MIDI plc is hoping that 2023 marks the year when its Manoel Island project finally takes off, as a long-running appeal against the development by residents and NGO runs aground and a potential joint venture to develop the site together with Anton ‘Tal-Franċiż’ Camilleri’s AC Enterprises takes shape.
In its annual report for 2022, the publicly listed company said that the controversial Manoel Island project “remains at the forefront” of its objectives.
“A significant amount of planning work is taking place behind the scenes to get this long-awaited project finally off the ground,” it said.
CEO Mark Portelli said the company will “continue to work incessantly” to bring the project to fruition, with the objectives for 2023 being to close off the transaction with AC Enterprises, conclude discussions with the Government, and work towards obtaining the full development permit for the whole project.
The mentioned discussions with Government revolve around “the specific remedies” available in the deed of emphyteusis “which will help to mitigate in part the impact of the reduction of development volumes resulting from the discovery of archaeological finds on the Manoel Island site”.
The discovery of these finds had necessitated a revision to its Manoel Island masterplan which resulted in a reduction of development volumes from 127,000 sqm to 95,000 sqm.
In addition, the deed of emphyteusis earmarks 31st March 2023 as the date by which the entire development (including Tigné Point as well as Manoel Island) had to be "substantially completed".
Restored stonework at Fort Manoel
"In the course of the development project of Manoel Island and Tigné Point, the group underwent a number of delays associated with the issue of building permits and encountered site related conditions which were not foreseen at the point in time when the emphyteutical concession was granted," said MIDI, adding that it is "currently actively engaged in discussions on this matter" and "on the basis of the ongoing discussions, the Board is confident that an outcome which will enable the successful completion of the project will be achieved."
In the meantime, the group as undertaken significant restoration efforts of heritage at both sites, including Fort Tigné and Fort Manoel.
The Camilleri connection
MIDI has long been seeking a partner capable of bringing substantial financial clout to the Manoel Island project, at one point trying to find internationals backers for the investment, which could cost as much as €500 million.
In 2019, a deal with Tumas Group to set up a joint venture for the development of the site in exchange for €100 million fell through at the last minute as its CEO, Yorgen Fenech, was sensationally apprehended by the Armed Forces trying to flee the island. He has since been charged with a number of crimes in relation to the assassination of journalist Daphne Caruana Galizia.
In December 2021, MIDI announced that it had entered in a non-binding memorandum of understanding with AC Enterprises Limited, owned by prominent developer Anton Camilleri, known as ‘Tal-Franċiż’, and his family.
“Discussions are ongoing and may or may not result in a transaction,” the company said at the time.
In its latest annual report, MIDI reported that it has “continued with intensive negotiations and discussions with the party in question but as yet no transaction has been concluded.”
Earlier this year, Mr Camilleri revealed his plans for the Villa Rosa site overlooking St George’s Bay in St Julian’s. The development includes two high-rises of 34 and 27 storeys, and the €305 million project will reportedly be self-financed by Mr Camilleri.
MIDI’s 2022 results
MIDI plc and its subsidiaries registered a loss of €2.28 million for the financial year ended 31st December 2022. This contrasts with the profit after tax of €0.6 million that was posted by the group for the previous financial year.
“The reasons for this decline in financial performance are two-fold,” it said. “Firstly, and primarily, MIDI had no inventory of residential apartments for sale during 2022, reflecting the cyclical nature of the company’s property development business.”
Although it recently launched the final residential development at Tigné Point (known as Q3 – Fortress Gardens), the sale of these residential units will only be recognised once the final deeds of sale are entered into with the respective buyers.
Q3 – Fortress Gardens consists of 63 apartments and underground parking as well as the landscaping, paving and embellishment of the Garden Battery and adjoining areas. MIDI noted that “the market’s response has been very positive and more than 60 per cent of the launched apartments are currently either subject to a reservation agreement or to a promise of sale agreement”.
“This augurs well for the future financial performance of the group when, upon the delivery of these apartments, the group will be in a position to register the profits made from these sales.”
For 2022, however, revenues generated from the sale of property during 2022 amounted to €229k (2021: €6.61 million) resulting in an operating loss of €1.13 million (2021: operating profit: €686k).
Secondly, the group carried out its yearly review of its book values of its investment property portfolio and, having taken into consideration current economic circumstances and other developments that have taken place over the past twelve months, it was concluded that it “would be prudent to reduce the overall book value of its investment property portfolio by €1.05 million”.
Meanwhile, revenues of the property rental and management segment have increased during 2022 (2022: €3.19 million versus 2021: €2.81 million) as the company terminated all rent concessions related to the COVID-19 pandemic.
The increased revenue for 2022 is not reflected in the segment’s operating (loss)/profit since the aforementioned fair value loss impacted the overall profitability of this segment (2022: operating loss: €0.28 million versus 2021: operating profit: €1.18 million).
This segment includes the group’s rental operations of its Pjazza retail outlets and foreshore restaurants, car parking operations, operator concession fees earned from the Manoel Island Yacht Marina, and the operating activities undertaken by Solutions and Infrastructure Services Limited (“SIS”).
The group’s financial results also include its 50 per cent share of the financial results of Mid Knight Holdings Limited (MKH), a jointly-controlled entity accounted for on the basis of the equity method of accounting.
The group’s share of MKH’s profits for 2022 amounted to €1.98 million, which is marginally less than the €2.03 million registered in 2021. MKH’s profits are wholly generated from the rental operations of The Centre, an office block situated at Tigné Point.
Ownership
The registered shareholders with more than five per cent of the company’s share capital as at 13th April 2023 are Alf. Mizzi & Sons Ltd (17.37 per cent), MAPFRE MSV Life plc (12.55 per cent), Gasan Enterprises Ltd (11.09 per cent), Mark Andrew Weingard (8.91 per cent), and Rizzo Farrugia & Co. Ltd (5.92 per cent).
