Malita Investments plc recently announced a strategic move to expand its portfolio and reinforce its financial foundation through a rights issue, approved by the Malta Financial Services Authority (MFSA).
This initiative marks a significant step in the company’s journey since its listing on the Malta Stock Exchange in 2012, following a fully subscribed initial public offering.
The government, as the majority shareholder with an 80 per cent stake, showcases its ongoing support and confidence in Malita’s strategic direction and its pivotal role in national real estate projects.
Malita’s investment strategy is centred on the acquisition, development and management of immovable property, focusing on national, strategic and commercial real estate opportunities.
The company’s revenue streams are primarily derived from long-term ground rent and lease agreements with high-quality tenants, including significant government projects like the Malta International Airport, Valletta Cruise Port, and notable landmarks in Valletta like the open-air theatre and the parliament building.
The Affordable Housing Project involves the construction and rental of affordable housing units developed on land acquired from the Housing Authority
The rights issue
The rights issue, set for shareholders on record as of February 20, offers up to 65,825,806 new ordinary shares at a price of €0.50 each. This offering is structured to allow existing shareholders to subscribe to four new shares for every nine shares they currently hold. Moreover, the issue opens doors for potential third-party investors and existing shareholders to apply for additional shares beyond their initial entitlement.
Importantly, the government has committed to subscribing its full entitlement, with a provision to renounce a portion to accommodate subscriptions from institutional investors, existing shareholders seeking additional shares, and other applicants. This ensures that while the government remains a significant stakeholder of no less than 70 per cent, there is room for increased participation from the public and institutional investors, thereby potentially allowing for increased liquidity in the aftermarket.
Use of proceeds: the Affordable Housing Project
The rights issue is not just a financial manoeuvre, but a strategic initiative aimed at addressing a critical national challenge: affordable housing. The net proceeds, estimated to reach up to €32.5 million after issue expenses, are earmarked for the Affordable Housing Project.
This project involves the construction and rental of affordable housing units developed on land acquired from the Housing Authority, targeting the completion of 752 residential apartments across multiple localities by 2026. This initiative reflects Malita’s commitment to social responsibility and its role in supporting the government’s affordable housing strategy.
Financial stability and dividend policy
Malita’s consistent track record in dividend payments, supported by a stable income profile from long-term leases and rentals, underscores its financial health and commitment to shareholder value. Additionally, the quality of the lessors underscores the strategic nature of the assets that are being leased and hence the quality of the tenants.
With the Affordable Housing Project, the Housing Authority remains a party to the lease agreement that Malita will enter with the underlying tenants, thereby ensuring that Malita is not exposed to significant non-payment of lease risks. In view of this, and hence the visibility of the income streams, the company at its EGM in December 2023 confirmed its intention to continue its policy of distributing total gross dividends of €0.035 per share, which at the rights issue price of €0.50 per share translates to a gross yield of seven per cent on the rights issue price, demonstrating confidence in its operational stability and future prospects.
Key rights issue dates
The rights issue process is designed to be accessible for existing shareholders, who will receive a form of acceptance, authority, and election (FAAE) via mail, outlining the steps to participate. Additionally, an allocation of up to 20,846,827 shares may be available for institutional investors and other applicants through authorised financial intermediaries, emphasising the inclusivity and broad scope of this initiative.
Key dates for the rights issue include:
1. Commencement of offer period: February 28.
2. Placement date: March 13.
3. Closing of offer period: March 15.
4. Announcement of the results of the offer: March 25.
5. Expected date of listing: April 1.
6. Expected date of commencement of trading: April 2.
Malita Investments plc’s rights issue represents a strategic alignment of financial goals with national priorities, particularly in addressing affordable housing. By leveraging its solid foundation and government support, Malita is poised to not only enhance its portfolio but also contribute significantly to Malta’s social and economic development, while at the same time allowing investors to participate in a high-quality income stream backed by assets of national strategic importance.
Beppe Jaccarini is a capital markets analyst at Curmi & Partners Ltd. Curmi & Partners Ltd are acting as sponsoring stockbrokers for the rights issue.
The information presented in this commentary is solely provided for informational purposes and is not to be interpreted as investment advice, or to be used or considered as an offer or a solicitation to sell/buy or subscribe for any financial instruments, nor to constitute any advice or recommendation with respect to such financial instruments. Curmi & Partners Ltd is a member of the Malta Stock Exchange and is licensed by the MFSA to conduct investment services business.