The Leser Group in the First Quarter: June Is Funded, December Depends on Asset Sales and the Dollar
The Leser Group opened 2026 with higher NOI from 2440 Fulton and enough solo cash to cover the June bond payment. The rest of the year still depends on asset sales, additional Fulton financing, and keeping covenants intact while the dollar-shekel rate moves against the company.
In the first quarter of 2026, The Leser Group resolved the easier part of the year: solo cash covers the June principal and interest payment. The harder part moved to December 2026, and it depends on asset sales, additional financing at 2440 Fulton, and the dollar-shekel rate. The operating business improved, mainly because Fulton began contributing to revenue and NOI, yet recurring cash still does not fund the debt schedule. Management AFFO remained negative, consolidated operating cash flow was negative, and the year-end cash forecast relies mostly on disposals, deposits and financing. The detail a reader may miss is that debt covenants have become a pressure point earlier than December: the company estimates that if the June 30 dollar rate is similar to the rate at the financial-statement approval date, it will not meet the 75% debt-to-CAP covenant and a certain minimum-equity requirement. This quarter is therefore real progress in liquidity management, not a complete reset of the risk profile. From here, only three points really matter: the McDonald closing, the first Fulton financing, and whether the dollar lets the company remain inside its covenants until Series H is repaid or refinanced.
Fulton Lifts NOI, Debt Sets the Pace
The Leser Group is a U.S. income-producing real-estate company with properties in New York, Pennsylvania, New Jersey, Georgia and Florida, alongside development assets, land and unsold units in a residential project. In a leveraged income-real-estate company, debt and refinancing are normal. The unusual point here is timing: large bond payments in 2026 meet a property portfolio that has to become cash quickly.
The continuity from the previous annual analysis is clear. At that point, 2440 Fulton had already shown that it could lift revenue and NOI, and June payments looked fundable. December 2026 was still open. The first quarter did not close December, but it made the monitoring points more concrete: $66.6 million of solo cash, a McDonald deposit that became non-refundable, $12 million released from the Fulton deposit, Monsey financing, and sale or refinancing processes around Series H collateral.
The operating numbers improved. Rental and related-service revenue rose to $20.3 million, up about 26.5% year over year. NOI rose to $13.0 million, up about 33.5%. Operating profit reached $9.7 million, compared with $7.8 million in the comparable quarter. The burden appears below operating profit: finance expenses rose to $17.5 million, and a $3.2 million foreign-exchange loss replaced a $7.1 million gain in the comparable quarter. Net loss reached $10.4 million, including a $9.7 million loss attributable to shareholders.
Fulton is the main reason for the improvement. In the quarter it generated $3.1 million of NOI, average occupancy was 77%, and average rent was $65.01 per square foot per year. The property value at quarter-end was $291.8 million. This is now a property that has moved from development to revenue, but its cash contribution still runs through financing mechanics. Of the roughly $16 million deposit tied to the New York City lease, $12 million was released and $4 million remained at the bank as security for senior-loan payments during the free-rent months. In addition, three free-rent months will be given in June 2027, June 2028 and June 2029 because delivery of the space was delayed by about five months.
June Is Covered, December Is an Asset-Sale Plan
All-in cash flexibility after expected cash uses through year-end 2026 looks better than at the beginning of the year, but recurring cash has to be separated from one-off sources. The June 2026 principal and interest payments total about $66 million. Solo cash at the end of March was $66.6 million, and the company states that near the report publication date its liquid bank balances covered the expected payment. December needs another source: December bond principal is $93.3 million using the March 31 rate, about $101.8 million using the rate near the approval date, and December interest adds about $16.2 million.
The April-December 2026 cash forecast explains the story. The company starts with $66.6 million and ends with $121.7 million. The path includes only $6.0 million from operating activity after G&A, $239.7 million from asset sales, deposit releases and investing sources, and another $15.0 million from additional property financing. The main uses are the $15.0 million Monsey loan repayment and about $190.7 million of bond principal and interest payments.
