Tsarfati: What the Office and Commercial Layer Is Really Worth
Tsarfati’s office and commercial layer is no longer a footnote, but it is not clean upside either. Nes Ziona is entering the monetization phase with a completion certificate and negative net fourth-quarter sales, Metro still carries a large open inventory base, and SOKOLOV remains potential that management itself still cannot quantify.
What Is Actually Monetizable
The main article argued that by the end of 2025 the key question at Tsarfati was no longer only whether projects were getting built, but whether the layers that had already advanced could now turn into cash. This follow-up isolates the least clean part of that equation: the office and commercial layer.
The reason is straightforward. This is not one asset bucket. Part of it has already been sold and collected, part of it is still open inventory even after construction has finished, and part of it remains planning optionality that the company itself still cannot quantify. That is why the question “what is it worth?” does not have one simple balance-sheet answer.
This is also where headline comfort can become misleading. In 2025 the company reported sales of about 3,110 sqm of offices and commercial space worth around NIS 31.5 million. But in the fourth quarter alone, net sales were actually negative NIS 7.3 million, after a net reduction of about 65 sqm of office space and 265 sqm of retail space. In other words, year-end did not show a smooth acceleration in monetization. It showed that even space already counted as sold can move backward.
That chart explains why this layer deserves a conservative read. In Nes Ziona, under Alternative A, only about 330 sqm remained open, but that space reopened precisely in the fourth quarter. In Nes Ziona under Alternatives B and C, the disclosed sales data show cumulative sales of about 2,344 sqm. In Metro Rishon LeZion, by contrast, only about 2,290 sqm had been sold by year-end out of about 11,355 sqm marketed. That means most of the open area sits there, not in the project that already has the completion-certificate headline.
Nes Ziona: A Completion Certificate Is Still Not Full Monetization
In Nes Ziona, it is easy to look only at the positive line. On March 1, 2026 the first office building in the project received a completion certificate. That matters, because it moves the project from construction into handover and monetization. But that is also exactly where the right screening begins.
First, this is not an asset entirely meant for outside sale. The company states explicitly that the top two floors in the office building that was constructed are designated for the company’s own offices. So even after the completion certificate, it is not correct to read every built square meter as inventory about to turn directly into cash.
Second, the Nes Ziona project still sits inside an open planning framework. The financing agreement describes three construction alternatives, and later permits were received under Alternative B in October 2024 and under Alternative C in December 2025. So this is a project whose monetization path does not rest only on one completed building. It still sits inside a moving planning layer that can affect the rights package and the economic shape of the project.
Third, the commercial line itself is not clean. In the January 2026 sales report, Nes Ziona under Alternative A finished the fourth quarter with net negative sales of about NIS 7.3 million, after a net decline of about 65 sqm of office space and 265 sqm of retail space. The company does not explain what caused that reversal. The conservative conclusion is therefore the right one: the project reached an engineering finish line, but it still has not proved a clean commercial run-rate.
This is the key distinction. A completion certificate is an important transition point, not an end point. Until deliveries, collections, and clarity around what remains for internal use versus what remains for sale actually show up, there is no reason to assign the Nes Ziona layer full cash value simply because the building is standing.
Metro: This Is Where the Real Open Inventory Still Sits
If Nes Ziona shows why a completion certificate is not the same as monetization, Metro Rishon LeZion shows where the heavier test of the non-residential layer really sits. On the positive side, there is a real transaction here that cannot be ignored. In November 2024 the company signed an agreement to sell office units and attached rights totaling about 1,419 sqm, including roughly 157 sqm of storage and 10 parking spaces, for about NIS 16.3 million plus VAT and indexation. By the date of the annual report, the entire remaining consideration had been paid. This is a clear case where office monetization did turn into cash.
But that transaction also sharpens the gap, not only the solution. The same sales report shows that in Metro Rishon LeZion, Stage B, the company had marketed about 11,355 sqm of office space, while cumulative sales by year-end totaled only about 2,290 sqm worth about NIS 26.7 million. Put differently, about 9,065 sqm, roughly four-fifths of the marketed area, remained open at the end of 2025. The company also states explicitly that the project was completed in the first quarter of 2025, but that its sell-through was still not complete.
That is a critical distinction, because it separates “there is demand” from “the issue is solved.” Yes, Metro has a signed and fully paid transaction. No, that still does not make the project a clean value bucket. Quite the opposite: it shows there is a market, but the pace of monetization is far slower than the size of the open inventory. As long as that remains true, Metro cannot be used as proof that the office and commercial layer has already moved from balance sheet to cash.
| Project | What is already certain | What remains open | Conservative read |
|---|---|---|---|
| Nes Ziona, Alt. A | Completion certificate received on March 1, 2026 | Net reversal of 330 sqm in the fourth quarter and two floors earmarked for internal use | Engineering completion is real, but monetization is still not clean |
| Nes Ziona, Alt. B/C | About 2,344 sqm sold cumulatively for about NIS 31.7 million | The final project shape still sits inside a live alternatives-and-planning framework | There is a sales base, but it should not be detached from the planning complexity |
| Metro Rishon LeZion, Stage B | A roughly 1,419 sqm deal for about NIS 16.3 million was fully paid, and cumulative sales reached about 2,290 sqm | About 9,065 sqm still remained open at year-end 2025 | There is a market, but most of the space still has not turned into cash |
| SOKOLOV | Updated plan approved subject to corrections | No office sales, no final certainty, and no quantified economics | Planning upside, not value that can yet anchor a near-term model |
SOKOLOV: Option Value, Not Underwritable Value
SOKOLOV in Hod Hasharon is exactly the kind of asset that invites an overly pretty narrative. It is easy to take the national subcommittee approval from January 2026, add the rights expansion, and start treating this layer like an asset already approaching monetization. That would be a mistake.
The sales report states explicitly that in SOKOLOV, which is an office project still under construction, no office units have yet been sold. So there is still no real market evidence here. And in the immediate report dated January 27, 2026, the company says two things that matter just as much as the approval itself: the updated plan was approved only subject to corrections and technical comments, and there is still no certainty regarding fulfillment of the committee’s requirements, final effectiveness of the plan, or receipt of a building permit for the updated rights package.
The most important sentence comes at the end: at this stage the company cannot estimate the financial effect of the increase in building rights on the project’s financial results. That wording should be taken literally. As long as the company itself cannot quantify the value, the reader should not do it on management’s behalf.
So SOKOLOV may well be real upside for future years. But at this stage it does not solve the 2026 monetization question inside the office and commercial layer. It adds optionality, not cash. It adds planning potential, not proof of commercialization.
Conclusion
What is Tsarfati’s office and commercial layer really worth? Less than a headline about “future yielding asset” or “additional rights” might suggest, and more than zero. But only if it is broken down correctly.
The right thesis today is that the non-residential layer splits into three very different buckets: value already sold and collected, as in the Metro transaction; built or near-built inventory still searching for a clean monetization path, as in Metro and Nes Ziona; and planning optionality that still cannot be quantified, as in SOKOLOV. The problem is that it is easy to compress those three buckets into one story. The year’s numbers and the immediate filings say that would be too aggressive a read.
That also defines the near-term test. For this layer to deserve a more positive weight in the Tsarfati thesis, 2026 needs to show three simple things: consistently positive net office/commercial sales, real reduction in Metro’s open inventory, and eventually a shift in SOKOLOV from conditional approval to economics that can actually be measured. Until then, the office and commercial layer should be read mainly as a pool of capital still looking for price, buyer, and timing, not as value that can already be cleanly counted on.
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