Â鶹ӳ»­

Lewis Charles Romania Property Fund (LCSR) has announced the sale of its subsidiary Magnolia which holds a prime retail site in Ploiesti, Romania to Blackpearl Property for a 'nominal consideration'.

The site is intended for the Zenith retail project which is to comprise a 86,000 m² shopping centre, with the potential to accommodate a further 23,000 m² of retail space and a hotel of up to 11,000 m². Market watchers estimate that the scheme is potentially worth EUR 140 mln but was likely sold for less that EUR 100 mln.

LCSR said that although the project was at an advanced stage of planning, it has not been possible to secure development finance for the construction of the scheme in the current financial markets. The fund said the sale of Magnolia would 'de-risk the exposure for LCSR' while preserving as much of the potential opportunity for shareholders.

Under the arrangement, LCSR has entered into a profit sharing agreement with Blackpearl, where it is entitled to receive 50% of the future profits from the project. Two of the fund managers will join the board of Magnolia to represent the company’s interests. The company retains no liabilities in connection with Magnolia, including the EUR 3.63 mln of third-party debt.

LCSR had held Magnolia on its balance sheet at cost of just under EUR 20 mln.

Irish-based Blackpearl Property invests in commercial and residential property in Romania.