Amot Lowers 2026 Outlook as Office Occupancy Drops Amid Iran Conflict Delays
Amot, an Israeli real estate company, reported slower leasing progress in its office tower project in Bnei Brak, with office occupancy rates declining and contract signings delayed due to the conflict with Iran. Consequently, the company reduced its 2026 financial forecast despite noting a recovery in office marketing since the war's end, expecting operational improvements next year. Following the earnings release, Amot's shares rose 2% on the Tel Aviv Stock Exchange.
In Q2 2026, Amot recorded a net operating income (NOI) of 270 million shekels, a 3% increase from the same quarter in 2025, and a 4% rise in funds from operations (FFO) to 212 million shekels. However, the company lowered its full-year NOI forecast from up to 1.1 billion shekels to 1.08 billion, and its FFO forecast from 810 million to 800 million shekels, attributing the downward revision to delays in contract signings and lease commencements caused by the Iran war.
CEO Shimon Avudraham highlighted a positive trend post-conflict, with increased demand and willingness among tenants, especially in Tel Aviv, to sign binding office leases, which should improve operational metrics in 2027. Amot's portfolio is heavily weighted toward office properties, which contributed 47% of Q2 NOI, alongside logistics and industrial assets (29%) and retail including supermarkets. Office occupancy fell to 83.7% in Q2 from 86.7% at the end of 2025, partly due to Pioneer vacating 8,000 square meters in Petah Tikva.
The company expects occupancy to rise with new leases in its Holon campus and a property in Modiin. Amot is also completing an 87,000-square-meter office project in Bnei Brak by year-end, currently only 10% leased. Its flagship ToHa2 office tower in Tel Aviv, developed with Gav Yam, has advanced leasing from 39% at the end of 2025 to 75% by June 2026, including a major lease to Google. Full income from ToHa2 is anticipated starting Q3 2027.
Avudraham noted a shortage of office supply in the Tel Aviv Central Business District, with ToHa rents around 150 shekels per square meter expected to remain high. Amot plans to begin construction of ToHa3 next year and develop two additional large office projects nearby. The company will distribute a dividend of 133 million shekels in September. Despite a 25% share price decline this year, underperforming the TA Real Estate Index and peers, analysts emphasize Amot's strong portfolio, financial stability, and attractive dividend yield.
