My Town in the First Quarter: Sales Returned, Project Surpluses Still Need to Reach Cash
My Town opened 2026 with stronger sales, occupancy milestones in two near-term projects, and cleaner payment-term disclosure. But the quarter still leaves the core question open: how quickly project surpluses turn into cash at the company level.
The first quarter of My Town was not just another weak quarter for a small developer waiting for projects to mature. Sales returned at a pace the company did not show in 2025, Nordau 78 received an occupancy form, Biltmore 12 received a completion certificate after the reporting date, and Kiryat Malachi finally moved into actual execution with the demolition of the existing building. Those are positive developments, and they close part of the open question from the previous annual analysis. Still, the quarter does not solve the more important issue: how quickly project surpluses become cash at the company level. Operating cash flow remained negative, current bank and other credit rose to NIS 68.5 million, and Biltmore 12 already showed how a short occupancy delay can turn into a NIS 9.3 million bridge loan. So 2026 starts better on execution and sales, but it is still a transition year in which holders need to see actual surplus releases, not only a longer list of advancing projects.
Company Background
The company operates in residential development in Israel, mainly urban renewal. This is not an income-producing real estate company with steady NOI, or net operating income from properties. It is a project business: signatures, permits, financing, sales, construction, occupancy, and surplus release. Each stage can create value, but cash arrives late, after banks, landowners, partners, and project costs have taken priority.
The business map is already broad relative to the company's size. As of the report approval date, the group and its partners were developing 2,671 housing units, of which 1,970 were the company's share, plus 23,096 sqm of office and commercial space, of which 14,146 sqm were the company's share. That includes 159 units in projects under construction, 336 units in projects under planning, 162 units in land reserves, and 2,014 units in urban renewal projects. These figures explain the project upside, but also the bottleneck: until projects release surplus cash, the company funds inventory, equity contributions into projects, and overhead.
The company does not trade like a regular listed equity with an active daily market cap. The relevant public layer is mainly Series A bonds, so the right analytical lens is cash and credit rather than earnings multiples. That makes the pledged surpluses, owner loans, and cash-release timing more important than the quarterly profit line.
Sales Returned With Cleaner Payment Terms
The clear positive in the quarter was sales pace. During the first three months of 2026, the company signed 18 sale agreements totaling NIS 37.7 million including VAT, with the company's share at NIS 18.3 million. No agreements were signed in the comparable quarter, and only 4 agreements totaling NIS 13.4 million were signed in all of 2025. Most of the change came from Kiryat Malachi, where 16 binding sale agreements totaling about NIS 30 million were signed during the quarter after marketing began in November 2025.
This is not only a volume improvement. Payment-term disclosure matters just as much: from the start of 2026 through the report publication date, 100% of the company's sales were on a linear payment schedule. The company states that it has not granted developer loans, and that exemptions from indexation and 80/20 or 10/90 payment structures are used only rarely. That does not eliminate the sector risk in a competitive residential market, but it weakens the argument that new sales are mainly being supported by buyer financing concessions. In this quarter, sales quality looks better than one might have feared at the start of the year.
Still, sales are not surplus cash. In Kiryat Malachi, marketing reached only 12% at the end of March, the project was still at 0% accounting completion, and expected completion is only in the second quarter of 2030. Even in Tel Aviv projects already under construction, some marketing levels remain low relative to future cash needs: Jabotinsky 105 was at 8% marketing versus 38% accounting completion, and Brandis 9 was at 20% versus 31%. The sales improvement is a good starting point, not the end of the analysis.
| Checkpoint | What Happened in the Quarter | Why It Matters |
|---|---|---|
| Sale agreements | 18 units for NIS 37.7 million | A jump from zero agreements in the comparable quarter |
| Payment terms | 100% of sales on linear payment schedules | Fewer signs of buyer subsidies than the sector concern implied |
| Kiryat Malachi | 16 agreements for about NIS 30 million | Early demand proof in the large project, but still far from cash |
| Biltmore 12 | Completion certificate after the balance date and 2 agreements after March 31 | Lowers risk in a near-term surplus-release project |
| Jabotinsky 105 | 8% marketing versus 38% completion | Part of the future surplus still depends on additional sales |
Project Progress Improved, But Financing Is Still Counting the Days
The operating progress was real. Nordau 78 received an occupancy form during the quarter. Biltmore 12 received a completion certificate from the Tel Aviv-Yafo local planning committee after the quarter, and all owner apartments plus 4 of the 5 sold apartments had been handed over by the report publication date. Those are exactly the two projects that were supposed to start turning 2026 from a waiting year into a surplus-release year.
Biltmore also shows the problem. The occupancy delay held back surplus release, so the company took a NIS 9.3 million loan from a non-bank lender. At the same time, short-term bank and other credit rose from NIS 30.2 million at the end of 2025 to NIS 68.5 million at the end of March 2026. The explanation is a combination of credit use in projects under construction, mainly Jabotinsky 105 and Brandis 9, together with that bridge loan.
When looking at all-in cash flexibility after actual cash uses, not normalized cash generation from mature projects, the quarter relied almost entirely on financing. Operating cash flow was negative NIS 23.2 million, mainly because of inventory and project investment. Investing activity added NIS 1.4 million, but financing activity supplied NIS 24.0 million, including credit drawdowns and a NIS 9.3 million bond principal repayment. Cash rose from NIS 0.8 million at the beginning of the year to NIS 3.0 million at the end of March, but not because project surpluses had already reached the company.
The company itself gives the key checkpoint: it expects to draw about NIS 44.9 million from project surpluses from April 2026 through the end of March 2027, and another NIS 54 million from April 2027 through the end of March 2028. The first-year figure includes NIS 7.6 million from Nordau 78, NIS 17.4 million from Biltmore 12, NIS 5.2 million from Antigonus 9, NIS 4.1 million from Brandis 9, NIS 3.8 million from Alexander Yanai, NIS 4.8 million from Jabotinsky 105, and about NIS 2 million from Kiryat Malachi. That is a clear path, but a timing-sensitive one: if a near-term project slips, the pressure immediately moves to credit.
There is also an important support point at the shareholder layer. After the reporting period, the company approved deferring the accumulated annual interest on owner loans with NIS 11.5 million principal, so the interest will be paid only after the final full repayment of Series A bonds. In addition, both principal and interest will be subordinated to the bonds, and in liquidation they will be repaid only after the series is fully repaid. This does not create new project surpluses, but it improves bondholder priority and reduces cash leakage to shareholders during the transition period.
Conclusion
The first quarter strengthens the positive case for the company: it has real projects, new sales, and progress in near-term projects that can begin releasing cash in 2026. It also weakens one concern left open at the end of 2025, because the new sales do not look like they were built on broad buyer-financing concessions. In a development company, sales quality can be almost as important as sales quantity.
The thesis is still not clean enough to call the quarter a full inflection point. Current credit rose quickly, operating cash flow stayed negative, and Biltmore 12 showed that even an almost-complete project delay can require interim financing. Deferring owner-loan interest is positive for bondholders, but it does not replace project surplus release. Over the next two to four quarters, three things need to happen: Biltmore and Nordau need to release cash, Kiryat Malachi and the Tel Aviv projects need to keep selling without broad payment concessions, and credit use needs to stop rising faster than project progress. If that happens, 2026 can read as a constructive transition year. If not, the first quarter will remain proof that demand returned before cash arrived.
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