Summit Follow-up: How Much of 2025 Profit Remains After Stripping Out Paz and Revaluations?
Summit reported NIS 601 million of attributable net profit in 2025. Strip out the main Paz effect and valuation noise, and the picture changes sharply: roughly NIS 201-277 million of recurring earnings, and even that is not entirely detached from Paz's residual contribution.
What Actually Remains of 2025 Profit
The main article argued that Summit's 2025 profit looked much cleaner than it really was. Here the point can be quantified. The headline number is NIS 601 million of attributable net profit. If you strip out the Paz capital gain, which the company itself presents at roughly NIS 450 million net of tax, and the NIS 44 million equity-accounted contribution recorded while Paz was still carried under the equity method, you are left with roughly NIS 107 million. That is already a very different year.
But even NIS 107 million is not the recurring earnings answer. That number still includes all of 2025's valuation noise, especially the investment-property value declines in the US. Once that layer is removed as well, attributable FFO comes out at NIS 277 million under management's approach, or NIS 201 million under the Securities Authority approach. In other words, there are at least three defensible answers to the question of how much of 2025 profit remains, but none of them looks anything like the NIS 601 million headline.
Migorit sits in a different place from Paz in that bridge. It barely stands out in the profit bridge, but it matters in the liquidity bridge. The sale of 10 million Migorit shares brought in NIS 82 million, and management explicitly ties the improvement in working capital and the positive investing cash flow to the Paz and Migorit realizations. So 2025 was a year when both profit and cash were shaped by monetizations, just not in the same way.
| Reading frame | 2025 | What it really says |
|---|---|---|
| Attributable net profit | NIS 601m | The full accounting headline, including Paz, revaluations, and the rest of the year's noise |
| Profit after removing Paz net gain and the Paz equity-method contribution | About NIS 107m | The strict reading if the question is what remains without Paz, while still leaving all valuation noise inside |
| Attributable FFO, management approach | NIS 277m | A cleaner operating read after neutralizing much of the accounting noise |
| Attributable FFO, Authority approach | NIS 201m | The same question answered more conservatively |
| Operating cash flow | NIS 346m | The group still generated cash, but this is still not cash that is automatically free to shareholders |
That chart is the core of the follow-up. The earnings-quality debate is not semantic. Depending on what exactly is stripped out, Summit finished 2025 with NIS 601 million, NIS 277 million, NIS 201 million, or only a bit more than NIS 100 million. That is too wide a gap to treat as detail.
Where Paz Ends, and Where the Core Business Starts
Paz is the main reason the headline and the core business diverge so sharply. In the result note, other income was positive by NIS 279.4 million in 2025. The breakdown shows NIS 510.3 million of gain from realizing an investment accounted for under the equity method, offset by NIS 222.8 million of investment-property fair-value losses and another NIS 8.4 million of other expenses. So the line that pushed profit up was primarily the conversion of Paz into a realized gain, while the property portfolio itself was pulling back in the other direction.
The investor presentation makes that even clearer. It shows profit after financing of NIS 258 million, then adds NIS 279 million of revaluation and other items plus NIS 44 million from associates, and only then reaches NIS 597 million of group net profit. That is the warning sign. Before revaluations, before the associates line, and before the wrappers around the year, the operating base looked much closer to the mid-200s than to 600.
Because the report explicitly says the Paz investment was carried under the equity method from the third quarter of 2024 through the second quarter of 2025, it is reasonable to read the NIS 44.1 million equity-accounted profit line as Paz-related, or at least mainly Paz-related. That matters because otherwise it is easy to think that neutralizing the one-off disposal gain is enough. In reality, Paz influenced 2025 through two different layers: first through the exit itself, and second through the equity-method line before the exit.
| Item | P&L effect | Cash / liquidity effect | What it means |
|---|---|---|---|
| Paz | Roughly NIS 450m capital gain net of tax, and NIS 510.3m pre-tax in the detailed other-income note | Roughly NIS 767m of proceeds from the July sale | This is the item that turned 2025 into an unusually strong profit year |
| Paz through the equity-method line | NIS 44.1m | The FFO bridge also shows NIS 33m of dividends from equity-accounted investments | Even after the exit, there was still an accounting and financial tail from the holding |
| Migorit | The selected pages do not isolate a material profit contribution | NIS 82m of proceeds from selling 10 million shares | Mainly a liquidity and working-capital story rather than an earnings story |
| Property revaluations and other items | Minus NIS 222.8m of investment-property fair-value adjustments plus NIS 8.4m of other expenses | Non-cash | This is the layer that drags the year down and explains why FFO is far above the profit left after removing Paz |
The quarterly pattern makes the same point in a different way. Attributable profit jumped to NIS 568.4 million in the third quarter, then swung to a NIS 117.6 million attributable loss in the fourth. This was not a year where profit built smoothly from quarter to quarter. One large event lifted almost the entire headline, and then the underlying business became visible again.
