Katzman found a way to reduce G City's debt: transfer it to the shareholders
G City CEO Chaim Katzman plans to spin off assets into a new subsidiary, 'Naga Commercial Properties,' distributing shares to existing investors. While intended to reduce debt, market analysts warn of significant risks and high leverage.
A sophisticated move or financial acrobatics? After realizing assets worth over 9 billion shekels, Chaim Katzman, CEO and controlling shareholder (55%) of the real estate firm G City, has found another way to reduce the company's debt: transferring it to its shareholders.
G City intends to launch a second phase of transferring assets to a new subsidiary and taking it public by distributing shares as a dividend in kind. This mirrors the move made with Orion in December. Given the similarity between the two actions, with an emphasis on the high leverage of the entity whose shares investors will receive, and following the 34% drop in Orion's share value since its distribution, the market views this new step as problematic.
Financial Overview and Debt Structure
As of the end of March, G City's debt (extended solo) stood at 13.2 billion shekels, with consolidated debt including subsidiaries reaching approximately 20 billion shekels. In December 2025, G City distributed shares of Orion, which had acquired three shopping centers in Poland valued at 455 million euros. Orion, now traded on the Tel Aviv Stock Exchange, carries a debt of 290 million euros.
Currently, G City aims to establish 'Naga Commercial Properties,' to which it plans to sell three shopping centers in Finland worth 423 million euros, currently held by its subsidiary Citycon. To finance this, Naga will issue 298 million euros in bonds, while Citycon provides a 65 million euro seller's loan, totaling 363 million euros in debt (approximately 1.24 billion shekels).
Strategy and Market Concerns
For G City, the logic is clear: the company is working to lower its leverage, which stood at 64.7% (consolidated) at the end of March, with a target of dropping below 50% by 2028. However, for Naga's shareholders, the situation is different. They will receive assets with limited control, given a five-year management agreement with Citycon and the geographical distance of the Finnish assets.
A market source commented: "For G City, this looks like a good move to realize assets at book value and reduce leverage. But for the new company's shareholders, it looks dangerous. The expected leverage reaches 86%, an astronomical figure, and the company will face high exposure to euro-denominated assets while holding shekel-denominated debt."
