Real estate developer Plaza Centers is seeking estimated damages of €262.2 million from the Romanian state following losses incurred in the Casa Radio real estate project in Bucharest. To this end, the company has filed a request with the International Centre for Settlement of Investment Disputes (ICSID) in Washington.
Casa Radio was leased for 49 years from the Romanian state for the development of a mega real estate project. In the past, the developer announced it had invested €85 million here, excluding the company’s acquisition cost, but the construction site has long been abandoned. The project was to be carried out in a partnership where Plaza Centers held 75% of the project, with the remaining stakes held by the Romanian authorities (25%) and a Turkish-capital company (10%). The company intended to build a mall, office buildings, and a hotel alongside the Romanian state on the land where Casa Radio is located, but the project remained only a promise and has not advanced at all in 15 years. Construction was delayed due to the economic crisis and because the Romanian state did not respond to requests to renegotiate the public-private partnership plan. Meanwhile, Plaza Centers considered selling its share of the project.
At the end of last year, Plaza Centers announced it agreed to extend the deadline for the sale of its 75% stake in the project to AFI Europe until December 31, 2022. AFI Europe signed a pre-contract to purchase the share package for €60 million.
The company has invested over €300 million in seven land plots located in Iași, Timișoara, Slatina, Hunedoara, Târgu Mureș, Constanța, and Miercurea Ciuc; in 75% of Casa Radio in Bucharest, in the Palazzo Ducale office building, and the Radisson complex, sold in 2017 for €169.2 million to the Cerberus and Revetas funds.
Frequently Asked Questions
Why is Plaza Centers suing the Romanian state?
Plaza Centers is seeking €262.2 million in damages through ICSID due to losses and lack of progress on the Casa Radio project, citing the state’s failure to renegotiate the public-private partnership.
What was the planned scope of the Casa Radio project?
The project was intended to be a large-scale development featuring a shopping mall, office spaces, and a hotel on a site leased for 49 years.
Who is the potential buyer for Plaza Centers’ stake in the project?
AFI Europe signed a pre-contract to acquire the 75% stake for €60 million, with the sale deadline previously extended to the end of 2022.