Mega Or: Operating income from signed data center agreements reaches 740 million shekels

Mega Or's signed contracts for its data center assets are already generating an annual net operating income (NOI) of 740 million shekels. This is 89% more than the total NOI generated by its assets in 2025 and 58% more than the representative annual rate of its NOI in the second quarter. This compares to signed contracts totaling 106 million shekels at the end of June last year and 460 million shekels at the end of March.

In practice, the data center sector's share of the company's total activity remains low. In the second half of last year, the company began operating a data center in Modiin with a weighted capacity of 9.5 MW IT, which generated 24 million shekels in revenue in the second quarter. In contrast, the company's logistics and commercial centers—its core business—generated quarterly revenues of 214 million shekels.

The Modiin data center is only the first for the company, which is currently building seven additional data centers with a capacity of 311 MW. It estimates that the annual NOI upon their operation and full leasing will reach one billion shekels. Of that total, approximately 740 million shekels are already covered by signed contracts. In June, the company entered into an agreement with the AI company Crusoe to provide data center services with a capacity of 67.6 MW IT in facilities under construction in Haifa and Bnei Shimon. These are scheduled to begin operation in the second quarter of next year, generating an annual NOI of 85 million dollars (approximately 255 million shekels).

However, a stop order issued by the Electricity Authority regarding connection approvals for data centers raises questions about connecting facilities for which Mega Or has not yet signed end-user contracts. The company reported that it cannot yet estimate the impact of this order. Furthermore, the estimated construction cost of data centers has increased by 9%, from 11 million dollars to 12 million dollars per MW, raising the total construction backlog estimate to 3.7 billion dollars from 3.5 billion dollars. This increase is largely attributed to the weakening of the shekel against the dollar and rising electricity costs.

The company's total NOI for the quarter rose by 25% to 117 million shekels, driven by the occupancy of new assets. FFO (operating cash profit) also rose by 25% to 85 million shekels. Revaluation profits for the second quarter reached 338 million shekels, a 52% improvement over the corresponding quarter last year. However, financing expenses of 103 million shekels led to a 41% decrease in net profit attributable to shareholders, down to 252 million shekels.

Mega Or is currently traded at a market value of 17 billion shekels, with its stock rising 66% year-to-date, leading the gains among stocks in the TA-Maniv Israel index.