Ram Aderet Follow-up: When Havatzelet Can Actually Release Surplus Cash
On paper, Havatzelet looks like a large future surplus source. In practice, the path runs first through mezzanine repayment, removal of an earlier lien, the Series D trust-deed release conditions, and then the project-level rules of the construction finance account itself. Expected surplus is therefore not the same thing as cash that can already be taken upstream.
Havatzelet can become a meaningful cash source, but only after three layers are cleared: the mezzanine and Phoenix's prior lien have to be cleaned up, the Series D release mechanics have to be completed, and only then can real surplus be released from the project's construction…
- The annual Havatzelet table now shows NIS 165.7 million of expected withdrawable surplus after mezzanine repayment, versus only NIS 80.2 million of expected gross profit.
- The company states that the full mezzanine loan in Havatzelet was repaid in March 2026.
- On March 11, 2026, 50% of Series D proceeds were transferred to the company after the first-stage deed conditions were completed.
- On March 29, 2026, the maturity of the credit provided to Havatzelet was extended through June 30, 2026, showing that the financing bridge was still active.
- Complete the conditions for releasing the remaining Series D proceeds, including the required building permit for Havatzelet.
- Remove Phoenix's earlier surplus lien in practice and complete the clean registration of the new security structure.
- Reach the end of the transition period without another maturity extension beyond June 30, 2026, or replace it with a cleaner long-term financing solution.
- Move from initial excavation and shoring to measurable execution progress and a credible route toward surplus release in 2027 to 2029.
- Because Havatzelet is effectively 100%-owned, the bottleneck here is not partner leakage but lender and lien priority.
- Series D uses Havatzelet first as a pledged collection route and only later as a possible source of broader corporate flexibility.
- The fact that only 50% of proceeds were released shows that the move from bond issuance to free cash is not automatic and still depends on the permit path.
- Even after mezzanine repayment, the lender still controlled the project's timing, as reflected by the late-March maturity extension.
- When will Havatzelet satisfy both the permit-related conditions for full Series D release and the lender-side conditions for actual surplus release?
- After mezzanine repayment, does Havatzelet move into a cleaner and more stable financing structure, or does it continue to rely on short maturity pushes?
- Will the final betterment levy assessment and the execution timetable preserve the NIS 165.7 million expected-surplus figure?
The fair counter-argument is that the market may be over-reading the issue: the company already repaid the mezzanine in March 2026, already released half of Series D proceeds, and the extension through June 30, 2026 may be nothing more than a short technical step on the way to a…
For a bond-only residential developer, the gap between project profit and cash that can actually be pulled upstream determines real financing flexibility. Havatzelet matters not only because of the size of the surplus estimate, but because of when that estimate stops being colla…
Why This Follow-up Matters
The main article treated Havatzelet as one of Ram Aderet's core liquidity anchors. This follow-up isolates the narrower question that matters more now: when does that anchor actually become cash that can be pulled out, rather than a number that mainly supports collateral.
The short answer is simple: Havatzelet does not clear in one step. First, the mezzanine layer and Phoenix's earlier lien on surplus rights have to be cleaned up. Then the Series D release mechanics have to be completed. Only after that does the project itself have to pass the release conditions of its own construction finance account. Until all three stages are behind it, "expected surplus" is still mostly a financing promise.
That matters even more because Havatzelet is effectively held at 100%. This is not a story about leakage to a minority partner. It is a story about lien order and lender priority.
| Layer | Figure | What it does say | What it still does not say |
|---|---|---|---|
| Specific project financing balance at December 31, 2025 | NIS 140.4 million | How much project debt still sits on Havatzelet at year-end | Not how much cash is already free for the company |
| Expected gross profit | NIS 80.2 million | The accounting economics of the project | Not withdrawable surplus |
| Expected profit in the construction finance account | NIS 92.6 million | The project-monitoring view used by the lender | Not free corporate cash |
| Equity already invested in the project | NIS 73.2 million | Capital already sunk into Havatzelet | Not capital already returned |
| Expected withdrawable surplus after mezzanine repayment | NIS 165.7 million | Future project-level surplus if all conditions are met | Not near-term liquidity |
What Havatzelet Promises on Paper
Havatzelet is a 192-unit residential project in Netanya, with 115 units under the price-target program and 77 units sold on the free market. Construction work started in January 2025, planned completion is in the first quarter of 2029, and 123 sales contracts had been signed close to the report date. At the same time, the company states that as of year-end no completion percentage had yet been set for the project because only excavation and shoring work had started.
That point matters because it explains why large projected numbers are still far from cash. The company presents expected revenue of NIS 572.2 million, expected project cost of NIS 492.0 million, and expected gross profit of NIS 80.2 million, but as of year-end none of that gross profit had yet been recognized in profit and loss. Even at the accounting-profit layer, Havatzelet was still entirely ahead of the company rather than behind it.
The more interesting figure sits one step below that. The company makes a NIS 12.4 million adjustment between accounting gross profit and the expected profit in the lender's monitoring report, reaching NIS 92.6 million of expected project profit in the construction finance account. It then adds NIS 73.2 million of equity already invested in the project and derives expected withdrawable surplus of NIS 165.7 million after mezzanine repayment, with expected timing in 2027 to 2029.
That is the key distinction between profit and surplus. The future surplus is not just profit. It is profit plus the return of capital already put into the project. That is why the NIS 165.7 million figure is much larger than the NIS 80.2 million gross-profit figure. It is also why it is much more dependent on financing structure, project completion, and lender approval.
