Fortina insists €8.1m payment exceeded fair valuation

The Fortina Group has reignited debate surrounding one of Malta’s most scrutinised property transactions, asserting that it paid an amount far exceeding fair market value for the waiver of restrictive conditions on its Sliema seafront property. In a detailed technical submission to the Parliamentary Committee, the Group presented expert findings that challenge the National Audit Office’s (NAO) earlier conclusion that Fortina had benefited from an undervalued deal.

The company maintains that, based on objective valuation principles and updated legal benchmarks, the €8.1 million it paid in 2019 was “significantly above fair value” — not below, as previously alleged.

Background of the dispute

In 2024, the National Audit Office issued a report suggesting that Fortina Group had paid millions less than what was due for the lifting of restrictive building conditions. The NAO argued that land valued at around €21 million had been conceded for just €8.1 million, raising concerns about undervaluation and potential loss to public finances.

The report generated intense public discussion about government land transactions, with questions emerging over whether private entities had benefited from favourable terms in such deals.

However, Fortina has now submitted a comprehensive counter-analysis asserting that the NAO’s calculations were deeply flawed.

Fortina’s statement and key arguments

A spokesperson for the company said:

“We have privately owned this prime seafront property since the 1960s and have paid over and above the fair value for the waiver of conditions.

Our comprehensive review of the NAO report, with technical expert assistance, found numerous discrepancies in all three valuations. After adjusting for these flaws, it is evident that even before taking into account the unrealistic sales price values assumed in the NAO valuation, the maximum fair value would at best range between €3.5 to €7.4 million.”

The company’s representatives further argued that under Malta’s current legislative framework for waivers of restrictive conditions, introduced in 2024, the corresponding government fee would have been €3.4 million less than the amount Fortina paid.

“If €4.7 million constitutes fair value under today's transparent standards, why is €8.1 million in 2019 not considered excessive? We paid significantly more than current fair value standards. Not only did we not benefit from an advantageous valuation, but we were significantly disadvantaged.”

Expert technical analysis and findings

The Fortina Group’s analysis, reportedly prepared by a team of independent experts, aims to dismantle the methodology employed by the NAO. According to the company, the NAO’s valuation framework suffered from material errors, methodological flaws, and internal inconsistencies that collectively inflated the perceived fair value of the land.

The report criticises the NAO’s approach for relying on assumptions designed to “maximise potential value”, including terminology such as “highest potential value achievable”, “fully capitalise on the site's potential”, and “maximum value.”

Fortina’s experts argue that this approach artificially boosted land valuations by ignoring necessary deductions and realistic market limitations.

After applying what it described as “technical corrections to ensure consistency and eliminate computational errors,” Fortina concluded that the fair market compensation for 2017—the relevant year of valuation—should fall between €3.5 million and €7.4 million, notably below the €8.1 million it paid.

Key discrepancies highlighted by Fortina’s experts

Re-basing valuation dates

One of the central issues raised by Fortina’s advisers involves the valuation date. The NAO and the Auditor based their calculations on 2019 prices, even though the application to lift the restrictions was made in 2017.

This discrepancy, Fortina argues, resulted in an inflated valuation of €2.8 million to €3.2 million, depending on the methodology used. By adjusting the figures to 2017 prices, the company says it revealed a more accurate and fair value assessment.

Misapplication of “in-use value” principles

The company also disputes how the NAO treated the site’s in-use market value. Contrary to standard Lands Authority procedures, the NAO’s calculations deducted only the “deemed air space value” rather than the site’s full operational value as a functioning hotel.

According to Fortina, this led to a major underestimation of the property’s existing worth. The auditors’ valuation, it claims, understated the hotel’s fair value by approximately €13.4 million, given that deductions were not based on the realistic computed figure of €143,000 per room.

Questions of legal compliance and valuation standards

Fortina’s submission further argues that the methodologies adopted by both the Auditor and the NAO did not fully comply with the Government Lands Act and related valuation guidelines.

The NAO’s own report, the company notes, even acknowledges potential methodological issues in the valuations reviewed, suggesting there may have been internal doubts about compliance with statutory valuation requirements.

Fortina’s technical advisers stressed that valuation exercises must adhere to consistent, objective, and legally defined criteria to avoid subjective assessments or inflationary outcomes.

Benchmarking against legislative frameworks

Fortina commissioned an independent architectural firm to apply the guidelines set under Legal Notice 196 of 2024 and Legal Notice 75 of 2025, which govern the revocation or waiver of restrictive conditions on property originally transferred by the government, Lands Authority, or ecclesiastical entities.

