One of the biggest real estate projects in Romania is subject to investigation

Israeli real estate developer Plaza Centers has started an internal investigation on the Dambovita Center – Casa Radio real estate project in Romania. The company’s investigation may be connected to a criminal investigation carried out by the Romanian authorities, although no information about such an investigation has been publicly released. The company’s board “has become aware of certain issues with respect to certain agreements that were executed in the past by Plaza in connection with the Casa Radio Project in Romania”, according to a statement by Israeli group Elbit Imaging, the majority shareholder of Plaza Centers. “In order to address this matter, Plaza's Board has appointed the chairman of Plaza's Audit Committee to investigate the matters internally. Plaza's Board has also appointed independent law firms to perform an independent review of the issues raised,” the statement reads. Moreover, the company says that it “has approached and is co-operating fully with the relevant Romanian Authorities regarding the matters that have come to its attention in this respect and it has submitted its findings to the Romanian Authorities”. Casa Radio is one of the biggest real estate projects in Bucharest. The project focuses on transforming a huge building started by Nicolae Ceausescu and left unfinished into a modern business center. It spans over a 9.2-hectare land plot less than 2 kilometers away from the Parliament’s Palace in Bucharest. “The development of Casa Radio comprises approximately 467,000 sqm of built area, including a 90,000 sqm GLA shopping mall and indoor leisure center, approximately 127,000 sqm GBA of offices, hotel complex with conference center, and underground car parking spaces,” according to a presentation by Plaza Centers, which has a 75% share in the project. The Israeli company bought its way into this project in February 2007 when the Romanian real estate market was booming. The project was put on hold due to the crisis. The Romanian state holds 15% of the project, via the National Investments Company (Compania Nationala de Investitii), and Turkish group Kucuk owns the remaining 10%. The Casa Radio project was negotiated by Romania’s Government starting 2003 and the association contract between the Romanian state and Turkish group Kucuk was signed later, according to the Romanian media. The contract had issues from the start as the selected investor apparently didn’t have the capacity to carry out the investment. Plaza Centers joined and relaunched the project in 2007. However, the Israeli group put all of its development plans in Romania on hold after the financial crisis. The company didn’t release any information on the nature of the internal investigation related to this project. “As the investigation of this matter is ongoing Plaza in unable to comment on any details related to this matter.” Plaza Centers wants to remove residential component from contract with Romanian state over unfinished Radio House mixed project