Leser in 2025: 2440 Fulton Is In, But December Is Still Open

Company Overview

Leser is not a classic listed equity story. It is a foreign bond issuer, and the entire case runs through one question: can a US income-producing real-estate portfolio translate into cash that reaches the debt layer on time? As of the report date, the company held about 50 income-producing properties and 3 land parcels, with high concentration in New York, Pennsylvania, and New Jersey, and with exposure to offices, educational facilities, retail, logistics-industrial assets, and public-use properties. On paper, this looks like a portfolio with relatively strong tenants, including the US government, New York State, the City of New York, and affiliated public bodies.

What is working right now is clear enough. Rental and related-service revenue rose in 2025 to $76.0 million from $65.0 million, NOI rose to $51.0 million from $41.8 million, and 2440 Fulton finally moved from development into operations after delivery to the City of New York in May 2025. That is a real change, not a cosmetic one.

But that is still not the center of the story. The active bottleneck is funding. AFFO attributable to shareholders remained negative at $19.8 million, operating cash flow was negative $20.2 million, consolidated working capital was negative $154.5 million, and by year-end the company had $147.7 million of bonds and $86.2 million of loans due within one year. 2440 Fulton improved the income picture, but it did not solve the maturity wall.

So the right way to read Leser is not as just another US commercial real-estate platform. It is an asset platform trying to move from a model of development, selective acquisitions, and periodic monetizations into one where the assets themselves can carry the debt burden. By the end of 2025 it was not there yet. The company is bond-only on the exchange, so the screening lens is different: the question is not whether there is room for multiple expansion, but whether there is enough cash, enough flexibility, and enough covenant headroom to get through 2026.

What does not stand out at first glance:

• June 2026 looks funded, December 2026 still depends on execution. The company says that at report approval it had about $70 million of solo cash, enough for the June 2026 principal and interest payment, but the December payment still relies on the McDonald sale, further monetizations, and refinancing.
• 2440 Fulton only contributed for part of the year. In 2025 the asset generated $10.4 million of revenue and $7.9 million of NOI, while management itself points to 2026 annual NOI of about $16 million and annual AFFO contribution of about $6.5 million.
• The company is in covenant compliance, but the cushions are no longer wide. Adjusted net debt to CAP stood at 74.38%, against a 75% threshold in Series G and I for coupon step-up purposes, while Series H loan-to-collateral stood at 71.02%, against a 75% threshold.
• Asset sales solve liquidity, but they also shrink the asset base. The sale of four logistics assets generated cash, but the company expects to record a roughly $4.5 million accounting loss from the transaction in the first quarter of 2026.
• The 2024 story was partly reframed after the fact. The company now clarifies that 2440 Fulton borrowing costs were capitalized during development, so the earlier explanation that Fulton debt was already depressing AFFO in prior periods was less accurate than it sounded at the time.

The economic map looks like this:

That chart matters because it sharpens the concentration issue. New York is not just the company’s main geography. It was already 77% of consolidated property value in 2025.

Events And Triggers

The first trigger: 2440 Fulton moved from development into operations. In May 2025, New York City confirmed that the conditions for delivery had been met, and the asset was formally handed over to the tenant. In 2025 the property already contributed $10.4 million of revenue, $7.9 million of NOI, and $9.6 million of net profit. That does not mean the asset has already reached full potential. Quite the opposite. Average occupancy was only 77%, and the company notes that the unleased portion, around 70 thousand square feet, could add another roughly $3.3 million of annual rent.

The second trigger: the 2440 Fulton lease is both a value source and a cash-delay mechanism. The lease with the City of New York runs for 21 years, with annual rent of about $13.6 million in the first three years after a nine-month free-rent period, rising gradually to about $19.9 million in later years. That means 2025 already benefited from Fulton entering the portfolio, but the cash layer still did not receive the full effect. Out of a roughly $16 million deposit tied to the lease, about $12 million was released in March 2026, while roughly $4 million remained as security for loan payments during the free-rent period.

