Prashkovsky in the first quarter: Ben Shemen is filling up, but the cash test is not over
Prashkovsky's first quarter shows better profit and operating cash flow, but the improvement is driven mainly by collections and financing becoming available. Progress at Ben Shemen brings the company closer to a key monetization point, yet it still has to turn planned value into recurring cash.
Prashkovsky ended the first quarter with results that look stronger than the operating line itself: net profit rose to NIS 17.6 million and operating cash flow was positive at NIS 135.5 million, while revenue fell by about 26%. The explanation is not only better business performance, but a change in the stage of the assets: completed projects released cash, Ben Shemen started filling with tenants, and Series 17 bonds became more usable funding after the balance-sheet date. Still, this quarter does not close the cash test. Ben Shemen reached 243 signed leases out of 286 units, close to the 90% threshold set in the memorandum for selling half of the rights, but in the quarter itself it contributed only NIS 367 thousand of rental revenue and NIS 190 thousand of NOI. Residential activity weakened in sales and revenue, though without new developer loans to buyers, so the weakness looks more like demand and project timing than sales bought with financing subsidies. The direction improved, but the company still has to prove over the next three quarters that this value reaches the cash account: completion of the Ben Shemen leasing threshold, detailed sale agreements with the institutional buyer, and stronger residential sales on terms that do not require heavy customer support.
Ben Shemen is the transition point between value and cash
Prashkovsky is still measured first as a residential developer, but the first quarter shows that the company is no longer only a story of apartment sales. Israeli development generated NIS 121.9 million of revenue and a NIS 19.0 million segment result, while Israeli rental housing generated only NIS 4.9 million of revenue but a NIS 21.3 million segment result. That gap says a lot: a meaningful part of the result comes from asset values and progress in rental projects, not from rent that is already coming in at full run rate.
The previous annual analysis of the company focused on how much of the value that had grown on the balance sheet was actually accessible to shareholders as cash, debt reduction, or monetization. Ben Shemen is now the clearest test of that question. By the report approval date, 243 leases had been signed out of 286 long-term rental units, with annual rent of about NIS 15.4 million. The 90% threshold set in the memorandum for selling half the rights is about 258 units, so the project is roughly 15 signed units short of the numerical threshold.
That progress is real, but it is still not cash in the account. The sale of half the rights in Ben Shemen is priced at about NIS 286.4 million for the apartments and about NIS 14.8 million for the commercial space, before VAT, but payment depends, among other conditions, on signed and income-producing leases for 90% of the residential units. In the quarter itself, occupancy during the period was 60%, rental revenue was NIS 367 thousand, and NOI was only NIS 190 thousand. At the project company, Netivei Dor Ben Shemen, the quarter ended with a NIS 7.6 million loss after financing expenses and fair-value movements. Ben Shemen is already proving tenant demand, but not yet full cash contribution at group level.
There was also progress on financing. Series 17, issued in February 2026 with NIS 400 million par value and a 2.67% annual CPI-linked coupon, was initially held in escrow and was released to the company in April 2026 after the liens were registered. The LTV of the series against the pledged asset value is about 66.7%, below an 80% ceiling. The issue is not immediate covenant proximity, but whether the asset starts paying for the financing it supports.
Cash flow improved, but mainly through working capital
The move to positive operating cash flow is the clearest improvement in the quarter: positive NIS 135.5 million, compared with negative NIS 183.2 million in the comparable quarter and negative NIS 430.4 million for all of 2025. This is an important number, but it should be read as an all-in cash picture, not as normalized recurring cash generation from the existing business.
The central driver was working-capital release. A decline in receivables, contract assets, and current tax assets contributed NIS 385.7 million, mainly from collections in projects completed in the fourth quarter of 2025 and the first quarter of 2026. Against that, inventory of buildings under construction, land inventory, and land increased by NIS 180.5 million, while liabilities to land sellers fell by NIS 76.1 million. This is a better picture than in 2025, but not a base that should be assumed to recur every quarter.
The all-in cash picture is still tighter than operating cash flow alone suggests. Cash was NIS 40.3 million, alongside NIS 473.7 million of deposits and designated accounts, most of the increase coming from Series 17 proceeds that were pledged until the liens were registered. Investing activity used NIS 554.3 million, mainly through deposits in designated accounts and investment in investment property. The quarter therefore proves that the company can release cash from projects that advanced, but it does not yet prove recurring cash generation that can fund rental-housing growth, land, and financing costs by itself.
Residential sales weakened, and debt still sets the pace
The less comfortable part of the quarter is residential sales. In the first quarter, the company sold 37 apartments and 51 square meters of office space for NIS 54.3 million, compared with 43 apartments and NIS 142.1 million in the comparable quarter. After the balance-sheet date, it sold another 11 apartments and 1,827 square meters of office space for NIS 69.4 million, so activity did not stop, but the quarter itself was weaker both in volume and consideration.
Revenue from apartment and office sales fell to NIS 92.5 million, down about 34%, and gross profit in the activity fell to NIS 18.9 million. The gross margin was 20.5%, close to 21.9% in the comparable quarter, so the problem is not a margin collapse but lower recognized volume. Moradot Lincoln in Haifa contributed a low 9.1% gross margin, while Southgate in Herzliya showed a much higher 37.6% margin. The residential segment is not one block, and recognition pace depends heavily on the specific projects being delivered and sold.
Here, however, there is a more positive point than the top line suggests. The company says no developer loans were granted to apartment buyers in the first quarter of 2026. In the comparable quarter of 2025, developer loans were immaterial, four transactions out of 45, with financing costs of about NIS 0.2 million. That means the decline in sales was not held up by expanding financing subsidies to customers. It does not make the decline positive, but it clarifies the issue: demand pace, project mix, and revenue-recognition timing, not evidence that the company bought sales with expensive financing support.
At the same time, the balance sheet is still built around a large credit base. At the end of March 2026, liabilities totaled about NIS 5.04 billion, against equity of NIS 2.21 billion. The company has about NIS 1.05 billion of CPI-linked loans and bonds, and about NIS 2.7 billion of prime-based loans, with quarterly financing expenses on the prime-based loans estimated at about NIS 38 million. The company complies with its covenants, net financial debt to CAP is 63.3%, and Midroog assigned the new series an A1 rating with a negative outlook. This does not look like an immediate liquidity event, but debt cost reduces the time available before Ben Shemen, Be'er Yaakov, and Ganei Azar have to generate income or be monetized.
Conclusions
The first quarter of Prashkovsky paints a somewhat better picture than the one after 2025, but still not a clean one. Ben Shemen has advanced to the point where it is roughly 15 signed units short of the numerical 90% threshold in the memorandum, and Series 17 has already moved from escrowed cash to released financing after liens were registered. These are real milestones, not noise.
Still, the company has not proven that it has moved from an asset machine to a cash machine. Positive operating cash flow relied mainly on collections and working-capital movements, residential activity weakened in sales volume, and the rental-housing projects still have to show that fair value and expected NOI reach the cash account, not just valuation tables. Over the next few quarters, the market is likely to focus on three things: whether Ben Shemen crosses the leasing threshold and brings payment under the monetization deal, whether residential sales recover without material developer loans, and whether debt cost remains manageable while the company continues funding inventory, land, and rental housing.
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