Shoham vs. Kfar Saba: When Kardan’s Data Centers Move from Valuation to Cash

Two Data Centers, Two Different Clocks

The main article already identified the core point correctly: value at Kardan Israel is being built in data centers, but the real test is when that value turns into cash you can actually feel. This follow-up isolates only that question, and only inside the data-center activity. Not every megawatt is worth the same thing, and not every revaluation sits at the same distance from the cash box.

The key gap is between Kfar Saba and Shoham. Kfar Saba already has the first layer of translation from theoretical value into a cash structure: a 10-year lease with Serverz, a first hall completed in 2025, initial occupancy by telecom and financial customers, and after the balance-sheet date a Form 4 for the whole project in March 2026, exactly the condition set for the lease to become effective. Shoham, by contrast, still sits at a different stage: a final building permit received in January 2025, the first two data centers under construction on about 60% of the land, a second-half 2026 target for operations, but not a single signed lease as of the report date.

This is not a technical distinction. It is an economic one. Kfar Saba has already started to build a cash floor at the property level, even if it is still far from full occupancy and from free cash. Shoham is already creating value in the accounts, but as of the report date it still depends mainly on construction progress, appraisal framing, and the ability to turn customer discussions into contracts that lock in cash flow.

That chart is intentionally blunt. It does not say that Kfar Saba has already passed the full cash test, and it does not say that NIS 6.7 million captures the full economics of the facility. It does say something simple: Kfar Saba already has a contract connecting the asset to revenue, while Shoham does not.

Kfar Saba: The Cash Floor Is Starting to Appear

At Kfar Saba, management has already moved into operating language. In the January presentation, Serverz was described as active. There is real evidence behind that framing: an underground 12,500 square-meter data center, 22.2 MVA of power allocation at TIER3 level, and planned capacity of about 16 MW IT. The January presentation framed the total buildout at about NIS 300 million. In the annual report, the estimated build cost already stood at about NIS 410 million excluding financing costs, with the first hall alone already completed in 2025 at a cost of roughly NIS 90 million.

The more important point is the mechanism by which the project starts to become cash. In March 2025, the project owners signed a lease with Serverz for 10 years, with two automatic extension periods and annual rent of about NIS 6.7 million. This is still not the full operating value of the data center. It is the property-rent layer between the real estate and the operator. But that is exactly why it matters: it is the first line where the asset stops being only an appraisal shell and gains a contractual floor.

The really important detail is the condition attached to that lease. The rent is meant to start only when the whole project receives Form 4. So even after the first hall was completed, and even after initial customer occupancy had begun, the property-level cash step still waited for the occupancy certificate for the entire complex. That certificate was received in March 2026, after the balance-sheet date. That is the point at which Kfar Saba truly begins to move from valuation into a structure capable of generating cash.

But this still needs precision. The NIS 6.7 million annual rent is only the real-estate layer. In the January presentation, management already framed the operating layer in much larger terms: about NIS 80 million of hosting revenue and about NIS 55 million of gross profit at full occupancy of 16 MW IT, on a 100% basis. That is a different number, in a different economic layer. It sits at the operator level, not just at the landlord level, and it still requires a gradual filling of the halls rather than only a Form 4 certificate.

There is another useful nuance here. In that same presentation, Kfar Saba's carrying value was presented on the basis of a second-quarter 2025 DCF valuation, assuming gradual occupancy over 6 years up to a maximum of 10 MW IT, at discount rates of 6.5% to 9%. In other words, even in management's own valuation framing, the model did not assume an instant jump to full utilization of 16 MW IT. That is a good signal that, in the company's own language, real money arrives with occupancy ramp, not on the day power is allocated or a hall is completed.

This chart matters because it holds two truths at once. Shoham is the larger option. Kfar Saba is closer to real monetization. Markets often prefer falling in love with the larger option. But when the question is when value becomes cash, proximity to operations, a signed lease, and Form 4 matter more than a slide with the bigger top line.

Even after this step, Kfar Saba is not yet a clean cash machine. At the end of 2025, Kardan Israel's share of financing advanced to Serverz stood at NIS 14.3 million, and the company also guaranteed half of Serverz's obligations to the bank. So there is already a contract, there is initial occupancy, and there is post-balance-sheet Form 4, but the operating layer still depends on debt and the gradual construction of the next halls. Kfar Saba is therefore already on the side of "cash starting," not yet on the side of "free cash."