The third trigger: the company accelerated disposals exactly where the funding pressure demanded it. In January 2026 it signed a sale for four logistics assets in Georgia and Florida at about $28 million. In practice, the transaction closed in March 2026 for total consideration of about $26.7 million. Net cash after loan repayment and transaction expenses was about $20.3 million on a 100% basis, of which roughly $12 million was deposited for the benefit of the partial early redemption of Series H. The company itself was left with roughly $8 million of unrestricted cash.

The fourth trigger: on March 31, 2026, Series H was partially redeemed early. The scope was NIS 36.8 million par value, and the total payment to bondholders, including interest and redemption premium, was NIS 37.764 million. This improved the 2026 maturity profile, but it did not resolve it. It only pushed part of the pressure into the broader question of what happens with the remaining Series H balance by December.

The fifth trigger: on the same day the company also closed two moves that added liquidity. The first was financing on the 59 Monsey property: $15.63 million for 18 months at Prime + 1.5%, leaving about $12.5 million of net excess cash. The second was the Bristol sale, the 2201 Green Lane property, to entities controlled by the controlling shareholder at a 100% property price of $39.3 million, generating net cash of about $11.3 million to the company.

The sixth trigger: McDonald is probably the most critical link right now. On March 31, 2026, the company signed a conditional agreement to sell 1080 McDonald Avenue in Brooklyn for about $41 million, above the year-end book value of $36.5 million. Debt on the property stood at about $19 million, and the company expects excess cash of about $17 million. But this is still not closed cash. The deal remains subject to due diligence, title insurance, tenant estoppels, and a targeted closing date by June 30, 2026.

The company itself rounds that figure to about $70 million and says that, as of the signing date, it had the cash needed for all June 2026 payments. That is important. But it is not the same as saying the funding pressure is over.

Efficiency, Profitability, And Competition

The 2025 operating story is a paradox. On one hand, the real-estate engine improved. On the other, the bottom line is still dominated by financing, currency, and valuation effects.

Rental and related-service revenue rose to $76.0 million from $65.0 million. Gross profit rose to $46.8 million from $37.4 million. NOI, including the proportional share in associates and joint ventures, rose to $51.0 million from $41.8 million. That is a material improvement, driven mainly by 2440 Fulton entering the income-producing base.

But below the NOI layer the profitability picture weakens. Finance expense rose to $64.6 million from $53.5 million. In addition, the company recorded a $43.2 million foreign-exchange loss on its shekel liabilities, compared with just $0.7 million of FX income in 2024. So even after a $31.2 million gain from fair-value changes in investment property, the company ended the year with a net loss of $34.4 million, deeper than the $20.9 million loss in 2024.

That chart shows exactly what a quick read can miss. NOI resumed growth, but finance expense rose even faster, so the picture for creditors and shareholders is still not clean.

What Actually Drove The Improvement

2440 Fulton is the main engine, but it also exposes the limitation of reading 2025 in isolation. In 2025 the property contributed for only part of the year, so its AFFO contribution was only partial, around $3 million according to the company. On a fuller annual run-rate basis, management points to 2026 NOI of about $16 million, annual interest expense of about $9.5 million, and a net AFFO contribution of about $6.5 million.

That matters for two reasons. First, it shows that the operating improvement has not yet been exhausted. Second, the company is retroactively reframing the 2024 and early-2025 narrative. It explicitly writes that the increase in 2440 Fulton debt did not hurt AFFO during the development period because borrowing costs were capitalized to the asset. This is a technical point, but not a marginal one. It means the AFFO comparison between 2024 and 2025 is less clean than it may have appeared.

Asset Quality Versus Cash Quality

On tenant quality, there is solid material here. In New York, the company is exposed to the City of New York, government bodies, and educational institutions. 2440 Fulton alone contributed 14% of company revenue in 2025, with one anchor tenant, the City of New York, taking 77% of the property area. That creates a high-quality anchor, but also concentration.

At the same time, not every property is working yet. 25 Oakland, with around 270 thousand square feet, was still vacant at the end of 2025, generated no income during the year, and its value declined to $24.9 million from $25.8 million. The company is evaluating both a value-enhancement path through subdivision and a sale. In other words, part of the portfolio is still built on option value rather than current income.