These newer rules were introduced to promote transparency and standardisation in determining fair value, reducing opportunities for arbitrary judgment. Under this updated framework, Fortina would have paid no more than €4.7 million—a figure substantially lower than the €8.1 million actually paid.

Although the company acknowledges that the 2024 and 2025 laws were not applicable at the time of its transaction, it argues that benchmarking against these rules provides useful context for assessing what a fair valuation should look like under today’s more transparent standards.

Historical background of the Fortina property

The Fortina Group’s involvement with the Sliema property extends back over six decades. The company originally acquired the prime seafront site in the 1960s. Over the following decades, it purchased three adjoining plots—in 1991, 1996, and 2000—each subject to government-imposed conditions restricting building height and use.

According to Fortina, these restrictions became increasingly outdated as urban and commercial conditions evolved. By 2017, the company sought to lift these restrictions to enable the development of a modern hotel and mixed-use complex, which it argued was essential for maintaining competitiveness and meeting contemporary tourism standards.

“Business requirements change over 25-30 years – conditions that made sense in 1996 became completely outdated by 2017 and led to Fortina deciding to embark on the substantial investment in a new hotel and mixed-use project.”

The spokesperson added that similar concessions have been granted to numerous developments across Malta over the years, often involving lower compensation figures.

“Concessions to change outdated conditions have been granted to numerous developments in Malta over both recent and distant past but nobody has paid anywhere close to the compensation paid by Fortina.”

Fortina’s appeal to Parliament

Fortina has requested the Parliamentary Committee to give full and proper consideration to the technical findings submitted by its expert advisers.

The company insists that, once errors and inconsistencies are corrected, the fair market value for the waiver of restrictions should range between €3.5 million and €7.4 million—substantially below the amount paid.

By submitting its analysis to Parliament, the Group aims to demonstrate that it did not benefit from any undue advantage and, in fact, was financially disadvantaged by paying an amount higher than what any reasonable valuation would have required.

Broader implications for transparency and valuation policy

The Fortina case touches on broader issues within Malta’s property administration system, particularly around valuation transparency, accountability, and consistency. The company’s argument aligns with ongoing public discussions about improving oversight and standardisation in government property transactions.

Recent legal reforms, including the Lands Authority Act amendments and Legal Notices 196/2024 and 75/2025, aim to create frameworks that minimise subjective or discretionary practices. Fortina’s benchmarking exercise underscores the importance of applying such transparent standards to avoid disputes like this one in the future.

Conclusion

The Fortina Group’s submission to the Parliamentary Committee marks a significant escalation in its efforts to counter the conclusions drawn by the National Audit Office. By presenting a detailed expert analysis, the company contends that its €8.1 million payment to the Maltese Government was not only fair but excessive by objective valuation standards.

The case underscores enduring questions about how Malta values public land, applies consistent methodologies, and ensures that public and private interests are balanced fairly. While the Parliamentary Committee’s response remains to be seen, the Fortina case has once again spotlighted the urgent need for transparent, standardised, and legally consistent valuation practices in the country’s property dealings.

FAQs

What is the main issue in the Fortina Group dispute?
The dispute centers on whether Fortina Group underpaid or overpaid for the waiver of restrictive conditions on its Sliema property.

What did the National Audit Office conclude?
The NAO report claimed that Fortina paid less than the land’s fair value, suggesting an undervaluation that led to public loss.

What is Fortina’s counterargument?
Fortina argues that it paid €8.1 million, which exceeded fair market value based on professional and legal valuation principles.

Who conducted Fortina’s technical analysis?
The analysis was carried out by independent expert advisers and architects commissioned by Fortina Group.

Why is the valuation year significant?
Fortina contends that valuations should have been based on 2017 prices—the year the application was made—not on inflated 2019 figures.

How does the new legislation affect the valuation?
Under the 2024–2025 legal framework for condition waivers, Fortina would have paid €3.4 million less than it did in 2019.

What was the NAO’s methodology criticised for?
Fortina said the NAO used “maximum potential value” assumptions, inflating valuations instead of assessing realistic market value.

Did Fortina benefit from the deal?
According to the company, no; it claims to have been financially disadvantaged compared to other similar concessions.

What is Fortina requesting from Parliament?
The Group wants Parliament to review the findings and recognise that the payment made was excessive by fair valuation standards.

What does this case mean for future government land deals?
It highlights the need for consistent, transparent, and legally compliant valuation practices to prevent future disputes.