, 50% | Reflects a more mature income picture |
| Yield on cost | 4.3% | Company share, 50% | Already close to adjusted yield |
| Period-end occupancy | About 60% | Project level | Lease-up has advanced, but is not finished |
| Bank facility | Up to NIS 490 million, with about NIS 452 million drawn | Project level, 100% | The financing layer is still heavy and project-specific |
The chart shows what did improve. Fair value rose steadily from NIS 227.447 million in 2023 to NIS 307.5 million in 2024 and NIS 334 million in 2025, while occupancy moved from about 30% to about 48% and then to about 60%. So the project did make real progress. But progress is not the same thing as stabilization. If an asset carried at NIS 334 million is still producing only a 1.7% actual yield, it is not there yet.
What matters most is not only the gap between 1.7% and 4.1%, but also how close adjusted yield already is to the 4.3% yield on cost. That is an inference from the filing, not another reported figure: the recorded value is already leaning closer to a more mature rent profile than to the NOI that actually showed up in 2025. Put differently, the value line is looking ahead faster than the income line.
That point matters because leasing did begin in a real way. Average monthly rent was NIS 81.5 per square meter, and occupancy reached a level that looks respectable for a project that had only just received its occupancy certificate. But the actual-yield figure says the hard part is not finished. HOPE TOWN is no longer a construction site, yet it is not a NOI anchor that can by itself make the reported value feel fully accessible.
Even After Completion, The Debt Still Looks Transitional
This is where the financing note becomes sharper than the headline. Note 11(b)(3) describes the bank facility signed in February 2020 to fund the project developed with a Rogovin-group partner. The facility size stands at up to NIS 490 million on a 100% basis, of which about NIS 452 million had been drawn by year-end 2025. At that point the loan carried interest of prime plus a margin in the 0.5% to 1% range, and its final maturity was no later than March 31, 2026.
The implication is straightforward: even after the January 2025 occupancy certificate, the project entered year-end with a financing layer that was due only three months after the balance-sheet date. That is not how a stabilized income property is normally financed. It is how a recently completed project looks when it still needs to prove that it can move into a longer and calmer debt structure.
Then came the March 2026 amendment. On March 18, 2026 the company and its partner signed another amendment under which the final maturity was pushed out to March 31, 2027 and the interest rate was reduced to prime plus a margin in the 0% to 0.5% range.
| Term | End-2025 position | After the March 18, 2026 amendment |
|---|---|---|
| Final maturity | March 31, 2026 | March 31, 2027 |
| Interest | Prime + 0.5% to 1% | Prime + 0% to 0.5% |
This is a real improvement. The bank did not only grant more time, it also lowered the spread. But it matters what exactly improved: the terms of the transition period improved, not the fact that there is still a transition period. The company itself does not frame the amendment as the project's end state. It frames it as another step along the way.
Note 11(b)(3) also makes clear how tight the facility structure still is. The bank holds a first-ranking charge over the land rights, the project and the income generated from it. In addition, the company and its partner committed a total equity layer of NIS 188 million, including the land component, and that equity had already been fully invested by the reporting date. In other words, the equity cushion is already in. The test now shifts to whether the project can generate enough NOI to refinance the debt layer.
The more sensitive point is the liability structure. Under the note, a breach by one partner is treated as a breach by both, gives the bank the right to accelerate the full debt, and allows it to enforce the collateral over the whole project. The company and the partner are jointly and severally liable to the bank, even though the company says it would not have to repay amounts above 60% of the financing. So HOPE TOWN is not only a leasing story. It is also a shared-governance and shared-financing-risk story.
The Extension Is Not The Refinance The Company Actually Needs
The most revealing line in this continuation sits in the liquidity discussion. The board explains that the company's negative working capital, NIS 664.658 million on a consolidated basis, reflects among other things the short-term presentation of the HOPE TOWN facility. But the more important point comes one line later: among the core assumptions supporting the board's conclusion that there is no reasonable liquidity concern, the company explicitly includes the conversion of the HOPE TOWN bank facility into long-term income-property financing secured by the project.
That wording matters. If the company itself needs that conversion inside its solvency assumptions, then the March 2026 amendment is not the destination. It is a station on the route. HOPE TOWN is not yet being judged as an asset that has completed the development stage and entered the normal financing rhythm of stabilized real estate. It is still being judged as an asset that needs to earn that transition.
In that sense, the gap between reported value and a real income asset is not only the gap between 1.7% and 4.1%. It is the gap between two different questions:
- Is there a defensible accounting value for the project.
- Is the NOI already produced, together with the lease-up still ahead, enough to persuade the funding side to move from project finance into long-term income-property debt.
The first question already has a fairly clear answer. The second one does not.
What Has To Happen Next
The first marker: occupancy has to move above about 60%, not only to add rent but to close the gap between actual yield and adjusted yield. As long as the filing has to carry 1.7% actual and 4.1% adjusted side by side, the project is still speaking in 2 economic languages.
The second marker: the March 2026 amendment has to turn into long-term financing, not another postponement. As long as the achievement is more time and a lower spread, HOPE TOWN improves short-term liquidity but does not yet truly free it.
The third marker: the partnership structure has to stay quiet. Because a breach by one partner counts as a breach by both, HOPE TOWN's path toward becoming a stable income asset depends not only on the next tenant but also on the stable functioning of the borrower-partner structure in front of the bank.
Bottom Line
HOPE TOWN has already covered real ground. It was completed, partly leased, started generating rent, and in March 2026 it received both a better spread and another year of time. But that still does not make it automatically a mature income asset.
At the end of 2025 the company carried its share of the project at NIS 334 million, against actual NOI of NIS 5.676 million and an actual yield of 1.7%. At the same time, the company's own liquidity conclusion relies on converting the HOPE TOWN facility into long-term income-property financing. That leads to the central continuation thesis: the value is already recorded, but for it to become truly accessible value the project has to move not only from completion into leasing, but also from project finance into durable income-property debt.
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