Mega Or turns part of the data center story into contracts, but cash comes after construction
Mega DC signed data-center service agreements for about 67.6MWIT and expects about USD 85 million of annual NOI after full delivery. The filing improves proof quality, but the remaining questions are CAPEX, financing, delivery timetable and the Gav-Yam option in Haifa.
Mega Or's Mega DC filing is an important update to the data-center thesis because it moves part of the story from planning optionality into signed capacity with a global cloud and AI infrastructure customer. The company reported agreements for about 67.6MWIT of data-center services across Idan HaNegev and Haifa, with expected annual NOI of about USD 85 million after the facilities are fully delivered. That is meaningful, but it is not immediate cash flow. Idan HaNegev is expected to be delivered in two stages in late 2027 and early 2028, while Haifa is expected in the second quarter of 2027. Before the NOI appears in financial statements, Mega DC has to fund construction, meet delivery timetables, satisfy service-level obligations and account for Gav-Yam's right to receive up to 30% of the Haifa partnership. The filing therefore improves the evidence, but does not eliminate the execution gap between signed contract and free cash flow.
What was signed
Mega DC signed agreements with a third party that is a subsidiary of an international company active in cloud and AI infrastructure. The agreements cover two facilities: Idan HaNegev in the Bnei Shimon regional council area and Haifa. Total capacity is about 67.6MWIT.
At Idan HaNegev, Mega DC is expected to provide about 57.6MWIT. Half is expected to be delivered in the fourth quarter of 2027, and the other half in the first quarter of 2028. The company estimates construction cost at about USD 12 million per 1MWIT, including land value.
At Haifa, Mega DC and the relevant partnership are expected to provide about 10MWIT, with customer delivery expected in the second quarter of 2027. The cost structure is different there: Gav-Yam is responsible for shell construction, while the partnership will perform the fit-out and electromechanical systems required to operate the data center.
| Site | Capacity | Expected delivery | Main check |
|---|---|---|---|
| Idan HaNegev | About 57.6MWIT | Half in Q4 2027 and half in Q1 2028 | Total construction cost and funding before revenue |
| Haifa | About 10MWIT | Q2 2027 | Gav-Yam's option to receive up to 30% of the partnership |
| Total | About 67.6MWIT | 2027-2028 | Conversion from signed capacity into NOI and cash flow |
The NOI is large, but it comes after CAPEX and time
Mega Or estimates annual NOI of about USD 85 million from the agreements after full delivery, net of operating and maintenance expenses. This is the number that matters, but it has to be read with two conditions: the income arrives only after the facilities are delivered, and delivery requires heavy investment before the first full run-rate.
In data centers, the gap between a contract and NOI is not only time. The developer needs power, cooling, electromechanical systems, security requirements and service-level performance. The agreements also include additional undertakings, including service-level obligations and customer rights related to delays or other contractual conditions.
The question is therefore not whether USD 85 million of annual NOI is meaningful. It is. The question is total investment cost, how much is funded with debt, what financing cost is incurred before delivery, and whether the timetable holds.
The Haifa option changes Mega Or's final share
Haifa adds another layer. Gav-Yam may exercise a right to receive up to 30% of the partnership, against participation in investments made by Mega DC in the facility until exercise. If the right is exercised, Mega Or says its investment in the Haifa facility is expected to decline by about 30%, and the expected NOI from the facility would decline at a similar rate.
That is not necessarily negative. A partner can reduce capital at risk. But it means the total NOI cannot be read too mechanically. Part of the NOI may leave together with part of the investment, and the final economics in Haifa depend on whether the option is exercised.
What needs to be proven next
The current filing strengthens Mega Or's data-center thesis because it discloses a customer, capacity, delivery timing and expected NOI. But it still does not close the return-on-capital question. To judge value creation, investors need to see the financing package, investment pace, construction progress and Mega Or's final share of Haifa.
The next proof points are concrete: construction progress, debt funding or bond issuance, actual construction cost, and whether the customer receives capacity on time. If those move forward without material overruns, Mega Or can show that the data-center story is no longer only long-dated growth optionality. If timing slips, costs rise or the Haifa share is diluted without enough risk reduction, the market will need to reprice the gap between expected NOI and cash flow available to shareholders.
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