AX Real Estate p.l.c. (the “Company”), a wholly owned subsidiary of AX Group p.l.c. who acts as the holding company of the Real Estate division within the AX Group announced a combined share and bond offer of:

Sale of 33,333,333 ordinary ‘A’ shares of a nominal value of €0.125 each at an Offer Price of €0.60 per share (subject to an over-allotment option of an additional 16,666,667 ordinary ‘A’ shares)
An issue of up to €40,000,000 3.5% unsecured bonds 2031 of a nominal value of €100 per bond issued at par

In the current financial year, the AX Group completed a group reorganisation with the ultimate aim of consolidating its property letting activities into one, newly formed real estate division, the holding entity of which is AX Real Estate p.l.c. The table below provides a summary of the property portfolio having an aggregate value of €231.1 million.

AX REAL ESTATE PLC

Group Assets

30 Apr' 21

€'000

Sliema Hotels (The Palace Hotel and The Victoria Hotel) 72,750

Qawra Hotels (Seashells Resort at Suncrest, Sunny Coast Resort & Spa and Luzzuy Complex) 73,480

Valletta Hotels (Saint John's Boutique Hotel and Rosselli Hotel) 16,010

Part of Verdala Site earmarked for the proposed Grand Hotel Verdala and Virtu Heights 8,630

Simbilija Care Home &Hilltop Gardens Retirement Village 36,870

Targa Gap Complex, Mosta 11,830

Hardrocks Business park (8 warehouses, an office block and a plot of land) 6,950

Office Space at Falcon House, Sliema 4,320

Blackstead Garage 285

_______

231,125

Source: Consolidated pro forma statement of financial position of AX Real Estate p.l.c.

The above properties are primarily operated by the AX Group in terms of various lease agreements with the AX Real Estate Group. In FY2022, being the first full year of operations, the Company is projected to generated rental income amounting to €9.1 million and a net profit of €2.3 million. On the assumption that the Seashells Resort at Suncrest re-opens in FY2024 (following completion of development of four additional floors) and that hospitality operations return to pre-COVID levels in the same year, the AX Real Estate Group’s net profit in FY2024 is expected to amount to €9.6 million.

The intention of the Company directors is to sustain a strong dividend pay-out ratio. Subject to any unforeseen circumstances, the AX Real Estate Group is expected to distribute the majority of the Group’s profit after taxation subject to the availability of cash and retaining a minimum cash balance of €1 million. With respect to the payment of dividend, it is projected that an interim dividend (50% of annual dividend) is paid in July and the final dividend (remaining 50% of annual dividend) is paid in January.

The Company’s directors believe that this dividend policy is sustainable because full funding is in place for the capital projects planned for the short to medium term. Furthermore, most of the Group’s borrowings relate to the amounts due to the AX Group that are not due for repayment in the next 10 years.

The AX Real Estate Group expects to regularly declare dividends to shareholders as from FY2022. The net dividend yield, which is based on the IPO price of €0.60, is projected to progressively increase from 4.1% in FY2022 to 5.1% in in FY2025.

The subscription period is between 10 January 2022 and 21 January 2022 or earlier if fully subscribed. The minimum subscription for this combined offer is €3,000 worth of shares (5,000 shares at €0.60) and €2,000 bonds. Furthermore, investors applying for 200,000 shares will benefit from a 10% discount on the offer price. More information about the Company and a copy of the prospectus can be obtained from the Company’s website HERE

MZ Investment Services Ltd has been appointed by the Company to act as Joint Sponsor and Authorised Financial Intermediary for the purpose of the Combined Offer.

This article is intended for information purposes only and its contents should not be construed as investment advice. The value of investments can go down as well as up and past performance is not necessarily a guide to future performance. The financial instruments referred to in this article may not be suitable or appropriate for every investor. Prospective investors are urged to consult their Financial Advisor prior to making an investment. The Company accepts no liability whatsoever for any loss arising from the information contained in this article.

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