Valletta real estate developer VBL Group saw both revenue and costs increase during 2023, driven by an uptick in activity across its different operational sectors.

The figures were released in the group’s recently published Annual Report for 2023.

VBL Group is involved in the property ownership and full process of real estate acquisitions, integrated real estate development, property management, operations, utilisation and disposal of properties, with the main market of operation being Valletta. Since it was established over 10 years ago, VBL Group has become one of the largest and most active investors in immovable property in Valletta.

During 2023, the group’s financial performance remained stable, highlighted by a 40.1 per cent increase in revenue to a total of €3.2 million (2022: €2.3 million). This was largely prompted by rental income during 2023 increasing to €3 million, up from the €2.2 million recorded during 2022. Management fees and other revenue came in at €89,974 and €162,713, respectively.

Over the course of the year, VBL Group continued to follow its strategy, renovation programme, and consolidate the Valletta hospitality market, resulting in €2 million in investment income (2022: €6.9 million). This is because of the balance of fair value movement of individual portfolio assets and an overall significant increase in the book value of investment property, amounting to €3.5 million. It is important to note that investment income only reflects the value changes from completed development or other market adjustments in the reporting period, and hence does not take into account the potential value of a property at completion.

VBL Group clarified that the core activity and most significant value driver for the group is real estate acquisitions and development, accounting for the most significant value changes in the company’s accounts. As a result, the group, similar to other real estate companies, assesses and reflects the investment income under total revenue, but on a separate line.

While the group is growing its portfolio, only around 30 per cent of its owned assets, based on square metres, were in operation and revenue generating as at the end of 2023. The remaining portion of assets are under development or are still being prepared for development. VBL Group stated that these developments project “significant growth opportunities in the coming years,” resulting from the conversion of owned non-performing assets into “renovated, revenue generating properties.”

Cost of sales increased by 45.2 per cent to €1.7 million during 2023 (2022: €1.2 million), while administrative expenses amounted to €1 million (2022: €897,336). €312,661 was recorded in depreciation and amortisation charges during the year.

As a result, pre-tax profit for 2023 amounted to €2 million, substantially lower than the €6.6 million that was recorded in 2022.

Total assets as at the end of 2023 stood at €79.5 million, expanding from the €77.5 million reported at the end of the previous year. A dividend payment for 2023 will be considered and proposed by the Directors for the decision of the Annual General Meeting.

Late in 2023, VBL Group also announced that it had raised a total of €295,500 from a subscription of 1,136,538 ordinary shares through a private placement.

The Directors have proposed the balance of retained earnings amounting to €14.2 million to be carried forward to the next financial year.

VBL Group stated that identified deals which are in the pipeline are not reflected in the group’s current valuation of assets, yet they still represent a “significant additional value potential.” Once the existing proprietary pipeline of over 5,000 square metres of total gross area is realised, further growth in the group’s revenue and asset value are expected to be achieved.

“Implementation of the acquisition and development strategy is dependent of the available investment resources and other market factors,” VBL Group affirmed.

Additionally, ongoing developments are valued on a project value basis, where the full value of the asset would be realised once the project is completed. In the present development cycle, VBL Group is developing approximately 7,000 square metres over a number of projects, with the projected property value increase once these are completed expected to be in the region of €8-10 million. The majority of this value release will take place once the Silver Horse Block project is completed and has commenced operations.

The Silver Horse Block is one of the largest development projects in Valletta, having been spread over two phases. The development is presently in its second phase, with this part of the project comprising various apartments of different sizes that will lead to a significant increase in bed nights for VBL Group’s hospitality operation, VREM Ltd. Additionally, this phase will also see part of the existing block converted into 1,500 square metres of workspace, making it one of the largest privately owned office blocks in the capital city.