Gaffarena | Chronology of timely acquisitions suggests GPD intimacy aided compensation

11 August 2014 • 36 Old Mint Street, Valletta

Architect Joseph H. Spiteri is asked to value a 25% freehold share in 36 Old Mint Street, Valletta – a palazzo that formerly housed a school, now hosting the government offices of the BICC. Marco Gaffarena owns a 25% share he acquired in 2007 for little over €25,000.

Total area 25% share of Old Mint Street offices: 445 sq.m.

Property characteristics Offices in heart of Valletta, located in good location of Valetta, healthy demand for quality office space, assumed not under title of emphyteusis or title of lease. Property is schedule and inside urban conservation area

How it was valued

1 Comparative freehold prices for recently refurbished offices in Melita Street and Strait Street averaged at €5,000 per square metre for prime office space and €4,000 per square metre for ancillary space.

Therefore, 456 sq.m at €5,000 = €2,280,000, while ancillary space of
233 sq.m at €4,000 = €932,000.

Total freehold value = €3,212,000

2 Profits method: Comparative rental values for prime office space in Valletta at €200 per square metre, per annum, and at €150 per square metre for ancillary space.

Therefore, 456 sq.m at €200 = €91,200 and 233 sq.m at €150 = €34,950. Altogether €126,150 per annum profit rent.

As a relatively risk-free investment, the years property value (YP) is taken at 3.5% plus 0.25% loading for provision for administration and extraordinary repairs and so on: YP at 3.75% = 26.67.

Freehold value = €126,150 x 26.27 = €3,364,420

“Based on methodologies 1 and 2, the estimated freehold value is: €3,288,210.25, say €3,290,000,” Prof. Spiteri remarked in his valuation.

31 August 2014 • Haz-Zebbug fields at Hal Mula

Spiteri values fields in Haz-Zebbug, strategically located behind another plot in Qormi he was also given: land Gaffarena was squatting in at Qormi and on which he “illegally” built an entertainment venue with a pool, marketed for group dinner parties as Cavett Place, despite an enforcement notice issued by the planning authority in 2012.

Total Area 26,270 square metres

Property characteristics
 Agricultural land ODZ subject to enforcement notice 184/2003 therefore depreciating the value

How it was valued

Comparative freehold prices for agricultural land taking into consideration depreciate factors average at €14 per square metre: 26,270 sq.m at €14 = €367,780, or €375,000

31 August 2014 • Qormi fields at Handaq, Cavett Place

Spiteri values land at Handaq where Gaffarena reportedly operates an unlicensed entertainment venue that caters for group parties.

Total Area 9,870 square metres

Property characteristics
Agricultural land outside development zone, with building occupying 182 square metres, with structures under enforcement 407/12, not assumed under title of emphyteusis or title of lease.

How it was valued

1 Comparative freehold prices for agricultural land average at 19 per square metre: 9,870 sq.m at €19 = €187,530

2 Contractor method for footprint area of 182 square metres at construction costs of €400 per square metre.
Construction costs at €300 per square metre = €54,600.

This value is reduced by 90% to take into account that the buildings are subject to an enforcement notice and land lies in an ODZ area.

Value attributed to buildings = €5,460 Freehold value - €187,530 + €5,460 = €192,810

Based on methodologies 1 and 2 the estimated freehold value is €192,810

28 September 2014 • Land and structures at is-Salvatur, Mqabba

Spiteri values land in Mqabba that was also given to Gaffarena.

Total area 5,992 sq. metres

Property characteristics Agricultural land with two rooms totalling 425 square metres, outside development zones and lying on an aquifer protection area, with title of emphyteusis or lease not assumed.

How it was valued

1 Comparative freehold prices for agricultural land average at €19 per square metre.
5,992 sq.m at €19 = €113,848

2 DRC method for buildings:
Footprint area of 425 square metres at DRC costs of €123 per square metre Construction costs = €52,275

Estimated freehold value of €165,800

30 October 2014 • Sliema shop on Manwel Dimech Street

A senior architect from the Lands Department, Stefan Scotto, values a small shop that has been closed down, in the depressed commercial area of Manwel Dimech Street. Marco Gaffarena had purchased the overlying property for just over €72,210 – he plans to build a four-storey block of 10 apartments and penthouse and underlying garages, which permit he will apply for in May 2015.

Total area 54 square metres

Property characteristics Location is in relatively obscure area of Manwel Dimech Street, with development mainly consisting of ‘local shops or language institutes’, with many shops closed down. Also considered were property dimensions, bad state of repair, parking problems, and unofficial information on similar, privately-owned property and similar sales following public call for tenders.

How it was valued

Since property be granted on temporary emphyteusis, resulting value
of direct dominium and full ownership, as per ministerial direction MFEI 007/09 issued by finance minister, is €58,960. Also considered is that the site was granted on temporary emphyteusis with ground rent of 25 cents per annum, expiring on 30 June 2016.

Estimated freehold value €65,000

The property in Old Mint Street that houses the BICC offices

October 2014

Gaffarena gets a promise-of-sale agreement for the acquisition of another 25% of Old Mint Street, Valletta – ostensibly he might have already been aware that the first quarter of the property he owned had been valued at over €800,000.

One of the sellers, Tonio Mercieca, said Gaffarena first bought a quarter of the property in 2007 for €23,294 from his cousin. Towards the end of 2013, Gaffarena offered €69,881 but eventually agreed to double his offer to €139,762 after around a year of negotiations. Buyer and seller signed a promise of sale agreement last October.

“I don’t begrudge Gaffarena that he managed to sell the piece for more than I had. I am frustrated as Joe Citizen. This was nothing less than daylight robbery of taxpayers’ money. It seems as though it was a case of a clique of people helping each other out.”

21 December 2014, and 16 February 2015 • Two parcels of land at Bahar ic-Caghaq

Prof. Spiteri has to value lands on which some structures have been built at Bahar ic-Caghaq, close to the White Rocks complex.

Total area: 3,735 square metres (valued at €260,000) and 1,663 square metres (valued at €70,000)

How it was valued

Taking into account the characteristics and locality of the site, the structure thereon constructed, land use zoning in the Central Malta Local Plan and other contributory factors from assessments carried out, the value of the land and building
on a freehold is €70,000, and rental value is €2,200 per annum to be reviewed upwards every five years in accordance with cost of living index; and €260,000, or €7,900 rental value per annum to be reviewed upwards every five years in accordance with cost of living index.

28 January 2015 • Gaffarena paid €822,000 in cash and lands for expropriation of 25% of Old Mint Street

Gaffarena recieves:

1. the Sliema shop on Manwel Dimech Street, valued at €65,000
2. land at Tas-Salvatur in Mqabba for €165,800
3. land at tal-Handaq in Hal Qormi for €192,810
4. a first parcel of land at Bahar ic-Caghaq for €260,000
5. and a cash payment of €138,890

26 February 2015 • Gaffarena completes acquisition of the other 25% portion at Old Mint Street for €139,762

10 April 2015 • Gaffarena again €822,000 in cash and lands for expropriation of 25% of Old Mint Street

Gaffarena recieves:

1. a second portion of land at Bahar ic-Caghaq bordering on his own property for €70,000
2. two portions of land at Raba ta' Harram or Ta' Hal Mula in Zebbug for €375,000
3. and another cash payment of €377,550