Levy and Hayarkon 185: The Value Exists, Cash Still Depends on Financing and a Tenant
Hayarkon 185 is carried at a fair value of about NIS 54 million and could, under the company's proposed structure, release about NIS 11 million to the cash balance. But the path runs through alternative financing, a NIS 25 million deposit or guarantee plus accrued interest, and an asset that still has no signed tenant.
The follow-up read on Levy has to separate asset value from usable cash. Hayarkon 185 is a real asset, with fair value of about NIS 54 million and weighted collateral value of NIS 45.9 million, so the accounting and collateral base exists. But the asset is still pledged to the Series H bondholders, and its release does not start with cash flowing into the company. It starts with protecting the bondholders through a NIS 25 million deposit or bank guarantee, plus accrued interest. Only after that step does management expect a free balance of about NIS 11 million to reach the company. The second bottleneck sits in the income-property note: since the prior tenant left, the company has been negotiating with several potential tenants, but no new lease had been signed by the approval date of the financial statements. The current conclusion is therefore not that Hayarkon 185 solves liquidity, but that it can become a cash source only if two things happen together: binding alternative financing and a tenant that restores cash-flow quality to the asset.
Value Exists, But It Is Not Yet Cash
Hayarkon 185 matters because Levy is not presenting it as just another property in the portfolio. It is part of a broader effort to release pledged real-estate assets, refinance them, and pull back part of the equity historically invested in them. For a development and income-real-estate company, using assets as collateral is normal. What is less routine here is the timing: in a quarter with warning signs, a working-capital deficit of about NIS 12.1 million, a net loss of about NIS 5.2 million, and negative operating cash flow of about NIS 9.1 million, appraisal value has to pass through a financing filter before it can help liquidity.
The structure promoted by the company rests on two different numbers that should not be blended. The first is the asset value, about NIS 54 million. The second is the potential cash that may reach the company after the collateral replacement. Management estimates that alternative financing could be raised against the asset at about 75% of its value, or about NIS 40.5 million. From that amount, NIS 25 million plus accrued interest must first be deposited with the trustee or backed by a bank guarantee in order to release the Series H lien. The free balance presented for the company's cash account, about NIS 11 million, is a different figure: not the value of the asset, but what may remain after the bondholder layer is protected.
| Hayarkon 185 mechanism | Number or status | Economic meaning |
|---|---|---|
| Fair value of the asset | About NIS 54 million | The valuation base behind the plan |
| Weighted collateral value | NIS 45.9 million | The asset still functions first as Series H collateral |
| Potential alternative financing | About NIS 40.5 million | Management estimate based on about 75% of asset value |
| Deposit or guarantee to the trustee | NIS 25 million plus interest | Precondition for releasing the lien |
| Expected free balance | About NIS 11 million | Potential cash to the company if the move is completed |
| Leasing status | No new signed lease | The collateral exists, but property cash flow is still missing |
That is why the NIS 11 million figure matters more than the NIS 54 million value when liquidity is the question. The value says there is an asset. The free balance says how much of that asset may reach the company after the bondholders, and even that depends on financing that is not yet a binding agreement.
Series H Gets Protected First
Hayarkon 185 is pledged under a first-ranking lien to the Series H bondholders. The series was issued in March 2022, bears fixed shekel interest of 7%, and its final principal and interest payments are scheduled for March 31, 2027. As of the end of March 2026, the company states that no conditions existed for immediate repayment, and that it met the required debt-to-collateral ratio. The issue is therefore not an existing breach. It is the company's access to the value of an asset while that asset is pledged.
The collateral-replacement mechanism gives the company a route: a pledged asset may be replaced by a cash deposit, an autonomous bank guarantee from one of Israel's five largest banks, Israeli government securities, or short-term government notes, provided the collateral ratio conditions remain intact. For Hayarkon 185, the committed replacement value is set at NIS 25 million. That makes release easier relative to the full asset value, but it also clarifies priority. Before the company can talk about free cash, it has to place alternative protection under the Series H bondholders.
This point becomes more important because the company states that it has no unencumbered assets. Hayarkon 185 is therefore not only an opportunity to refinance one asset. It sits inside a liquidity map in which most assets are already pledged, and value extraction requires collateral replacement, new financing, and sometimes guarantees. In all-in cash flexibility terms, this remains a conditional move: it can bring in cash, but first it has to pay the release cost.
The Missing Tenant Weakens Collateral Quality
The appraiser update helps Levy on one point: as of March 31, 2026, no material change was identified in Hayarkon 185's value relative to the prior valuation. The January 2026 deposit of Tel Aviv Plan 5500 also did not, under the update, change the relevant building rights relative to the District 3 plan. In other words, the issue is not that the accounting value disappeared. The question is whether that value can be translated into financing terms that actually serve the company.
This is where the tenant matters. The company's office activity in France is described as stable and fully occupied, but Hayarkon 185 is in a different position: since the tenant left, negotiations have been held with several tenants, and no new contract had been signed by the approval date of the statements. That does not erase the value of the land and property, but it changes the cash-flow quality of the story. A leased asset can support debt service through rent. An asset without a signed tenant leans more heavily on collateral value, appraisal assumptions, and the lender's willingness to provide credit before the property is producing rent again.
The company does not yet disclose the possible financing terms: rate, maturity, amortization, additional collateral, covenants, or whether the financing depends on a signed tenant. That does not make the plan weak, but it prevents the plan from being counted as a completed liquidity solution. The market will get proof only when two hard details appear: a binding financing agreement showing how much cash truly reaches the company after the Series H protection, and a lease showing that the asset is not only collateral but also a cash-flow source.
The Next Read Depends on Execution
Hayarkon 185 is a clean example of the gap between paper value and accessible liquidity. Levy has an asset whose value has not eroded, a trust-deed mechanism that can in principle replace collateral, and a management estimate that about NIS 11 million would remain for the company after the deposit or guarantee. That is enough to make the asset a meaningful financing option, especially when there are no unencumbered assets. It is still not enough to call it a solution.
The read improves if the company signs alternative financing on clear terms, actually posts the Series H deposit or guarantee, and signs a new lease for the property. It weakens if financing is delayed, if interest or additional collateral consumes the free balance, or if the asset remains without a tenant. Until then, Hayarkon 185 is an asset with proven value but a cash path that still has to pass through two gates: the bondholders and the next tenant.
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