February 20, 2019

AFI Europe may take over big unfinished project in Bucharest

AFI Europe may take over big unfinished project in Bucharest

Israeli group AFI Europe signed a non-binding letter of intent with Plaza Centers NV to acquire the majority stake in the Casa Radio project, in downtown Bucharest. The total value of the offer amounts to €60 million, the company announced in a press release.

Casa Radio, whose construction started during the communist regime, is one of the largest unfinished projects in Bucharest. Plaza Centers, which was a subsidiary of Israeli group Elbit until the end of 2018, reportedly invested €85 million in demolishing part of the Casa Radio structure, plus design and foundation consolidation until 2010 when the project entered into preservation. In March 2018, Elbit agreed to pay a $500,000 fine in the US to settle a case related to unjustified payments worth some $27 million that Plaza Centers had made to offshore consultancy firms. Some of the money may have reached the pockets of corrupt politicians in Romania to speed up the Casa Radio project.

Plaza Centers is currently in the process of exiting the Romanian market, where it also owns several land plots for development, which it bought before the 2008 crisis. If the Casa Radio deal goes through, AFI Europe will become the majority shareholder in this project with a 75 percent stake. The Romanian state controls 15 percent of the project, and third-party investors hold the remaining 10 percent.

"Casa Radio is a landmark in Bucharest and the acquisition of the project is in line with our expansion strategy. Given the early stage of this acquisition, we will provide up-to-date purchasing information and plans for this project as the process advances," said Doron Klein, CEO of AFI Europe Romania.

AFI Europe Romania owns the largest shopping mall in Bucharest, AFI Cotroceni. It also has a mall in Ploiesti and another one under construction in Brasov, as well as two office projects and a residential project in Bucharest.

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