Actual first-quarter cash flow supports the same conclusion. Consolidated operating cash flow was negative $1.6 million, after positive $3.0 million in the comparable quarter. Investing cash flow was positive $46.3 million, mainly from asset sales and restricted-deposit releases. The Leser Group is not showing operating deterioration, but 2026 liquidity is coming through transactions.
| Liquidity Source | Current Status | Relevant Amount | Meaning for December |
|---|---|---|---|
| Solo cash at end-March | Available for the June payment | $66.6 million | Covers June, with little room left if no additional sources arrive |
| 1080 McDonald Avenue | $4 million deposit became non-refundable | About $17 million expected net cash | Important December source, still subject to the planned June 30 closing |
| 2440 Fulton | Unleased portion expected to be released from collateral | About $15 million first financing, plus about $15 million after leasing | Financing source, not recurring operating cash |
| Assets planned for sale by year-end 2026 | Fair value of about $377 million | Up to about $73 million of positive cash after related repayments | Turns December into an execution event around sales and financing |
| Series H collateral assets | Value of about $123.2 million | Intended for sale or refinancing | The plan should remove the 75% covenant constraint, but most processes are not yet closed |
The Dollar and Pledged Assets Drive the December Read
As of March 31, 2026, The Leser Group complies with all financial covenants. Adjusted net financial debt to net CAP is 74.3%, very close to the 75% ceiling under Series H. Series H loan-to-value is 71.14% against an 80% ceiling. Equity attributable to shareholders is $264.4 million, above the relevant minimum-equity requirements.
That proximity to the 75% ceiling became more important after the balance-sheet date. The company explains that the ratio was hurt by shekel appreciation against the dollar, because the bonds are shekel-denominated while operations and assets are dollar-based. If the June 30 dollar rate is similar to the financial-statement approval-date rate, the company expects not to meet the 75% debt-to-CAP covenant and also not to meet a certain minimum-equity requirement. The auditors highlighted this point in the emphasis paragraph, together with the deficit of current assets against current liabilities, negative operating cash flow, and the need for debt extensions, loan refinancing and asset disposals.
The equity-layer mechanism is interesting on its own. Partners in several properties committed to let the company acquire their minority interests through Tracking Shares if equity excluding minority interests falls below $215 million and the move cures the breach in the following quarter. The book value of those interests is about $6.4 million. The commitments are valid for 12 months and are cancelled if the controlling shareholder contributes real-estate interests or cash totaling at least $5 million. This is a possible accounting-equity cushion, not a new cash source.
The Series H collateral also requires a distinction between value and cash. 1440 Story received a non-binding proposal of about $22.5 million. Beard-Van Brunt is at the draft-agreement stage after commercial understandings around about $21 million. Former Horton Hospital Campus still has no agreed price, while a roughly $30 million financing option is also being reviewed. 25 Oakland, a $24.9 million asset, is not occupied and produces no NOI, although an improved $25.7 million proposal was received. 3150 Nifda is much smaller, with a $3.6 million value and discussions around about $3 million. The collateral exists, but December needs signed transactions and actual financing.
The bond market is already showing skepticism. The fair value of the bonds at March 31 was $274.6 million, compared with a carrying amount of $412.8 million. That gap does not determine the outcome, but it explains why every update on McDonald, Fulton, Series H assets or the dollar can quickly change the risk interpretation.
Conclusions
The Leser Group made progress in the first quarter, mainly because June 2026 moved from an open issue to a payment covered by solo cash. Fulton adds NOI, McDonald advanced, and several disposals and financings have already generated cash. Cash quality is still limited: AFFO is negative, consolidated operating cash flow is negative, and December depends on transactions that must close on time.
The counter-thesis is that the company has already demonstrated stronger execution than the market may credit. If McDonald closes, Series H assets are sold or financed near their stated values, and Fulton receives additional financing, December 2026 can move from a stress scenario to a controlled liquidity process. What would damage that interpretation is a delay in one of the core transactions, a dollar rate that leads to covenant breach, or asset sales that reduce the future NOI base too much. The next proof points are McDonald closing, compliance with or cure of the June 30 covenants, first financing at Fulton, and binding agreements for Series H assets.
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