Tuesday, February 10, 2009

Bloom Freezes Romania Project on Lack of Funding

By Zainab Fattah

Feb. 10 (Bloomberg) -- Bloom, a property developer that is funded by members of Abu Dhabi’s ruling family, is putting plans to build a mixed-use development in Romania on hold as banks worldwide restrict lending, its chief executive officer said.

“We froze the project for the moment simply because all major banks are clearly not lending,” Hani Shammah said in an interview in Abu Dhabi late yesterday. “It’s a matter of prioritization and cash flow management, nothing else.”

The project in Romania, valued at 450 million euros ($585 million), was expected to focus mainly on high-end offices and retail facilities, Shammah said. “The demand drivers, at least in the short term, have sort of disappeared” as most European companies halted their expansion plans, he said.

Bloom joins rivals such as Dubai’s Deyaar Development PJSC in shelving projects as banks are toughening lending terms following more than trillion dollars in writedowns and losses worldwide.

Bloom, which is owned by Emirates International Investment Co. LLC, puts the sales value of its project portfolio at “more than $10 billion” while the company’s assets are estimated at close to 10 billion dirhams ($2.7 billion), Shammah said.

Shammah said Romania remains an interesting place to do business from a cost point of view, however, the project will not be resumed until he sees “evidence of corporate demand” since “at the moment no one is expanding.”

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.

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