Amot in the first quarter: strong assets, but the bridge year is still heavy
NOI rose to NIS 269 million and ToHa2 moved forward, but FFO per share fell to 38 agorot and the all-in cash picture stayed heavy. The next quarters need to prove that development turns into signed leases, occupancy and FFO per share before the market gives full credit.
Amot did not report a weak quarter, but it did report a quarter that explains why 2026 is still not a breakout year for shareholders. The existing portfolio keeps working, NOI rose 1.9% to NIS 269 million, and ToHa2 reached roughly 45% signed leases out of marketable space, but management-method FFO fell 7% and FFO per share fell 11% to 38 agorot. That gap matters more than the NOI growth, because the share traded around EPRA NTA rather than at a deep discount that lets the market settle for future asset value. The all-in cash picture sends the same message from another angle: operating cash flow of NIS 100 million did not cover investments, dividends and debt repayments in one quarter, even though this is not a liquidity-stress story. The company has NIS 1.05 billion of undrawn credit lines, a strong rating and almost all assets unencumbered, so access to capital is not the active bottleneck. The bottleneck is conversion speed: more ToHa2 leases, construction completion and Form 4, better office occupancy, and occupancy that begins to show up in FFO per share. Until then, the company remains high quality inside an expensive bridge year.
The Assets Work, But Per-Share Earnings Do Not Yet Join In
The economic map remains strong: 111 income-producing properties, 1.86 million square meters of space, NIS 21.7 billion of investment property and about 1,730 tenants. Offices account for 47% of income-property value, logistics and industrial assets for 29%, retail for 17% and supermarkets for 5%. This is a broad portfolio in demand areas, with relatively low-cost debt and a long debt duration.
Still, the quarter sharpens the same issue raised in the previous annual analysis: asset stability is not enough if it does not reach the shareholder layer. NOI was NIS 269.4 million, compared with NIS 264.3 million in the comparable quarter. Same-property NOI rose only 1%, after a roughly NIS 1 million provision for estimated lost income related to Operation Roaring Lion. That is not a poor result, but it is not a step-change either.
The gap appears in FFO. Under the Israel Securities Authority method, FFO rose 10% to NIS 192.4 million, because that metric treats indexation differences differently. Under management's method, which is also the relevant measure for the trust deeds, FFO fell to NIS 187.8 million. At the share level the decline was sharper: 38.0 agorot, versus 42.9 agorot in the comparable quarter, partly after the July 2025 issuance of 20.7 million shares.
The valuation context makes that important. The last market cap before the report was about NIS 10.8 billion, almost identical to the NIS 10.8 billion EPRA NTA at the end of March. When the stock sits around tangible net asset value, the market has less patience for a gap between asset potential and actual FFO per share.
The operating weak spot is in offices. Overall occupancy was 92.2%, or 93.4% excluding assets moved from investment property under construction in 2025. In offices, almost half of income-property value, occupancy was only 84.3%, or 85.7% excluding those new assets. Logistics and industrial assets were at 96.2%, retail at 97.8% and supermarkets at 100%. The problem is not portfolio-wide weakness. It is the quality and pace of leasing in the asset class that holds much of the future growth.
ToHa2 Advanced, But Has Not Finished Its Leasing Test
ToHa2 is the asset that can change the 2027 read, so progress there matters more than another modest quarterly NOI increase. The project includes about 156 thousand above-ground square meters in Tel Aviv, and the company's share is 50%. The Google lease already provides a meaningful anchor: about 60 thousand shell-level square meters, several hundred parking spaces, a 10-year lease with a one-time exit right after five years, and total annual rent of about NIS 120 million, with the company's share at 50%.
This quarter moved the story forward, but did not close it. Signed leases cover about 45% of marketable space, and significant negotiations are under way for the remaining space. That is progress against the checkpoint opened in the ToHa2 follow-up analysis, but 45% signed is not full occupancy and does not remove leasing risk. The difference between an anchor tenant and a critical mass of tenants is exactly where the future NOI still needs proof.
