Government investment firm funding affordable housing now seeking new share issue

Malita Investments plc, an investment holding company registered by the Government of Malta, has requested approval by the Malta Financial Services Authority for an issue of rights to eligible shareholders to subscribe to up to 65,825,806 new ordinary shares of a nominal value of €0.50 per share in the company.

The paid up issued share capital of the company currently stands at 148,108,064 ordinary shares of a nominal value of €0.50 each.

Malita Investments is presently seeking debt finance to fund the government's Affordable Housing project. Once these affordable housing apartments are completed they will be leased out at commercial rates to persons in possession of a certificate from the Housing Authority with the subsidy available to these persons being directly payable to the company.

The company was registered by the Government of Malta to operate on an independent and commercial basis, in an initiative aimed at contributing towards long-term investment development in our country in a partnership between the public and private sectors.

Its stated mission is to acquire, develop and manage immovable property, the leveraging of revenue streams arising therefrom and the reinvestment of undistributed profits in national and/or strategic real estate projects as well as in commercial property opportunities.

The company’s investment portfolio started off with the reinvestment of the equity embedded in the dominium directum of the Malta International Airport and the Valletta Cruise Port, which - in combination with the shares subscribed for in cash by the shareholders and further augmented by debt finance - was utilised to acquire the Parliament building and open-air theatre in Valletta.

Following completion, these properties have been leased out at a rental yield commensurate with that generated in the commercial property market in Malta.

The company’s business profile is such that the existing revenue streams are highly visible and quantifiable, given that they arise from long term contractual agreements. These contracts also provide for the periodic revision of the ground rent and rental income arising.

Furthermore, the risk of the debtors defaulting on the amounts receivable by the company is mitigated by the quality of tenants, the relativity of the amounts receivable compared to the market value of the properties including the improvements undertaken thereon by the occupiers, as well as the inherent security enjoyed by the company at law as the dominus of the property sites.

The company’s cash outflows also carry a high degree of visibility. These comprise the cost of collection of the revenue streams and corporate administration costs and taxation. The resulting cash surplus is applied primarily in the servicing of borrowing and a high proportion of the balance is intended to be distributed in dividends to shareholders, such that the latter would receive a consistent return on the nominal value of their ordinary shares.

The residual cash flows after these appropriations are set aside for further re-investment, as the same is determined from time to time by the investment committee set up by the board of directors.