What Competition Means Here

At Leser, competition is not the main question in the same way it would be for a mall owner or a software company. The real contest is over funding, tenant quality, and speed of lease-up. So the relevant issue is not whether there is theoretical demand for offices, educational space, and logistics. The issue is whether non-income-producing and partly income-producing assets can turn into cash flow before the debt stack forces harsher terms.

Cash Flow, Debt, And Capital Structure

This is where the core thesis sits. In terms of recurring cash-generation potential, the company can support $51 million of NOI. In all-in cash flexibility terms, meaning after actual cash uses, it is still under pressure.

The Actual Cash Picture

Operating cash flow was negative $20.2 million. Investing activity consumed another $32.5 million, and financing activity was negative $1.6 million. The bottom line is that cash and cash equivalents fell from $79.0 million to $33.1 million at the end of the year.

That is exactly the gap between a business that can produce NOI and a business that has real financing room. The 2025 financials do not show that room. It was built only after the balance-sheet date, through asset sales, deposit release, and new financing.

The Debt Layer

At the end of 2025, interest-bearing loans stood at $557.5 million and bonds stood at $411.6 million. Equity attributable to shareholders fell to $274.1 million and total equity fell to $325.0 million. The equity ratio fell to 24.92% from 27.92% in 2024, and the company itself points to the strengthening of the shekel against the dollar as the main reason leverage rose, because it created a roughly $43.2 million loss on the shekel bonds.

It is important to separate two leverage metrics here. In the directors’ report, net debt to net CAP stood at 72.51%. In the covenant test, adjusted net financial debt to net CAP stood at 74.38%. That is still within the bond terms, but no longer with a wide margin.

Covenants, Rating, And The Real Cushion

The company says it complied with all terms of Series G, H, and I, and that no acceleration event occurred. That is formally true, but the margin matters. In Series G and I, adjusted debt to CAP at 74.38% sits only 0.62 percentage points below the 75% threshold that triggers a coupon adjustment. In Series H, loan-to-collateral stood at 71.02%, only 3.98 percentage points below the 75% threshold that affects the coupon. Equity attributable to shareholders, $274.1 million, sits only $29.1 million above the $245 million threshold in Series I.

Alongside this, S&P Maalot kept the issuer rating at ilA- with a negative outlook and Series H at ilA. That is an important external signal: the company is not in a default event, but it is also not in a position where institutional debt markets can treat it as a frictionless story.

Less Visible Constraints

There are also several less visible layers. In two group loans, with a combined balance of about $40 million, a lockbox mechanism was activated, and designated accounts held about $0.35 million at the end of 2025. In addition, the company notes that in some loans it is not meeting certain LTV requirements, which may limit access to up to about $1 million of cash, even if that does not give lenders the right to accelerate repayment.

At 25 Oakland, the company also failed to meet the occupancy condition set in the Series H deed, so it had to deposit an additional $2.5 million security amount. This is a classic example of a property that is not just failing to contribute NOI, but is also consuming flexibility.

Outlook

Four points need to be set before looking ahead:

• June 2026 is almost closed, December 2026 is not. The company says explicitly that June is covered. It does not say the same about December.
• 2440 Fulton passed the delivery test, but not yet the full-ramp test. Part of the property is still vacant, and $4 million remains trapped.
• Disposals help liquidity and also reduce future NOI base. Asset sales cannot be read as purely positive.
• The company now has to convince the market not only on value, but on timing. McDonald, refinancing of Series H, and continued sale of the eight assets selected with the special advisor are now execution tests, not just ideas.

The next 12 months look roughly like this:

The company itself maps the December path through several sources: the McDonald sale, with expected excess cash of about $17 million; the sale of 64 Leone Lane, expected to add about $1 million of cash plus release from the related loan; an intention to monetize additional assets with aggregate fair value of about $352 million and total positive cash flow of up to $150 million after loan repayment and before bond repayment; and an intention to raise another roughly $15 million against the portion of 2440 Fulton not leased to the City of New York. These are potential sources, not committed ones.

