Suprin in the first quarter: debt buys time, the projects still need to deliver cash

Suprin opened 2026 with a much stronger cash position than it had at the end of 2025, but the quarterly report does not yet prove that the projects are funding themselves. Series C brought in about NIS 82 million net, and cash and cash equivalents rose to NIS 95.2 million, while operating cash flow in the same quarter was negative NIS 26.7 million and the company moved to a net loss of NIS 3.9 million. This is not only a cyclical revenue drop, because the report also shows first signs of project collection: project income receivables declined slightly, Technopark Ashdod group-member debt decreased, and accrued project guidance expenses declined by about NIS 22 million. Still, the main test remains open: Migdalei Atid reached a financing agreement, but the financing is still subject to signatures, equity funding and conditions precedent, and had not actually been provided by the report date. At the same time, the company itself warns that sales terms such as 20/80, non-indexation and contractor loans support apartment sales but shift part of the risk to the handover date and to buyer financing. The first quarter therefore mainly bought time: the cash balance gives the company breathing room, but the interpretation will change only if the backlog starts turning into cash without another reliance on new debt.

The cash came from debt, not from the projects

The company combines three real-estate activities: organizing and managing purchase groups, residential and commercial development, and income-producing properties. That mix matters because accounting profit is not always the central metric. In this kind of company, the immediate question is how much of the projects already visible in the financial statements turns into receipts, how much additional capital must be brought in along the way, and how much of the value sits above the public-shareholder layer inside held companies, partnerships and purchase groups.

The first quarter sharpened that gap. Consolidated revenue fell to NIS 6.5 million, compared with NIS 21.9 million in the parallel quarter, mainly because engineering management and supervision revenue declined and the parallel quarter included income from option assignment. Gross profit fell to NIS 3.1 million, and the operating loss was NIS 3.2 million. Even segment results on a proportional basis do not solve the picture: the segments produced NIS 7.1 million of profit before adjustments, but NIS 10.3 million of adjustments brought the consolidated result down to an operating loss.

The more important number is cash flow. The all-in cash picture in the first quarter is positive only after financing activity is included: negative operating cash flow of NIS 26.7 million, negative investing cash flow of NIS 6.9 million, and positive financing cash flow of NIS 88.8 million. This is an all-in cash picture after a debt raise, not evidence of recurring cash generation by the business.

Management says the company does not have a liquidity problem, and there is a basis for that statement: cash and cash equivalents together with the money-market fund totaled NIS 102.7 million, project income receivables were NIS 109.8 million, and accrued project guidance expenses were NIS 64.6 million. The company also points to the potential sale of income-producing properties if needed, although that possibility was not included in the liquidity calculation. But if the test is cash generation from existing operations, the quarter remains weak: operating cash flow was negative in the first quarter and was also negative for all of 2025, when the company recorded negative operating cash flow of NIS 77.8 million.

Series C changes the timetable of the test, not the test itself. In February 2026 the company issued Series C bonds with a face value of NIS 87.0 million, unlinked, carrying a fixed 6.5% interest rate, together with options. Principal repayments start in 2027 and continue until 2033, so the raise gives the company time. But it also adds another debt and covenant layer: solo equity must remain above NIS 90 million, and the solo equity-to-balance-sheet ratio must remain above 22.5%. The company is in compliance as of the report, but a 1% increase in interest rates is expected to affect group finance expenses by about NIS 1.9 million per year. In a company where the projects are still consuming cash, that is not a minor detail.

The backlog started to collect, but Migdalei Atid is still before active financing

In prior coverage of Suprin, including the analysis of Migdalei Atid and Technopark, the main monitoring point was whether the backlog and projects would move from entitlement and accounting progress into collection and active financing. The first quarter gives only a partial answer. On the positive side, project income receivables declined from NIS 112.1 million at the end of 2025 to NIS 109.8 million, and the company attributes the decline to collection of engineering management fees from purchase groups. Receivables also declined because debts of purchase-group members in Technopark Ashdod decreased. These are positive signs because they address the exact issue that weighed on the annual report: profit and income entitlement that do not enter the cash account fast enough.