The timetable also remains tight. The structural frame has been completed, envelope and systems work are progressing according to plan, and the company expects construction completion and Form 4 by the end of 2026. Google's lease is scheduled to start in the first quarter of 2027. Any delay in Form 4 or occupancy can move NOI between years, even if the project itself remains high quality.
The wider development pipeline adds potential, but also cash uses. The three projects under construction are expected to add NIS 243 million to NIS 267 million of NOI at the company's share upon full occupancy: NIS 150 million to NIS 165 million from ToHa2 alone, NIS 44 million to NIS 48 million from the Lehi complex, and NIS 49 million to NIS 53 million from Complex K in Jerusalem. Against that, the path to representative NOI after occupancy still requires about NIS 1.4 billion of additional investment. At Lehi, the retail floors have opened and contracts were signed for about 13 thousand square meters that are expected to generate about NIS 22 million of annual rent at the company's share, but the office tower is still in final works and marketing. Complex K is scheduled for completion only in 2029, so it is less relevant to the near-term test.
The All-In Cash Picture Is Heavier Than NOI
In this quarter, operating cash generation and all-in cash flexibility need to be separated. Operating cash flow was NIS 100.2 million, compared with NIS 175.3 million in the comparable quarter. A large part of the decline relates to tax payments under an assessment agreement for 2020 through 2023, so it should not be read as normal operating weakness. But shareholders also need to know how much cash remains after the actual cash uses.
On that all-in basis, after investments, dividends, debt repayments and financing movements, the quarter was heavy. The company invested NIS 157.5 million in investment property, property under construction and building rights, paid NIS 246.9 million of dividends, repaid NIS 194.8 million of long-term bonds, and received partial relief from short-term credit and option exercises. The result was a NIS 396.0 million decline in cash and cash equivalents.
This is not a liquidity-stress picture. As of report publication, the company had about NIS 100 million of cash, NIS 1.05 billion of undrawn credit lines and 98% of assets unencumbered. It also repaid after the balance-sheet date the NIS 100 million of credit lines used at the end of March. The financial covenants are far from pressure: net financial debt to NOI was 5.5 versus a 14.0 threshold in the bond series, and the equity ratio was 54% versus a 22.5% threshold.
The external rating supports that read, but it also defines the comfort zone. Midroog affirmed an Aa2.il rating with a stable outlook at the end of March 2026, and expected the company to maintain cash-flow stability, high occupancy and financial flexibility. At the same time, its base case sets FFO at NIS 770 million to NIS 830 million in 2026 through 2027 and net financial debt to FFO at 11 to 12 years. That is manageable headroom for a highly rated company, not permission to ignore development delays.
The Bridge Year Has To Become Proof
The 2026 guidance tells most of the story. The company expects NOI of NIS 1.07 billion to NIS 1.10 billion, compared with NIS 1.06 billion in 2025. Management-method FFO is expected at NIS 790 million to NIS 810 million, compared with NIS 804 million in 2025. FFO per share is expected at 160 to 164 agorot, compared with 166.7 agorot in 2025. Even if management hits guidance, the year still looks more like a bridge to 2027 than an immediate shift in per-share earnings.
The current read is positive at the asset-quality and funding-access levels, and mixed at the shareholder level. The strongest counterpoint is that the market may be too harsh on one quarter in which taxes, indexation, rates and dilution distort FFO per share while the large projects are already advancing on the ground. That is a fair objection, but it requires near-term proof: additional ToHa2 leases, Form 4 by year-end, initial NOI from Lehi, and better office occupancy without signs that the company is buying demand through weaker terms.
Over the next two to four quarters, the company needs to show that balance-sheet strength is financing a transition, not only dividends and development before income arrives. If ToHa2 and Lehi mature on time, the decline in FFO per share will look in hindsight like a temporary cost of a bridge year. If leases or occupancy move to the right, the market will continue to see a gap between a company with good assets and a stock that still does not receive that growth in the line that matters.
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