Last Updated on Thursday, 7 December, 2023 at 9:10 am by Andre Camilleri
VBL Group has announced that it is forecasted to close another year of outstanding operational results, continuing the established trend of financial and operational growth, delivering a projected 30% year-on-year increase in revenues, and establishing record EBITDA in the current financial year.
Based on management’s forecasts, VBL Group is expected to achieve €3 million in sales revenues and is forecasted to realise doubling its operational EBITDA, compared to the previous year. The forecasted operational results are not taking into consideration the additional investment income, resulting from the development and investment activities of the Group as part of its normal course of business.
VBL’s Total Revenue Year-on-Year Growth (€ in millions)
VBL’s current year hospitality KPIs have already shown significant improvement on both previous year level, as well as to 2019 results (the last undisturbed pre-pandemic year). Forecasted annual ADR is also expected to be higher by about 30% compared to previous period.
As a result of the continuously improving operations, the already renovated and operational commercial properties of VBL’s owned portfolio are delivering growing yields in 2023. This improvement is driven by the fact that VBL has increased its leased out commercial square meters by 23% within its landmark development, and has committed new lease agreements for an additional c. 600 sqm within another location, starting in Jan 2024.
VBL’s Commercialized Properties are Systematically Delivering Yields Exceeding Those of the Broader EU
Notes to Chart Data:
- Mean – The representative property was selected based on the following criteria: fully developed status, robustness of historical records, and a substantial gross area; Mean calculation excludes gross yield data points for the years 2020 – 2021 due to the disruptive impact of the pandemic, resulting in significantly reduced tourist inflow to Malta;
- Portfolio Mean – gross yield is estimated as annual rental revenue from commercialized properties divided by total book value of owned commercialized properties;
- Average gross yield on residential properties in EU; Data provided for EU-28 countries by Global Property Guide as of September 2023
Continuing the positive trends of the first part of the year, in the second half of 2023, VBL has continued to record very strong operational results, demonstrating improving operational performance across the board. Current forecasts of the main financial metrics suggest a significant growth in revenues and operational results compared to 2022 results. VBL’s major development projects are progressing steadily, with several significant milestones reached, and the Group reaffirms earlier indicated interim delays in project development which are expected to be recovered in the mid-term. Delays experienced are linked to the very nature of VBL’s property assets, which makes them both unique historic buildings with considerable intrinsic value as well as challenging renovation projects to deliver in view of their complexity and priority on heritage preservation to which VBL pays particular attention.
During 2023, VBL has managed to reduce significantly the impact of the financing gap caused by the lower then projected level of capital raised at the time of listing, through the long-term development facility secured. The Group is committed to continue its growth and progresses firmly with the implementation of its strategic plans. As part of this, VBL has also secured a new overdraft facility from Bank of Valletta, which will serve as additional liquidity reserve during the expected upcoming dynamic growth period of both operations and development of owned but not yet productive assets.
Outlook and Strategic Review Process
In line with the Company’s earlier announced initiative for exploring various strategic options for the financing and development, VBL has engaged in a review of various strategic options for the Company’s future. The aim is to access the possible options to further develop VBL and increase the Company’s shareholder value, ensuring continuous expansion and growth in its core market.
In the recent period, on top of the existing portfolio, VBL has secured a proprietary pipeline of over 5,000 m2 of total gross area, while it is seeking to raise new equity to support the following key initiatives: 1) additional funding for ongoing and upcoming development of owned properties, 2) selective acquisition of additional pipeline properties, and 3) opportunistic market consolidation opportunities.
In line with the announcements and plans, the Company is in process of a small capital increase against issuing new share capital, which shall be completed by the year end. It is foreseen this process to be repeated in the future, and that VBL will continue with its efforts to attract strategic and/or financial investors in the coming period.
Valletta Property Market Outlook – on the rise
Valletta is envisioned to continue its journey as a touristic destination for quality culture and authentic historical experience. This is underpinned by the recent surge and increase of investment in luxury real estate within the unique walled UNESCO Site. The property market with its limited supply and ever-increasing demand remains solidly on an upward projectile, with numerous local and international subject matter experts predicting appreciation rates of 10-15% over the coming period.