There is one more quiet but important warning sign. The company states that the final betterment levy assessment had not yet been received, so if the final amount differs from management's estimate, project cost and expected surplus may change as well. In other words, even the NIS 165.7 million figure can still move.
Who Gets Paid First
The Series D trust deed turns Havatzelet into a pledged collection route, not a clean pool of corporate cash. In practice there are several layers that have to be cleared in order.
| Layer | Right | Practical meaning |
|---|---|---|
| The project lender | Priority to all amounts due under the construction finance documents and to the release of adjusted surplus | Without repayment and lender consent, no surplus is released |
| Phoenix in respect of the mezzanine loan | At signing, a first-ranking fixed lien already existed over the company's surplus rights | That debt had to be repaid and the earlier lien removed before the priority stack could be cleared |
| Series D bondholders | Pledge over the trust account, the pledged account, and the subsidiary's rights to released surplus | Even once surplus starts moving, it is meant to flow first through the security mechanism |
| The company | Access only to what remains after the layers above it | The company is last in the waterfall, not first |
The critical piece in the trust deed is the surplus pledge. The company undertook to cause its subsidiary to register a first-ranking pledge over the right to receive surplus released by the lender, including surplus the lender had agreed to release even if it had not yet been transferred. But the same document also makes clear that this right is subordinate until the lender has first been repaid in full for all amounts due under the finance documents and has approved the release of adjusted surplus. Until then, the Series D surplus pledge is junior to any security held by the lender over Havatzelet.
The added complication was the mezzanine loan. At the time the trust deed was signed, a first-ranking fixed lien in favor of Phoenix already existed on the company's right to receive Havatzelet surplus. That meant registration of the new surplus pledge for the trustee depended on a Phoenix letter of intent setting out the current debt amount, Phoenix's agreement to remove its lien once that amount was paid, and Phoenix's consent to the new surplus pledge in favor of the trustee. The trust deed further provides that the trustee would transfer the amount required to repay Phoenix under that letter, and only then would the earlier lien fall away.
This is the point that breaks the shortcut. Havatzelet was not on its way to releasing surplus straight into the company. It first had to function as a route for cleaning up existing project debt and building the new secured structure.
What Series D Has Already Opened, and What Is Still Blocked
Series D was not designed as a full immediate release of offering proceeds. The trust deed was built in two stages.
In the first stage, once the documents and conditions listed in sections 7.3.1 and 7.3.2 were delivered, the trustee was allowed to release 50% of the net offering proceeds from the designated account to the company. That is exactly what happened in practice: the company reported that the section 7.3 conditions were completed on March 10, 2026, and accordingly 50% of the offering proceeds were transferred to the company on March 11, 2026.
In the second stage, the deed states that the remainder can be released only after those same documents are in place and a building permit has been obtained for Havatzelet. That is where the gap lies between "the offering was completed" and "all the cash is already free." The project disclosures show an excavation-and-shoring permit and a committee decision for the full project, while the release mechanism for the remainder is explicitly tied to the building permit.
At the same time, the annual report notes that after the financial statements date, in March 2026, the company repaid the full mezzanine loan. That is an important step because it removes an expensive financing layer and allows the old Phoenix lien to be cleaned up. But the story did not end there. On March 29, 2026, the company disclosed that the institutional lender had approved an extension of the maturity of the credit provided to Havatzelet through June 30, 2026.
Series D therefore improved the transition path. It did not eliminate the transition period. The bond issue bought time and rearranged priorities, but even at the end of March 2026 the project still needed a maturity extension.
When Surplus Can Actually Be Released
To understand timing, it helps to separate two different clocks.
| Clock | What must happen | What the picture looks like now |
|---|---|---|
| Full release of Series D proceeds | Full security package, registered pledges, and a building permit for Havatzelet | The first 50% release was completed, but the second stage is also tied to the building permit |
| Release of project surplus | Project completion, Form 4 and engineer approvals, handover to buyers, full repayment of project debt, cancellation of guarantees and policies, and no legal impediment | The company explicitly says these conditions had not yet been met and estimates release only in 2027 to 2029 |
That is why Havatzelet matters so much and also why it is not a short-term liquidity source. The project may eventually become a large surplus source, but before that it has to move from its current state, where only excavation and shoring had started, to a finished and delivered project with debt repaid and adjusted surplus actually released by the lender.
There is another important nuance. Even once surplus begins to be released, it is supposed to flow directly into the pledged account rather than to any other destination, up to the full secured amount of Series D. Only after that layer has been filled, or after surplus is generated beyond it, does broader corporate flexibility begin to appear.
Put differently, Havatzelet still has to pass through three states: first a financed asset, then a pledged asset, and only later a real source of free surplus. The market's usual mistake is to jump from the first state straight to the third.
Conclusions
Havatzelet can become a meaningful cash source for Ram Aderet, but not before it stops being mainly a financing security and becomes a completed project with lender-approved released surplus. Right now, the NIS 165.7 million figure matters, but it sits at the end of a long route that includes mezzanine repayment, removal of an earlier lien, completion of the Series D deed conditions, a building permit, measurable construction progress, full project-debt repayment, and lender release of surplus.
The most important things to watch now are not small changes in the gross-profit estimate. The real checkpoints are much more concrete: release of the remaining Series D proceeds, clear removal of Phoenix's prior lien, no need for another maturity extension beyond June 30, 2026, and movement from excavation work to measurable execution.
If those checkpoints are completed, Havatzelet can begin to move from being mainly a collateral anchor to being a liquidity anchor. If not, it remains a strong number inside the filings, but not cash that has already arrived.