Author: Developers Think

Izola Bank p.l.c (the “Bank”) has announced a €14 million unsecured subordinated bond issue with an annual interest rate of 5% and a nominal value of €100 per Bond at par (the “Bonds”). The bond issue will mature on 15 September 2032 but may be redeemable at the Bank’s discretion on any date falling between 15 September 2027 and 14 September 2032. The Bonds will form part of the Bank’s capital and as such, Izola Bank will use the bond issue funds to help sustain its growth strategy.

Existing bondholders of the 4.5% Izola Bank p.l.c. Unsecured Bonds 2025 (ISIN MT0000531211) are being invited to subscribe to the Bonds in exchange for their existing holding at a 2.5% premium over par value (that is, at €102.50). The bond issue will open for subscriptions by existing bondholders and the general public (through an Intermediaries’ Offer) between 1 August 2022 and 12:00 hours on 7 September 2022, but may close earlier in the event of over-subscription. The Bonds are expected to be admitted to the official list of the Malta Stock on 23 September 2022, with trading commencing thereafter-.

Izola Bank p.l.c. is wholly owned by the Van Marcke Group, a family-owned company which is fast approaching its centennial of operations. Though the majority of its business activities are concentrated in Belgium, the Group operates over 140 stores in Belgium, France, the USA, Switzerland and Luxembourg. The Van Marcke Group is the largest plumbing and heating wholesaler in Belgium and a manufacturer and retailer of sanitary ware, bathroom furniture and related products. It is also involved in packaging and transportation. Van Marcke is a brand dedicated to providing a better quality of life through environmentally friendly and sustainable products. The Group’s new €75 million distribution centre in Kortrijk, Belgium is completely carbon neutral.

Izola Bank p.l.c. obtained its banking licence in 1994 and since inception has been heavily involved in the Van Marcke Group’s treasury operations, particularly in the areas of cash and liquidity management, as well as lending and factoring. The Bank provides tailor-made financing solutions for SMEs and large companies in Malta and Belgium mainly through commercial credit facilities and factoring. The Bank also offers retail customers online savings and term deposits as well as mortgage lending.

Andrew Mifsud, CEO and Executive Director of Izola Bank plc explains, ‘This bond issue will enable the Bank to continue its growth path, providing excellent digital banking services with a human touch. Our team are strong advocates for putting our customers at the centre of everything we do. Our impeccable service level, corroborated by our customers’ experience, our ongoing investment in technology and our diversified portfolio are helping the Bank grow from strength-to-strength. Our recent and ongoing projects include the launch of retail mortgage lending in the local market earlier this year and the upcoming launch of our new factoring solution, which is provided by HPD Lendscape, one of the world’s leading factoring software providers. We will also shortly be relaunching Izola Saver, our online savings platform to the local and international market, with an improved customer experience and more features to help our customers save money around their lifestyle.’
The sponsors for this issue are MZ Investment Services Ltd and Rizzo, Farrugia & Co (Stockbrokers) Ltd. Legal counsel has been provided by Camilleri Preziosi.

More information about the bond issue and the list of authorised intermediaries are included in the Prospectus dated 22 July 2022 which is available online.

Disclaimer

Issued by Izola Bank p.l.c. (C 16343) (the “Bank”) with its registered address at 53-58 East Street, Valletta, which is licensed to undertake Banking Activities under the Banking Act, Cap 371. The approval of the Prospectus by the MFSA should not be understood as an endorsement of the Bonds offered and admitted to trading on the Official List of the MSE. Prospective Investors wishing to acquire Bonds of the Bank should read the Prospectus before making any investment decision, to fully understand the potential risks and rewards associated with investing in the Bonds. A copy of the Prospectus is available from www.izolabank.com and other Authorised Financial Intermediaries listed therein.

