Ray TLV: What Is Left Of Nahalat Yitzhak After Damari, The Cancellations, And The Partition Suit

The main article argued that Ray TLV’s core gap is not whether project value exists, but how much of that value is actually reachable on time. Nahalat Yitzhak was the place where it was easiest to imagine fast upside: a large services agreement with Damari, a planning path that seemed to be moving, and one small landholding that was supposed to open the door into a much larger area.

This continuation isolates what is actually left there now, after the partition suit, the cancellation notice from the co-owners in parcel 45, and the cancellation of the lease arrangements. The answer is sharper than the headlines suggest: this is no longer a “project” in the ordinary sense. What remains is a small right in parcel 45 carried at NIS 625 thousand, a services agreement whose future consideration the company no longer relies on, and an asset that still serves as collateral inside the group’s broader financing map.

That matters now because Nahalat Yitzhak has moved from the language of development into the language of value extraction. As long as Damari and the company were still talking about advancing planning and signing up owners, the debate was about execution odds. Once the company itself says it is negotiating new commercial understandings, cancellation of the partition suit, a sale of its rights in parcel 45, and an assignment of its obligations in the area, the nature of the upside has changed. It is no longer ordinary development upside. It is settlement upside.

What Actually Remains On The Balance Sheet

The most important Nahalat Yitzhak number is not the original NIS 29.9 million services-agreement headline. It is NIS 625 thousand. That is the amount at which Nahalat Yitzhak sits in land inventory at year-end 2025, after a cumulative impairment of NIS 2.193 million.

That bridge matters because it shows what exactly has been worn down. The company bought 45/568 of the rights in parcel 45 in block 7093 in September 2020, including a ground-floor commercial unit, common property, and a storage room. In the project table, Nahalat Yitzhak is still described as an area with transfer-of-rights potential and a plan that, if approved, could reach a 25-story tower with about 164 apartments and 500 square meters of commercial area. But that same page also says the plan has not yet been discussed by the committee. The planning optionality is still written down on paper, but the balance sheet is no longer giving it much credit.

The filing almost says this outright: the company’s ownership share in the land is not material relative to the consideration under the services agreement. That is a small sentence with a large implication. It means Nahalat Yitzhak’s economics never rested mainly on the land parcel the company owns. They rested on the ability to turn the relationship with Damari and the advancement of the area into a much larger contractual payment.

That is exactly what has changed now. Once the contractual consideration weakens, what remains on the balance sheet is not a HaGra-style or Herzl-style project. What remains is a small fragment of land, after impairment, carried at only NIS 625 thousand.

The Original Upside Sat In Damari, Not In The Land

The original Nahalat Yitzhak economics were much larger than the land itself. Under the services agreement signed in March 2021, the Nahalat Yitzhak subsidiary committed to promote an architectural plan for a 20-story building with 91 apartments and about 500 square meters of commercial space, sign up the rights holders in the area, and advance a building permit. In return, Damari committed to pay NIS 29.9 million plus VAT: NIS 5 million at signing, NIS 15 million at the first milestone, and NIS 9.9 million at the second milestone.

Again, the quality matters as much as the size. Most of the money did not sit in the land parcel the company owns. It sat in two future stages that depended on planning progress, signatures, and a permit. Later on, the company was asked to change the service scope so that instead of an architectural plan it would advance a transfer-of-rights planning track, but the addendum to the agreement was still not signed. So even before the partition suit, the deal had already moved away from its original structure.

From there the story only became more complicated. The company negotiated with an alternative third party that examined buying Damari’s rights and additional rights in the area alongside the commitments toward the company, but that negotiation did not mature. After that, the company moved into negotiations with Damari over updated commercial terms and an assignment of obligations. At that exact point, the filing includes the sentence that effectively breaks the original upside case: for prudence, the company reduced the full future consideration it had expected to receive under the services agreement.

That is the real turning point. Once the company itself no longer relies on the future consideration from that agreement in its books, Nahalat Yitzhak stops being a development story with a large embedded payment and becomes a story about exit negotiations, restructuring, or a sale of rights. So the question of what is left is no longer only a planning question. It is a commercial and legal one.

The Partition Suit Did Not Just Hurt The Project. It Changed The Type Of Value

The March 2026 immediate report shows how far this story has moved out of an ordinary development track. Damari filed a partition suit in October 2025 against all rights holders in the planning area, including the company through the project company that holds rights in parcel 45. Following that suit, in November 2025 the co-owners with the project company in parcel 45 notified the company that they were cancelling the evacuation-and-reconstruction agreement signed in September 2020. Their reasoning was tied both to the partition suit and to the claim that the deadlines for the conditions precedent had passed.

