First failure of a real estate developer that announced significant investment

The domestic real estate market, which is currently expanding at full throttle, has witnessed its first failure – a developer that announced hundreds of millions of euros in projects.
US Polimeni International, which announced 300 million euros in investments on the domestic market, has decided to withdraw from Romania, after having lost the funding for the development of its first commercial projects, in Satu Mare and Galati.
This is the first failure of as foreign developer that had announced massive investments on the Romanian real estate market. Polimeni hired one of the top ten executives specialising in real estate, Stefan Gheorghiu, early this year, the former head of the local office of Austrian investment fund Europolis, to run its operations on the domestic market.
With Gheorghiu at the helm, Europolis made more than 200 million euros in investments on the domestic real estate market. “Polimeni lost the financing for the projects it announced in Romania. The withdrawal of the company from the domestic market is not necessarily connected to the subprime mortgage loan crisis in the USA, because the funds for investments were secured from a financial institution in the United Kingdom,” Stefan Gheorghiu, former country manager of Polimeni told ZIARUL FINANCIAR.
He says the American company withdrew from Romania with around 500,000 euros in losses and is now in the process of winding up the companies it had in Romania.
The Polimeni officials could not be reached by the time the story was ready for print to provide any comment on the issue.
The Americans signed the first of two pre-contracts in July to buy two plots of land in Galati and Satu Mare for 28 million euros, on which they were to develop two shopping complexes. However they failed to pay the money to the owners.
Market sources say Polimeni had a partnership in place with British property fund aAIM until this June, which owns commercial projects worth 2.9 billion euros in the US and Europe, and signed a contract with another British fund. Polimeni was supposed to develop the projects and the fund was supposed to buy them while in their early stages of development.
Polimeni lost the contract with its new financial partner for the investments in Romania and Poland in August and is now looking for a new fund to finance its investments.
Polimeni, based in New York, is controlled by American businessman Vincent Polimeni, and operates on the markets of the US and Poland.
The company has developed 13 real estate projects in the US and four projects in Poland, where it holds another ten plots of land on which it intends to develop shopping centres with total investments in excess of 150 million euros, according to the latest data available.
Polimeni said in July that the prices of the plots of land bought in Romania were five times higher than those paid for similar areas of land in Poland, yet potential clients were willing to pay a higher cost, given the opportunities on the Romanian market.