The application process for the redevelopment of the derelict Savoy Hotel at the top of Rue d’Argens is expected to be completed this year, Exalco Group, the company that owns the property, has stated.

The announcement was made in the Annual Report and Consolidated Financial Statements for 2023 of holding company Exalco Holdings Limited on Tuesday.

Exalco Properties Limited, a subsidiary of Exalco Group, acquired the Savoy Hotel from Almo Properties Limited for €5.4 million early in 2023 through a deed of sale. The property, located right on the border between Sliema and Gżira, has fallen into a state of ruin over recent years after a long-running legal saga between different members of the site’s former owners and groups of potential buyers. The battle commenced in 2016, when one group which represented a majority ownership, signed a promise of sale agreement with Exalco Group. However, just a few months before, a minority owner, holding 1/30th of the property rights, had entered into a different agreement with Melvyn Mifsud, a lawyer.

The court battle raged on for six years, with a number of shareholdings changing hands. When the final judgement was made, a judicial sale of the site was ordered with bids starting at €2.8 million. Almo Properties, which has the same shareholders as Exalco Group, was left with an 80 per cent stake.

F. Schembri & Sons Limited, owners of Ferretti Catering, and operators of Ferretti Restaurant in Birżebbugia, owned most of the rest after buying out some of the original owners as well. Almo Properties eventually won the court auction, which included bids from Schembri & Sons Limited, a subsidiary of F. Schembri & Sons, and also Ray Zammit. The winning bid came in at €12.8 million, yet Almo only needed to pay a fifth of that price for the property.

Following this, an application was submitted to the Planning Authority to convert the building into what Exalco Holdings Limited in its latest report described as a “prestigious business centre that will revitalise the now-derelict site, enhance the locality, and re-establish the Savoy as a landmark building.”

It confirmed that application process is “still ongoing” and thus is expected to be concluded in 2024.

According to renders, the redevelopment will feature a glass-encased business centre emerging from the side of the property, while the façade of the Category B+ monument will be restored.

A render of the redeveloped Savoy building

Exalco Group CEO Alex Montanaro had previously clarified that the property “will not be turned into another block of concrete like so many others in the area.” He expressed a desire for the old Savoy building to be “fully respected and renovated sensitively.” The redevelopment will also include a landscaped garden that will be open to the general public during office hours, as well as underground car park.

In the 2023 Annual Report, Exalco Group’s Directors stated that in 2024, as is the case every year, it will “continue to renovate and upgrade its existing property portfolio to ensure the buildings remain competitive and attractive in line with new market standards and demands.” This includes the aforementioned renovation of the Savoy building.

A render of the redeveloped Savoy building

Exalco Holdings Limited 2023 financial results

During the year ended 31st December 2023, Exalco Holdings Limited registered €5.3 million in revenue at group level, a marginal increase from the €5.1 million that was reported in 2022. This was mainly due to number of revised rental contracts in line with market rates.

Despite this, direct operating expenses and administrative expenses were both on the rise, going up to €733,750 (2022: €614,455) and €634,001 (2022: €537,668), respectively.

Finance costs for 2023 totalled €695,833, slightly lower than the €709,652 recorded in the previous year. 2023’s finance costs were comprised of interest payable on bank loans and interest payable on the outstanding bond issue and amortisation of the issued costs.

Profit before tax for the year amounted to €3.2 million, representing a substantial drop in performance from 2022, when the group had recorded €12.2 million in pre-tax profit.

Commenting on this, the group’s Directors clarified that the decrease is primarily a result of fair value gains made upon the fair valuation assessment of its investment properties carried out during 2022. Once the fair value gain is removed, operating profit remained consistent with the previous year at €3.9 million.

Exalco Group’s total asset base at the end of 2023 stood at €80.6 million, in line with the results from 2022. 70 per cent of its asset base is funded through equity. Non-current assets for the year amounted to €78 million, increasing by eight per cent from 2022, mainly because of the acquisition of the Savoy building in January 2023.

Looking ahead, the Directors expect 2024 to be “another challenging year,” yet management felt that the group is “well-positioned” at the time of the financial statements’ approval to honour its financial obligations.

“The group will continue to take all necessary measures to protect the long-term sustainability of its operations and financial performance and to attentively monitor ongoing developments,” they continued.