This is material because it hits two layers at once. The first is the owner-signing and rights-holder relationship layer, which is the core of the company’s ability to advance the area. The second is the lease layer that had been built back-to-back with that agreement. The company and a controlling shareholder had leased the units in the existing building for 6 years, and at the same time a sublease agreement had been signed with a third party. After the cancellation notice, the company notified the owners that it was cancelling the lease agreements, and from January 2026 it stopped paying rent to the owners.

There is some cash relief here, but not a clean exit. According to the immediate report, the rent paid by the subtenant was assigned to the owners, and that rent was lower than the rent the company itself had been obligated to pay. At the same time, a dispute remained with the owners regarding the validity of the lease agreement and the rent payments. The lease note completes the picture: following the event, the right-of-use asset and the related liability were fully derecognized, and the difference, about NIS 248 thousand, was recorded as financing income.

So the cancellation does remove one layer of ongoing drag, the rent burden, but it does not create a new source of value. It mainly stops one specific bleed while leaving an open dispute behind. This is no longer land that patiently waits for a permit. It is an asset the company is now managing more like a commercial conflict.

The sharpest signal comes from the reporting process itself. The company explains that it delayed the immediate report on the partition suit and the cancellation notice because it believed immediate disclosure could materially worsen the outcome of its negotiations with Damari. Only once those negotiations were delayed beyond the annual-report approval date was the reporting delay lifted. That matters because it shows the company no longer sees Nahalat Yitzhak first and foremost as a planning project. It sees it as a sensitive negotiation arena.

What Remains In The Financing Structure, And Why That Still Matters

If Nahalat Yitzhak had only shrunk to NIS 625 thousand on the balance sheet, it could have been dismissed as side noise. But that is not the situation. Parcel 45 still sits inside the group’s financing structure.

In March 2025, HaGra took a partner loan from Damari in the amount of NIS 2 million. By December 31, 2025, the balance had already risen to NIS 2.118 million, and the interest rate was prime plus 1.5%. That loan is secured by two layers: a Ray guarantee and a first-ranking mortgage on Nahalat Yitzhak’s rights in parcel 45. The loan was extended again in December 2025, and then in March 2026 it was extended to March 31, 2027.

This chart is not claiming that the collateral is worth only NIS 625 thousand in economic terms, and it is not claiming that parcel 45 alone is supposed to cover the entire loan. That would be an unsupported jump. What the chart does show is something else: even after the impairment, even after the cancellation, and even after the move toward negotiations over a sale of rights, Nahalat Yitzhak is not a free asset. It is already embedded inside a collateral web that serves the wider financing pressure.

That matters even more when the cash layer is added. At the end of 2025, the group had only NIS 240 thousand of cash and cash equivalents, against NIS 92.649 million of bank and other credit presented as current liabilities. Again, the point is not that all of that debt rests on Nahalat Yitzhak. The point is narrower, but important: in a company with a tight financing structure, even an asset that has stopped being a growth engine can still serve the financing system.

And that changes how Nahalat Yitzhak should be read. If it once looked like a planning option, it now looks more like a small but active junction between three layers: a low carrying value, unresolved commercial negotiations, and collateral that lives inside another debt node. That means even if a solution arrives, it may not all translate into accessible shareholder value. Part of it may first work by releasing pressure somewhere else.

Bottom Line

What is left of Nahalat Yitzhak after Damari is not a delayed project. What is left is an asset carried at NIS 625 thousand, a services agreement the company no longer builds on as future consideration, and an exit path that still has to run through negotiations, a dispute with rights holders, and collateral arrangements already woven into the financing structure.

The positive side is that the cancellation stopped the lease burden that had weighed on the company, and the accounting already cleaned out the related right-of-use asset and liability. The less comfortable side is that this saving is not the same thing as new value creation. It mainly says Nahalat Yitzhak has moved from being an enhancement story to being a damage-control and residual-right realization story.

That leads directly to the practical conclusion. If a new arrangement with Damari is signed and it includes cancellation of the partition suit, a sale of the company’s rights in parcel 45, and an assignment of its obligations in the area on reasonable terms, Nahalat Yitzhak can still create value. But that would no longer be the value the original thesis was trying to capture. It would be extraction value, not development value. Until such a move happens, Nahalat Yitzhak matters more as a friction point and a financing hinge than as a stand-alone upside engine.