Almogim weighs Series 13 and a block sale as Shamayim VeAretz margin pays the price
Almogim's July 8 update puts three mechanisms on the table: a possible Series 13 bond issue, control-holder approaches, and a block transaction covering 50 to 60 apartments for NIS 110 to 130 million including VAT. The sale could lift Shamayim VeAretz presale coverage to 56% to 59%, but management estimates it would cut the project's gross-margin rate by about 2 percentage points.
On July 8, Almogim Holding published an update that ties together three items that should not be read as completed events: a possible Series 13 bond issue, approaches received by the controlling shareholders for their stake, and negotiations for a block transaction covering 50 to 60 apartments in the Shamayim VeAretz project in Rehovot with one unrelated buyer. The filing is useful because it shows how the company is trying to trade uncertainty for funding visibility and sales coverage in a project that is supposed to generate cash over the next few years. The apartment block sale, if signed, could raise sold apartments to 173 to 183 units, or 56% to 59% of the 311-unit project. But Almogim also estimates that the sale would reduce the gross-margin rate of the whole project by about 2 percentage points. That is the core tradeoff: more visible presales and potentially better financing optics, at the cost of project profitability. Series 13 will matter only if the issue is launched and priced, and the control-holder approaches will matter only if they move toward a binding transaction.
Three mechanisms, different proof levels
| Mechanism | What is on the table | What has not happened yet | Why it matters |
|---|---|---|---|
| Series 13 bonds | A draft trust deed for a new unsecured bond series | No final issue, no final interest rate, no final amount | Could extend funding sources, but also adds holding-company debt |
| Controlling shareholders | Mario Zozel and Ami Bar Mashiah receive and evaluate approaches for their holdings from time to time | No binding structure and no control transaction | Under the Series 13 draft, a change of control without bondholder consent is an immediate repayment event |
| Shamayim VeAretz | Talks for a block transaction covering 50 to 60 apartments for NIS 110 to 130 million including VAT | No signed agreement and no named buyer | Could materially raise presale coverage, while reducing the project gross-margin rate |
The linkage matters more than each item in isolation. A holding-company bond can help Almogim manage maturities, but investors will ask whether the new debt funds growth or bridges the period until project surpluses are generated. A block apartment sale can improve the picture for lenders and investors, but the reported margin cost means part of the future profit is sacrificed now. The control-holder language does not yet change the company's economics, but it becomes relevant because the new bond deed treats a control transfer as a debt event.
Shamayim VeAretz: better coverage, lower margin
Shamayim VeAretz is material for Almogim: 311 residential units in Rehovot, plus 568 square meters of commercial space and 460 square meters of public space, fully owned by the company, with completion planned for the third quarter of 2028. At the end of 2025, Almogim estimated project revenue at about NIS 781.7 million, project costs at about NIS 684.9 million, and gross profit at about NIS 96.8 million. The expected total gross-margin rate was 12%, of which about NIS 18.5 million had already been recognized in profit and loss.
By the end of 2025, Almogim had signed 102 apartment sale contracts in the project, representing about 30% of expected project revenue. By the publication date of the annual report, that number had reached 109 apartments out of 311. The current transaction, if completed, would lift the number of sold apartments to 173 to 183. That is not a normal incremental sales update. It could improve presale coverage, support collection visibility, and help the project move toward surplus release.
The cost appears in the same filing. Almogim estimates that the block transaction would reduce the gross-margin rate of the whole project by about 2 percentage points. For a project whose expected total margin was 12% at the end of 2025, that is not marginal. It means the company may be willing to give up part of the upside in order to replace future sales risk with one larger signed deal. That can be rational if it accelerates financing, collections, and surplus release, but it is not the same as selling the apartments one by one at full project margin.
The bank facility reinforces that reading. At the end of 2025, Shamayim VeAretz had about NIS 275.4 million of project debt, a cash credit facility of about NIS 368.1 million, and about NIS 92.7 million still available to draw. Almogim then estimated expected project surplus at about NIS 209 million through 2028. In June 2026, Almogim signed an amendment with Mizrahi Tefahot Bank that brought Stage C under the project's financing agreement, putting all project stages under bank accompaniment. For stages B and C, the maximum framework was set at about NIS 526 million, including cash credit and Sale Law guarantees. Additional credit is subject to conditions that include equity investment, presales, and required documents. The block sale is therefore not just a revenue line. It may be a tool for improving project execution conditions.
Series 13: funding flexibility is not free
The Series 13 draft deed describes a new bond series that is unsecured and does not receive senior status over other debt series. Principal would be repaid in four equal annual installments from 2029 to 2032, and the fixed interest rate would be set in a tender if the issue proceeds. This structure can push maturities outward, but market conditions and the final rate will determine whether it improves flexibility or simply adds costly leverage.
The covenants show that investors are not being offered only a growth story. Minimum equity is set at NIS 175 million, the adjusted equity-to-balance-sheet ratio must not fall below 14%, and distributions are blocked if, after the distribution, equity would fall below NIS 250 million or the adjusted equity-to-balance-sheet ratio would fall below 16%. The appendix to the draft shows compliance as of March 31, 2026, with equity of about NIS 368.3 million and an adjusted equity-to-balance-sheet ratio of 20.4%. There is room, but not enough to make the cost of debt or the timing of project cash releases irrelevant.
The limited solo debt restriction also matters. The draft caps certain solo debt at 30% of consolidated total assets and notes that the bonds are not rated at the draft stage. For a developer funding several projects in parallel, the question is not just whether cash comes in. The question is whether the new debt aligns maturities until surplus releases arrive, or whether it increases the debt layer that needs proof from projects such as Shamayim VeAretz.
Control: background noise can become a debt issue
The control-holder update is not a transaction. Almogim says the controlling shareholders receive and evaluate approaches from time to time in different structures for the purchase of their holdings. There is no price, no buyer, and no binding process. So there is no immediate economic change in the company.
Still, this paragraph is not irrelevant. Under the Series 13 draft, a control transfer without advance special bondholder approval is an immediate repayment event. The definition focuses on Mario Zozel and Ami Bar Mashiah and whether they cease, together or separately and subject to carve-outs, to own more than half of the voting rights. If the approaches eventually become a transaction, they will not be only an equity story. They will also meet the debt documents and the need to manage bondholder consent.
What must close for the update to become real
The Almogim update is strong enough for a hot-subject note because it gives a concrete economic price: NIS 110 to 130 million including VAT for a jump in sold apartments, balanced against an expected reduction of about 2 percentage points in the Shamayim VeAretz gross-margin rate. This is not a clean marketing positive. It is a decision between financing visibility and project profitability. Until an agreement is signed, investors should not assume the cash will arrive, that the buyer will meet the terms, or that the final margin effect will match the initial estimate.
The next proof points are clear. Series 13 must either launch or remain a draft, and if it launches the amount and interest rate will determine the funding read. The 50 to 60 apartment sale needs a signed agreement, buyer identity, final apartment count, and final net pricing after VAT and transaction terms. The control-holder approaches need to remain background or become a process that also activates change-of-control analysis under the debt deed. For now, the current read is cautious: Almogim is trying to turn cash-flow uncertainty into sales and funding visibility, but at least in Shamayim VeAretz the company already says that visibility may cost it project margin.
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