Melisron Reports Operational Gains and Office Project Boosts Despite Cancelled Mall Acquisition

Melisron concluded the second quarter of 2026 with improved operational performance, primarily driven by its shopping mall operations. The company anticipates further gains next year as a major office project in Tel Aviv, fully leased and expected to be completed by the end of 2026, begins contributing. Mall revenues rose 11% following the end of the conflict with Iran. Melisron posted a net operating income (NOI) of 412 million shekels for the quarter, up 5% year-over-year, and a funds from operations (FFO) increase of 4% to 317 million shekels. Shopping centers accounted for 74% of total NOI, reaching 306 million shekels, a 6% increase compared to the same quarter last year, attributed to the completion of upgrades at the Kiryat Arie Mall and rent increases.

Office properties, with an average occupancy of 96%, generated 106 million shekels in NOI, up 2% year-over-year. Melisron expects additional NOI growth from offices once the Landmark B project near Sarona in Tel Aviv, comprising 49,000 square meters of office space, is completed and fully leased. The company is developing this project with Afikim Properties and anticipates an annual NOI of 50 million shekels from its share. Additionally, Melisron is constructing three other large office projects: a 29,000-square-meter site in Yokneam leased to Nvidia by 2028, a 28,000-square-meter project on Lincoln Street in Tel Aviv expected by 2030, and an 11,000-square-meter project in Rehovot.

In July, Melisron canceled its planned acquisition of 51% of Golden Mall in Rishon Lezion from Gindi for 840 million shekels after the Israeli Antitrust Authority opposed the expansion. CEO Ofir Sarid criticized the decision, stating the company could have improved the mall and enhanced competition in the area. He noted the ruling complicates growth through ready asset acquisitions but emphasized ongoing development of new projects in Yavne and Nof HaGalil, totaling 45,000 square meters and expected to yield 68 million shekels in annual NOI by 2027.

In residential real estate, Melisron's subsidiary Aviv Melisron is executing four projects with 341 housing units planned for completion by 2028-2029. By June, 147 units were sold, with a significant boost in the second quarter due to the pre-sale launch of the Shakim project in Herzliya, which signed 56 binding agreements during the quarter. July sales added 55 more units in Shakim. That month, Melisron also acquired 75% of a 29-dunam plot near Jerusalem's Armon Hanatziv promenade for 247.5 million shekels, with an additional 120 million shekels contingent on rezoning for hotel and residential use.

Net profit attributable to Melisron shareholders was 289 million shekels in the quarter, down from 437 million shekels the previous year, mainly due to lower revaluation gains amid slower index growth. Controlled by Chairperson Liora Ofer (50.8% via Ofer Investments), Melisron is valued at 19.3 billion shekels, with its stock down 1% year-to-date compared to an 8% decline in the TA Real Estate Index.