The Bonds constitute subordinated and unsecured obligations of the Bank and are classified as complex financial instruments. The Bank is subject to the Bank Recovery and Resolution Directive (BRRD) as transposed in local laws and therefore, Prospective Investors should consider the risk that, in the event that the Bank becomes subject to resolution, the Bonds including any accrued interest, may be written down or converted into equity, and a broad range of other resolution actions may be taken by the Resolution Committee in respect of the Bank. Therefore, investors may lose part or all their investment.

The value of the investment can down as well as up and past performance is not necessarily indicative of future performance. An investment in the Bonds of the Bank may not be suitable for all Investors and Prospective Investors are to consult their Financial Advisor so as to ensure the suitability of investing in the Bonds. Prospective Investors are only able to acquire the Bonds provided that the Investment in the Bonds is deemed to be suitable.

This advertisement has been approved by M.Z. Investment Services Limited (C23936) of 61, M.Z. House, St. Rita Street, Rabat Malta RBT 1523 and Rizzo, Farrugia & Co. (Stockbrokers) Ltd (C 13102) of Airways House, Fourth Floor, High Street, Sliema SLM 1551) (the “Co-Sponsors”) on behalf of the Bank. The Co-Sponsors are licensed to undertake investment services in Malta by the MFSA under the Investment Services Act, Cap 370.

As communicated through a Notice published on 28 January 2022 – https://mbr.mt/2022/01/28/legislative-amendments-introduced-by-act-lx-of-2021/ – Act LX of 2021 introduces the requirement for companies to indicate their electronic mail address in the memorandum, in terms of article 69(1)(d) of the Companies Act.

The scope behind this amendment is two-fold. Firstly, electronic communication serves to increase efficiency through timely communication by reducing the reliance on paper format communication to a company’s registered office. Certain correspondence may well be served to a company electronically and is many times more effective in reaching the concerned company officers. Secondly, the Malta Business Registry continuously strives as a central national registry and supervisory authority, toward implementing sustainable governance measures that correspond to corporate sustainability goals reflecting national and European Union initiatives in the sector. Limiting the amount of physical paper-format correspondence and shifting the emphasis to electronic means, will undoubtedly serve to reduce the use of paper and associated materials. Such measure is only one of those which will be undertaken as part of the responsibility in implementing measures synced with the European Green Deal.

Companies are hereby being notified that an adequate electronic mail address that is accessible to all the company officers, is to be provided to the Malta Business Registry by 30 September 2022. It is advisable that this is done by filing an updated memorandum and articles of association. In instances whereby this is not possible, one may address a formal letter to the Registrar, sent to the attention of Ms Stefania Baldacchino.

Transparency within the real estate market leads to increases in business efficiency, competitiveness, flexibility and investor confidence. It also facilitates the achievement of the country’s macroeconomic goals, through increased productivity, continued foreign direct investment, as well as improved policy development and long-term real estate planning.

This transparency has become even more important in today’s business world, in light of the heightened uncertainty and rapid change characterising the economic environment, owing as well to the repercussions of the COVID-19 pandemic and geopolitical conflicts. This has led to shifts in how we live and work and periods of greater consumer uncertainty, rising inflation and interest rates, as well as issues in supply chain distribution.

Understanding the importance of these benefits, PwC Malta has embarked on a project, in conjunction with JLL and Archi+, to derive a real estate transparency index for Malta for the first time. Through their Global Real Estate Transparency Index (GRETI), published on a biennial basis, JLL have been mapping the evolution of real estate transparency across 93 other countries and territories since 1999. The JLL GRETI is based on a combination of quantitative market data and survey results. The Index scores property markets on a one to five transparency scale (ranging between Highly Transparent to Opaque, respectively) and acts as an essential guide for companies operating in foreign markets and a unique benchmark of real estate market transparency.

Over the past few months, PwC Malta led the compilation of survey results for Malta given that JLL do not have a presence locally, and done through consultations with key stakeholders within the public and private sector, including real estate investors, key developers, architects, lawyers, notaries, real estate agents, and property managers. The Index, based on JLL’s methodology, focuses on 14 topic areas, including direct property indices, availability of property data in connection with transactions, valuations, the use of real estate technology in construction and property management (among others), real estate tax, land use planning, professional standards of agents, green building regulations and sustainability.