That chart matters because it shows how dependent the company remains on a stable funding market. A quarter-point move in cap rate erodes about $44 million from 2025 property value. That does not wipe out equity, but it is more than enough to further compress covenant headroom.

If 2026 needs a label, it is a bridge year. Not a reset year, because 2440 Fulton is already operating, NOI has risen, and the company has shown it can raise cash from monetizations and financing. But not a breakout year either, because most of what has to happen by December still rests on moves that are not fully closed.

Risks

The first risk is financing execution risk. The company has a plausible path through 2026, but it depends on too many steps that still need to happen on time. McDonald is a conditional deal. Additional financing on 2440 Fulton is still an estimate. The sale process for the eight designated assets is still underway. Even if each move sounds reasonable on its own, the combination is the real test.

The second risk is currency risk. In 2025, the strengthening of the shekel offset a large share of the operating improvement and created a $43.2 million loss on the shekel bonds. The company says it periodically undertakes hedging actions, but in practice the accounting effect remained highly material. When adjusted debt to CAP is already at 74.38%, FX is no longer background noise.

The third risk is concentration risk. 2440 Fulton alone represented 14% of revenue in 2025, and New York already accounts for 77% of property value. That does not automatically make concentration negative, especially because these are also the better-quality assets and tenants. But it does mean that any disruption at Fulton, in the public-tenant base, or in New York funding conditions travels quickly through the whole thesis.

The fourth risk is non-income-producing asset risk. 25 Oakland remained vacant at the end of 2025, kept falling in value, and required an additional security deposit. Monsey had also not previously been encumbered, which is why it could be used as a financing source, but that itself shows the company is still using non-income-producing assets as a liquidity reservoir rather than as an NOI source.

The fifth risk is governance risk under funding pressure. Bristol was sold to the controlling shareholder. 64 Leone Lane was sold to minority partners. The original exchange structure was changed after discussions with bondholders. None of these moves, by itself, proves a governance failure, but they do show that the route to solving funding pressure increasingly runs through transactions with parties already close to the system.

Conclusions

Leser ends 2025 in a better operating position, but still not in a comfortable funding position. NOI is up, 2440 Fulton is finally in, and the New York asset layer gives the company a real economic base. That is what supports the thesis.

The central constraint is that this improvement still does not carry the debt structure on its own. The company managed to build a bridge to June 2026 through asset sales, deposit release, and refinancing, but December 2026 is still not secured. So what will determine market interpretation in the near term is not another incremental rise in NOI by itself, but whether McDonald closes, whether Series H is refinanced, and whether non-income-producing assets actually turn into cash before covenant room tightens further.

Current thesis in one line: 2440 Fulton proved that Leser’s operating side is alive, but 2026 will be judged on funding execution rather than on NOI quality alone.

What changed: compared with the end of 2024, the company is no longer asking the market to underwrite only the promise of an asset under development. Fulton is already producing income. At the same time, the thesis has moved from delivery and lease-up to debt refinancing, monetizations, and December 2026.

Counter-thesis: one can argue that the market is being too harsh. In 2026 the company has already shown that it can sell assets, release deposits, refinance, and generate enough cash for the June payments. If McDonald closes and the remaining steps are executed, December 2026 may end up looking much less threatening than it does today.

What could change market interpretation in the short to medium term: completion of the McDonald transaction, visible progress on refinancing the remaining Series H balance, sale of part of the assets earmarked for monetization, and any update on lease-up or financing at 25 Oakland and on the vacant space at Fulton.

Why this matters: because Leser is no longer being judged on whether it owns good assets. It is being judged on whether those assets can reach the cash layer in time, before the debt structure turns the company into a forced seller.

Over the next 2 to 4 quarters, what needs to happen is fairly clear: McDonald has to close, 2440 Fulton has to keep filling and move away from deposit dependence, and Series H has to receive a credible repayment or refinancing path by December. What would weaken the thesis is a situation where NOI continues to look better, but liquidity still depends mainly on asset sales, related-party deals, and short-term extensions.