At the same time, the size is still meaningful. NIS 109.8 million of project income receivables is still a large amount relative to the company, and the report itself assumes that a central part of that balance should be received during 2026. The monitoring point is therefore not the decline in one quarter, but the continuation rate. If the balance keeps falling through actual receipts, the read improves. If it stays high while operating cash flow remains negative, Series C will look more like an extension of time and less like a turning point.

Migdalei Atid is the clearest example of the gap between formal progress and active money. In February 2026 the company, as a purchase-group member, and other group members signed an agreement with Bank Leumi and Migdal to provide credit for construction of the project. This is an important step because the project still requires substantial investment: the company’s expected investment cost in the project is NIS 133.2 million, of which about NIS 82.8 million remains to completion. But the report adds that the agreement becoming effective and the financing being provided are subject to all group members signing and to conditions precedent, including equity funding by the remaining group members. By the report date, the financing had still not been provided.

That means the financing agreement has not yet closed the execution test. Demolition, asbestos removal, excavation and shoring works have already been completed, but basement and building construction is expected to begin only after progress in obtaining the financing. The quantitative data says the same thing: budget completion is 37.9%, and no additional investment in the project was recorded during the quarter. In a project with expected completion in 2029, most of the future value still depends on when the financing actually becomes effective and when construction advances continuously.

Sales require more support from the balance sheet

The positive side of the report is that the company is not standing still on sales. It reported the sale of 14 apartments in the first quarter and shortly before the report date, including 10 apartments in the Ha’em Yoseftal project in Bat Yam, whose marketing began in 2026. In EAST&TLV, three contracts were signed in the first quarter and two additional contracts after the report date, and the cumulative marketing rate in the project is about 70%. These figures show commercial activity, not only a theoretical backlog.

But the report itself explains why the sales should not be read as clean evidence of demand. The company says that in a high-rate and inflationary environment it has to adjust prices and sales terms, including preferred financing terms, 20/80 arrangements, non-indexation and contractor loans. Those terms can support the sales pace, but they defer a large part of the payment to a later date and increase the company’s sensitivity to buyer financing availability.

The risk is not theoretical. The company itself writes that such benefits embed an economic benefit in the apartment price and may create exposure to cancellations if apartment prices decline or if buyers cannot obtain financing at the final payment date. It also refers to a draft temporary instruction by the Bank of Israel’s Supervisor of Banks, which could limit bank financing for deferred-payment apartment transactions and balloon or bullet loans until the end of 2026, and thereby hurt payment-term flexibility and receipts cash flow.

Sales quality therefore matters as much as sales volume. If the company can maintain the sales pace without increasing the weight of deferred payment terms, the next reports can show that demand is more real and that buyer financing is not becoming a bottleneck. If sales continue to rely on deferred payments, the company may show contracts, but cash will remain farther away from the financial statements.

Conclusions

The first quarter of 2026 does not close the questions opened by the annual report, but it defines them more clearly. The company received time from Series C, reduced part of its receivables and showed first signs of project collection. At the same time, it still shows negative operating cash flow, Migdalei Atid has not yet moved from conditional financing to active financing, and residential sales are taking place in an environment where favorable payment terms have become part of the competition for the customer.

Over the next two to four quarters, three numbers and events matter most. The first is whether the NIS 109.8 million of project income receivables continues to decline through actual receipts. The second is whether Migdalei Atid completes the conditions for activating the financing and starts moving beyond preparation works. The third is whether operating cash flow improves without another meaningful layer of debt.

If those three things happen, Series C will look like bridge financing that used a debt-market window to let the projects advance. If not, the first quarter will mainly be remembered as the quarter in which debt improved the cash picture while the business itself still had to prove that it can turn backlog, land and signed sales into cash accessible to shareholders.