Migdal prices Ashstrom Rental Housing and brings institutional funding through 2032

The binding memorandum between Ashstrom Group and entities from the Migdal Insurance group gives Ashstrom Rental Housing an outside price and an institutional funding partner. A 20% stake is priced at about NIS 451.1 million before adjustments and VAT, implying roughly NIS 2.26 billion for the partnership as a whole. The economic structure still depends on future cash flow and funding. About 50% of the consideration is expected by the end of November 2026, while the remaining amount is due in unequal CPI-linked installments through the end of 2032. Migdal is also entering the funding structure, with pro-rata equity commitments and rights to provide financing. From here, free cash reaching Ashstrom depends on the actual cash received after adjustments, the debt that remains in the partnership, and the ability of projects such as Neve Ayalon and Shikun Harofim to generate NOI and FFO that can support the new capital structure.

The outside price is for the partnership, not just the properties

The transaction is being done at Ashstrom Rental Housing LP, the partnership through which Ashstrom concentrates its rental-housing activity. Under the filing, Migdal-related entities will acquire 20% of the partnership rights for about NIS 451.1 million before adjustments and VAT. The simple calculation implies about NIS 2.26 billion for the whole partnership before adjustments, based on the partnership's financial statements as of March 31, 2026.

That reference point matters because Ashstrom's 2025 annual report already showed a large asset base in rental housing. Investment property, buildings under construction, land and payments on account of investment property totaled about NIS 4.54 billion at the end of 2025. The gap between asset value and partnership-rights value is where debt, future investment, cash generation and deal terms matter. Reading NIS 451.1 million as a direct asset-value marker misses the economic structure Migdal is entering.

The operating data also show why Migdal is not simply buying a balance sheet. At the end of 2025 the four operating rental-housing clusters had 1,126 apartments, full occupancy, property value of about NIS 3.14 billion and total NOI of about NIS 91.1 million for 2025. At the same time, nominal FFO under the filing's adjustment was negative NIS 38.8 million, while management's FFO measure was NIS 52.2 million after indexation and intercompany interest adjustments. The outside price is supported by leased and demanded assets, but current earning power is still sensitive to construction funding and CPI-linked debt.

The payment schedule is almost as important as the headline price

The filing says the purchase price will be adjusted for investments Ashstrom has made or will make in the partnership from the end of May 2026 until closing, debt repaid to funding entities of held corporations, and profits distributed or amounts withdrawn from Ashstrom Rental Housing until closing. The final consideration is therefore not just NIS 451.1 million attached to a sale line. It is the result of capital movements, debt and distributions through completion.

The cash impact for Ashstrom is different from the headline. If the transaction closes under the published principles, only about NIS 225 million before adjustments and VAT should arrive in the relatively near term. The balance is paid through 2032. At group level, Ashstrom's first-quarter 2026 report already showed negative operating cash flow of about NIS 517 million and negative investing cash flow of about NIS 731 million, alongside debt and credit inflows. Inside the rental-housing activity, net financial debt together with intersegment credit was about NIS 4.37 billion at the end of March 2026.

Those numbers do not reduce the importance of the deal. They locate its effect. Ashstrom gets a way to turn part of the platform's asset value into an outside partner and cash, while the rental-housing activity still needs credit, guarantees, equity injections and bank financing. The follow-through is therefore the actual cash received, the price adjustments and the debt that remains inside the partnership after Migdal enters.

Migdal is also buying a funding route for growth

The most important terms sit around the price. From closing, the parties are expected to contribute equity to projects according to their ownership shares. Migdal will receive a right of first refusal to provide market-term loans to the partnership and held corporations, both for construction financing and for long-term financing of income-producing assets. Ashstrom undertook that all group activity in the partnership's field will continue through the partnership, and Ashstrom will continue as contractor for current and future projects under the agreed terms.

Migdal is therefore not entering only as an investor entitled to 20% of future cash flows. It receives access to financing for a capital-intensive activity, pro-rata equity rights in projects and governance mechanisms that will be set in the amended partnership agreement. The filing also says Ashstrom may, after completing the agreement, consider itself no longer in control of the partnership and stop consolidating its financial results.

From Migdal's side, the deal fits the profile of a large institutional balance sheet. Migdal's 2025 presentation showed about NIS 33 billion in free nostro assets, of which 9% was in real estate and infrastructure, alongside hundreds of billions of shekels in managed assets. That does not prove Migdal's return on this specific deal, but it explains why long-term rental housing can suit an institutional investor looking for income-producing assets, credit exposure and long duration.

The construction pipeline will decide the quality of the price

The outside price arrives while Ashstrom Rental Housing is moving from an operating-asset portfolio to a platform with meaningful construction investment. In addition to 1,126 operating units, Ashstrom's 2025 presentation showed another 1,155 units under construction with expected remaining investment of about NIS 1.41 billion. Neve Ayalon was completed in the first quarter of 2026, all residential units had signed leases, and the asset was reclassified to investment property at fair value of about NIS 582 million. In the same quarter, Ashstrom recognized a fair-value loss of about NIS 46 million for the asset.

The next large project is Shikun Harofim. Ashstrom won a project including 1,189 housing units, of which 190 are for sale and 999 are for rent, plus about 23,000 square meters of commercial and employment space. Land and development cost before VAT was estimated at about NIS 394 million, and total expected project investment is about NIS 2.2 billion. In March 2026, a bank financing framework of about NIS 366 million was signed for the land purchase through April 2029, with an Ashstrom guarantee.

These are the same figures that create value and financing load. Neve Ayalon should begin contributing to NOI after full occupancy, and the next projects can expand the income-producing unit base. At the same time, remaining investments and the debt carrying them determine how much of the outside valuation ultimately reaches Ashstrom shareholders. If future reports show that the partnership is increasing NOI and FFO at a pace that supports the price, the deal becomes more than an external value mark. If most of the improvement is absorbed by debt and investment needs, the main achievement remains the external pricing anchor.

What the next filings need to show

The memorandum is binding, but it is still subject to detailed agreements, Migdal due diligence, required legal approvals and contractual consents. The parties targeted detailed agreements by July 31, 2026, and Migdal has exclusivity during that period, subject to Ashstrom's right to add other investors on terms not better than Migdal's. Ashstrom also said it is working to add additional investors.

The priority list is straightforward: completion, actual consideration received by the end of November, price adjustments, the accounting decision on consolidation, and the debt remaining inside Ashstrom Rental Housing. After that come operating data: NOI after Neve Ayalon, occupancy and rent in new clusters, investment pace in projects under construction, and progress at Shikun Harofim. Until then, the Migdal deal is a strong valuation reference point for Ashstrom's rental-housing activity, but its final economic value will be set by the cash, financing and NOI that reach the reports.