Shoham: Bigger Value, Still No Contract to Lock It In

Shoham is the larger option, and the more distant one. This is a campus on roughly 27.4 dunams, with three data centers and total power capacity of 48 MVA plus 48 MVA backup. In the first stage, the first two data centers are being built on about 60% of the land and are expected to supply up to 24 MW IT. Their build cost was estimated at more than NIS 700 million including systems and equipment, and the target for operations is the second half of 2026. The third data center is meant to be built only in response to demand.

On paper, that is exactly the kind of asset that can ignite imagination. In the January presentation, management spoke about NIS 135 million of annual revenue from the first two data centers under construction, and in the same breath presented a value of about NIS 386 million on a 100% basis, based on a third-quarter 2025 DCF with gradual occupancy through 2029 and up to 20 MW IT of maximum capacity. That is platform language, not single-asset language.

But the annual report contains one sentence that cuts straight through the excitement: as of 31 December 2025, and as of the report date, no lease contracts had been signed for the property. There were discussions with potential customers for meaningful scale, and that matters. But discussions are not a contract, and a contract is exactly the point where value begins to move from a model into cash.

That means the value booked in Shoham during 2025 still came ahead of actual commercialization proof. Kardan Israel's share in the project recorded NIS 39.2 million of revaluation gains in 2025, and its carrying value at year-end stood at NIS 162.9 million. That does not mean the appraisal is wrong. It does mean that the accounts recognize value before there is even one anchor tenant proving demand. In economic terms, Shoham has already moved from land story to construction story, but not yet to revenue story.

The financing layer is not fully closed either. At year-end 2025, Kardan Israel's share of financing in the Shoham joint project stood at NIS 53.7 million, and the company also had another roughly NIS 27 million of solo financing tied to the project. After the balance-sheet date, that financing was repaid and replaced with alternative funding, and Kardan Israel's share in the new financing stands at NIS 90 million. That is progress. But the report also stresses that as of its date, a binding project-finance agreement had still not been signed, even though a new bank had agreed in principle to provide the framework and had already advanced construction funding.

That is where the 30 March 2026 credit update matters, and where it should not be overread. The company said that the credit taken in connection with Shoham no longer qualifies as reportable credit for it. That is not the same statement as saying that Shoham has already become cash. The narrow meaning is that the loan no longer crosses the company's reportable-materiality threshold. That is a certain financing headline improvement. It is not a substitute for a lease, not a substitute for signed project finance, and not a substitute for actual commissioning.

That is exactly why Shoham remains, for now, the project with larger value and more distant cash. As construction advances, the gap becomes sharper: the value is already in the accounts, the spending is already on the ground, but the tenant and the contract are still missing.

So When Does Valuation Become Cash

If this needs to be answered in one line, the answer is simple: Kfar Saba has already crossed the first gate in March 2026. Shoham has not.

Kfar Saba crossed that gate because the three things needed for a first cash layer have already connected: there is a completed first hall, there is a signed lease, and there is Form 4 for the full project, which activated the lease. What still needs to happen now is the move from property rent into full hosting economics, meaning the gradual occupancy of additional halls and the conversion of the Serverz story into recurring revenue and gross profit that show up consistently in the accounts and in cash flow.

Shoham has not crossed the gate yet because the parallel three things are not connected at the same time: there is construction, and there is financing progress, but there is still no signed lease and no operating start. That means the point at which Shoham moves from valuation into cash will not come through another revaluation line or another credit update. It will come through a first anchor lease and the real commissioning of the first two data centers.

That also implies a more realistic sequence. Kfar Saba is a 2026 and 2027 proof-and-occupancy story. Shoham is a tenant-signing, bank-finance, and first-operations story, meaning a project the market can continue to value now but will struggle to translate into cash before contracts arrive.

So the real Shoham-versus-Kfar Saba comparison is not which project is "worth" more. It is which project has already started closing the distance between theoretical value and money. Right now the answer is not symmetrical: Kfar Saba has already placed one foot on the cash side, even if the road to free cash is still long. Shoham still lives mainly on real option value, but option value that still needs to be locked in by contract.