Global Real Estate Transparency Index Components, 2022

Source: JLL and LaSalle 2022, Global Real Estate Transparency Index, 2022

Malta placed 62nd among 94 participant countries

Malta has been attributed a score of 3.64 in the Index, thereby falling within the Low Transparency category, along with countries such as Morocco, Egypt and Sri Lanka. While scoring well on fronts such as governance of listed vehicles, regulatory and legal aspects, as well as the transaction process, areas such as sustainability, technology and digitisation, and availability of data merit considerable improvement.

Source: JLL and LaSalle 2022, Global Real Estate Transparency Index, 2022; PwC Analysis

Ensuring that contracted data is collated, recorded, analysed, digitised and disclosed to the public could help improve Malta’s score in terms of availability of data and technology and digitisation. Aggregate time series of data including contracted rents, contracted property prices, vacancy rates, gross capitalisation rates, office physical occupancy rates, as well as the stock of properties by type and size, would prove beneficial for investors, Government and other stakeholders to readily assess the inherent value of their transactions. Publication of contracted data would also boost investor confidence. Furthermore, contracted information could be particularly beneficial for the preparation of market-based real estate valuations, thereby improving the credibility of such valuations.

The ongoing project which will result in the digitalisation of the lands register and the digitisation of records and processes within the Lands Authority is a step in the right direction in this regard. Having said this, from a technology standpoint, the proptech sector is still at its inception. Furthermore, technologies that could lead to improvements in the way properties and facilities are managed, or the manner in which real estate data is collated, cleaned and analysed, are currently not used or being used by very few industry participants, leading Malta to achieve a low score on this front.
Malta also lags behind on the Index in the field of sustainability. Sustainability is garnering increased attention and will continue to do so in the future. Investors may need to start justifying their real estate investments, particularly if these have an impact on their carbon footprint. Owing to increased regulation and stakeholder pressure, companies including those involved in real estate will need to start taking into consideration sustainability when reporting their performance in the near future, particularly in view of the Taxonomy Regulation and the proposed Corporate Sustainability Reporting Directive (CSRD).

Europe, and Malta, will not be able to meet their ambitious targets unless financial investments are directed toward sustainable projects and activities. Currently, Malta lacks a well-established energy benchmarking system. While there are minimum energy efficiency standards for new buildings, the same is not in place for existing properties. Moreover, there is no tracking of Greenhouse Gas (GHG) emissions for real estate on a national level. This mirrors the lack of GHG Emissions Standards for both existing and new construction locally. Additionally, green building certification systems such as BREEAM and LEED are used by a number of market participants voluntarily, given that there is no requirement for the use of green building certification systems. The results of the sustainability stream are also impacted by the lack of green lease frameworks. Moreover, Malta lacks the use of a dominant or prominent health and wellness building certification system. The onset of the COVID-19 pandemic has led to increased awareness of personal and environmental hygiene, health, work-life balance, as well as social relations within the real estate field.

Malta’s score could improve a notch in the next round of the JLL GRETI

The results of this first Real Estate Transparency Index for Malta prioritise the initiatives Malta should address moving forward to increase transparency, focusing on digitalisation and publication of market data for increased market confidence and incentivising more sustainable practices in real estate to encourage uptake.

Our first national JLL GRETI score allows the setting of targets which Malta should aim to achieve over the next few years. Taking into consideration the current and upcoming initiatives which are currently being rolled out by the Government, and initiating actions in other areas of concern as highlighted, Malta could achieve a score lower than 3.5, allowing the country to climb up a notch within the transparency ladder and classify within the Semi-Transparent category. This shift could potentially happen by the next round of the JLL GRETI in 2024.

The gradual improvement of our transparency within the real estate sector will enhance the level of trust and will continue to ensure sustainability of the industry moving forward. To read the report, visit this link.