QLZH’s Steve and Michael Mercieca share lessons for first-time bond issuers

QLZH, a real estate firm established in 2014 by Steve and Michael Mercieca, has successfully completed its first bond issue, raising €12 million across two tranches in July and December 2025.

The move to tap public markets is the first by a real estate agency in Malta, with QLZH using the bond to effectively diversify their business away from a pure agency earning commissions on the buying, selling and letting of property, and into property investment.

“The funds raised are being used to finance creation of an entity for rental property investment,” shares Michael, noting that the investment will provide the firm with a regular long-term income stream.

QLZH, the brothers say, had “no problem” raising the money, even as a first-time issuer.

And although the company has built a reputation a disrupter in the real estate space, it remains a relatively new player when compared to the multi-generation firms with legacy that constitute much of Malta’s bond market.

“It was very satisfying to see the extent of investor support, and extremely encouraging to see that people believe in us and trust us with their money,” says Steve.

Shedding further light on the measures taken to construct a compelling investment proposition, Michael notes that the funds raised will help build a diversified asset base, mitigating the risk to investors.

“With our first launch” – referring to the €6.8 million first bond tranche in July – “we invested in a greater number of modern units, new on the market. Historically, they have always done well,” he says.

The funds raised in that first tranche are being used to finance the acquisition and development of a residential five-storey apartment complex with four units in Pembroke and an eight-storey building with 15 units in Buġibba aimed at the short-let market.

“These kinds of properties have historically always done well,” continues Michael.

“For the second bond tranche, we went for something with more heritage and character. In Valletta, we have an old palazzo that is split into different units. We are acquiring the entire palazzo and restoring its features – coat of arms, fountain – to create four welcoming short-let units.

“In Floriana, it’s different yet again, with a 12-room palazzo being converted into a boutique hotel.”

Steve notes that the different properties in Pembroke, Buġibba, Valletta and Floriana effectively provide exposure to the whole market range, from lower-end to higher-end offerings.

Further limiting investors’ risks is that planning approval is already in hand for all the developments.

“You can get an appeal that sets everything back for months, at the least,” notes Steve. “So having the permits in hand means we can hit the ground running, and mitigates risks for ourselves and our bondholders.”

Although properties with permits in hand tend to fetch a higher price, QLZH used the bargaining power of ready finance and short timeframes for konvenji (promise of sale agreements) to negotiate downwards.

Steve also points out that the move into property investment is the fruit of – and thoughtfully built on – QLZH’s extensive experience as a real estate firm.

“We do this every day,” he says. “We have an extensive network, so investors can be confident that we get the pick of the litter.”

The current investment cycle is expected to significantly increase the group’s asset base – something the brothers are grateful to investors for enabling.

“We’re a company that started from nothing and built its way up,” says Steve. “This was our first time in the bond market, and the support has been incredible.

“Thanks to our team for making this possible, the board of directors, and obviously the investors. Finally, thanks for our clients over the years – without them this wouldn’t have been possible.”