FFO Gives a Better Answer, but Not a Sterile One
If the goal is to understand what the income-producing business generated in 2025, FFO is the most useful bridge the company itself provides. It starts with NIS 597 million of profit from continuing operations, subtracts NIS 279 million of fair-value and other adjustments, NIS 15 million of deferred taxes, NIS 1 million of apartment-sale profit, and NIS 44 million of equity-accounted profit, then adds back NIS 33 million of dividends from equity-accounted investments and NIS 11 million of non-cash financing expense. That leads to NIS 302 million of consolidated FFO, NIS 277 million attributable to shareholders under management's approach, and NIS 201 million under the Authority approach.
That bridge gives a better answer than the headline, but it is still not fully sterile. Because it adds back NIS 33 million of dividends from equity-accounted investments, and because Summit itself links the equity-method accounting to Paz through the second quarter of 2025, it is reasonable to view the 2025 FFO number as still carrying some Paz residue rather than pure property earnings. So NIS 277 million is cleaner than the headline, but not necessarily fully post-Paz in the strictest sense.
That is exactly why the NIS 201 million figure under the Authority approach matters. The NIS 76 million gap between the two FFO versions is not technical trivia. It shows that even after the company has already stripped out most valuation noise, there is still a meaningful argument over what recurring earnings should actually mean. When that kind of gap sits at the center of the year, it is hard to describe 2025 as a clean earnings year.
The Group Generated Cash, but Not All of It Immediately Belongs to Shareholders
Operating cash flow came to NIS 346 million. That is a respectable number, and in one sense it is more comforting than FFO. But this is exactly where the framing needs discipline. NIS 346 million is group-level operating cash flow, not cash that is automatically free to shareholders after all real cash uses. In the same year, investing cash flow was positive by NIS 409 million, and the company itself explains that this mainly came from the Paz and Migorit sales and dividends from securities, offset by investments in real estate and fixed assets. Financing cash flow, meanwhile, was negative by NIS 1.005 billion, mainly because of bond repayments, the dividend distribution, and ongoing debt service. So 2025's all-in cash flexibility still leaned on exits, not only on rent.
The parent-company layer also looks less generous than the headline. In the separate financial data, the parent reports only NIS 29.9 million of net finance income from other companies in 2025. The adjacent table shows no dividends from the main held companies up to the balance-sheet date or after it. At the same time, the parent carries roughly NIS 1.66 billion of financial liabilities at amortized cost, and the undiscounted contractual cash-flow table shows NIS 482.4 million due in the first year. That is not a distress signal, but it is a reminder that the path from group profit to value that is actually accessible to common shareholders still runs through a leveraged parent layer rather than through an open dividend pipe.
There is also a smaller but telling friction point. In the compensation disclosure, the company says that under an earlier consulting arrangement tied to the Paz investment, Tomer Pomerantz was paid NIS 18 million based on the company's gains from selling Paz shares, with another NIS 2 million contingent on meeting sales targets in the commercial-center portfolio. That amount does not change the whole thesis on its own. It does underline a simpler point: even a one-off exit does not flow through to shareholders without leakage.
That is why the distinction between CFO and shareholder economics matters here. Operating cash flow says the group can generate cash. The separate-company disclosures say not all of that cash is moving up as dividends. And the investing-cash-flow explanation says that a meaningful part of 2025's flexibility came from Paz and Migorit monetizations. All three statements can be true at once, and in this case they were.
Conclusion
Put all of those layers together and the answer in the title becomes fairly clear. Not much of 2025 remains in the form implied by the headline. The NIS 601 million attributable profit belongs first and foremost to a Paz monetization year. Remove the net Paz gain and the Paz contribution through the equity-method line, and only about NIS 107 million remains. Remove the valuation noise as well, and the cleaner range becomes NIS 201 million to NIS 277 million, and even that range is probably not completely sterile from Paz.
That is exactly why 2026 matters more than 2025. If Summit can hold NOI, FFO, and operating cash flow without Paz and without another year of financial exits, the market will have a stronger basis for trusting the recurring earnings story. If not, 2025 will remain the year the company proved it can recycle capital well, but not necessarily the year it proved a parallel improvement in the recurring economics of the property business.
In simple terms, Paz solved 2025. Only the property business can solve 2026.
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