Turgeman in the First Quarter: Bond Cash Rose, Short Debt Still Sets the Pace

The first quarter at Turgeman confirms that the assets are working better, but it still does not prove that the company has moved past its financing bridge year. Rental, management and service revenue rose 12.8% to NIS 27.2 million, and profit from investment property rose to NIS 21.4 million, mainly because of office occupancy at Mol Hahof, additional commercial space and CPI indexation. Still, cash rose to NIS 60.7 million mainly because the first bond issue brought in NIS 121.0 million net, while operations and investments together did not fund all actual cash uses. The working-capital deficit improved compared with year-end 2025, but it remains very large at NIS 765.9 million, and much of it is tied to more than NIS 1.0 billion of short-term bank credit. Gordonia opened only on March 22, so it contributed just NIS 468 thousand in the quarter, not enough yet to prove the hotel's 2026 cash contribution. In Amirei Park Hadera, only three apartments were signed during the quarter, with no additional contracts through the approval date of the financial statements, so the project is still closer to proving sales and funding than to releasing cash. The current read is clear: the operating base is improving, but the next few quarters will be judged by debt extension, actual hotel rent, and Hadera's ability to move from early sales into a project that advances without adding more balance-sheet pressure.

The Mall Drives Revenue, the Hotel Is Still Early

Turgeman is a real-estate company with two practical engines: income-producing commercial, office and hospitality assets, and one residential development project in Hadera. This is not an ordinary equity screen with active market-cap and liquidity data. It is a formerly private company that became a bond company in January 2026. The right starting point is therefore less about an equity earnings multiple and more about how much of the asset value becomes rent, collateral and debt-refinancing capacity.

The strong side of the quarter is the income-producing activity. Rental, management and other service revenue totaled NIS 27.2 million, versus NIS 24.1 million in the comparable quarter. Profit from investment property, meaning rent and property operations before corporate overhead and financing, rose to NIS 21.4 million from NIS 19.4 million. That is not a dramatic change, but it does confirm that Mol Hahof office occupancy and the new commercial areas are already entering the income statement.

The operating-profit line is less clean. Operating profit rose to NIS 20.2 million from NIS 15.0 million, but part of the improvement came from a NIS 3.4 million fair-value gain, compared with a NIS 2.1 million fair-value loss in the comparable quarter. Before that revaluation, and after general, administrative, selling and marketing expenses, operating profitability barely advanced, because G&A nearly doubled to NIS 3.7 million and selling and marketing expenses rose to NIS 0.9 million. In practical terms: the property is pulling forward, while the new public-company overhead and compensation absorb part of the improvement.

Gordonia does not yet change the read. The hotel was supposed to open at the beginning of March, the opening was delayed because of the security situation, and it opened to the public only on March 22. That is why the hospitality segment contributed only NIS 468 thousand of revenue in the quarter. This is positive versus zero in the comparable quarter, but still not a run-rate on which to build a full-year read. The second and third quarters need to show whether the hotel really adds rent and cash flow, rather than just another completed asset on the balance sheet.

The Mol Hahof valuation update also keeps the message conservative. The appraiser did not materially change the property's value compared with year-end 2025, despite the February 24, 2026 completion certificate and finishing works that added about NIS 5.1 million of value. The capitalization rate remained unchanged. The quarter therefore adds operating execution, but not a new real-estate pricing layer that unlocks value by itself.

Cash Rose, but the Source Was the Bond Market

The relevant cash frame here is all-in cash flexibility after actual cash uses: operating cash flow, land-inventory payments, real-estate investments, credit repayments, interest, and payments related to a subsidiary acquisition. On that frame, the first quarter did not fund itself. It received breathing room from the bond.

Operating cash flow before land-inventory purchases was NIS 17.1 million, similar to NIS 16.5 million in the comparable quarter. After NIS 10.3 million of land-inventory payments, operating cash flow was NIS 6.7 million. Against that, NIS 20.8 million went to investing activity, mainly acquisition and construction of investment property, and NIS 51.7 million went to credit repayments, interest and a subsidiary-acquisition payment. Without the NIS 121.0 million of bond proceeds, the cash balance would have looked very different.

The working-capital deficit did decline from NIS 876.5 million at year-end 2025 to NIS 765.9 million at the end of March, but the number still frames the story. Current liabilities are 49.4% of the balance sheet, and short-term credit from banks and other lenders is NIS 1.04 billion. The main reason is that most of Mol Hahof's financing is classified as short term, with maturity in December 2026.

The bond covenants are not an immediate pressure point: the equity-to-balance-sheet ratio is 30.75% versus a 20% minimum, and equity is NIS 652.0 million versus a NIS 325 million minimum. That distinction matters for credit investors. The issue is not near-term covenant breach. It is the match between debt maturity and long-life assets, and the company's ability to replace short debt with longer funding without eroding the flexibility created by the bond.

Hadera Still Has to Prove Sales Reduce Risk

Amirei Park Hadera phase B is where the quarterly report adds the least comfortable data point for ongoing coverage. The project is planned to include 318 apartments in three buildings, and by the end of March 30 apartments had been pre-sold for NIS 62.7 million. That lifts the marketing rate to 9.4%, from 8.5% at year-end 2025, but it represents only three additional apartments during the quarter.

The average price for contracts signed in the quarter was NIS 19,587 per square meter, about 7.5% below the 2025 contract average and about 6.7% below the cumulative average through March. The sample is small, so it does not prove a broad price decline. Still, in a project with total expected revenue of NIS 749.3 million and total expected cost of NIS 652.7 million, an implied gross profit of about 12.9%, even a modest move in price or cost can affect the profit cushion.

The more practical point is funding. The construction-financing agreement requires preliminary conditions for using the credit line by August 31, 2026, including at least NIS 38.2 million of equity investment, registration of collateral, a building permit, a construction agreement and NIS 72 million of pre-sales. As of the end of March, cumulative contracts totaled NIS 62.7 million, and no additional contracts were signed from April 1 through the financial-statement approval date. The gap to the target is not large, but in a quarter with slow sales and a lower price per square meter, it is enough to keep Hadera open as a risk item.

The company has already started excavation and foundation works in the first quarter. That is an important step, but it also makes the next phase less forgiving. Once execution advances, a project with a low marketing rate needs more sales, stable pricing and progress toward the financing conditions. Otherwise Hadera remains a project that creates an early-demand headline, but still consumes capital and financing before releasing cash.

The Next Quarters Need to Replace New Funding With Stable Cash

The previous annual analysis framed 2026 as a bridge year in which the company had to prove that the hotel, Mol Hahof and Hadera could start working together toward cash flow and a cleaner debt structure. The first quarter moved in the right direction on the asset side: Mol Hahof increased revenue, Gordonia opened, and Hadera moved into excavation and foundation works. It moved less on the side that matters most to debt: liquidity improved mainly through a bond, short debt remains large, and the development project is still far from de-risked.

For now, 2026 looks more like a proof year than a harvest year. The read will improve only if Gordonia begins to contribute fuller rent from the second quarter, Mol Hahof continues to increase actual receipts without relying on revaluations, Hadera meets the pre-sales target and other financing conditions, and the company shows real extension or refinancing of short debt. The counter-thesis is reasonable: the mall is strong, covenants are distant, the bond opened a public funding channel, and the hotel only began operating at the end of the quarter. But until those items replace new funding with more stable cash, the first quarter still describes a company improving assets faster than it cleans up the debt structure.