Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) Central European and Indian mall development arm, Plaza Centers NV (LSE:PLAZWSE:WLZ) has suspended 26 of its 32 projects because of the market climate, according to the company's management statement for the third quarter. The suspended projects are in the design stage or waiting for permits. Construction of these projects will depend on the availability of external financing.
The company stated, "The last few months have seen extraordinary turbulence in economic and financial markets worldwide. This has impacted considerably on activity in real estate markets worldwide, with the lack of availability of financing being a key factor behind the dramatic slowdown in investment transactions."
Plaza Centers will continue with the development of the six projects that are in construction stage: the 360,000-square meter Casa Radio project and 14,000- square meter Ciuc project in Romania; the 17,000-square meter Liberec project in the Czech Republic; Koregaon Park in India; a 49,000-square meter project in Riga in Latvia; and a 24,500-square meter project in Kragujevac in Serbia. The Latvian and Czech malls are due to open next year.
The 26 projects that are being suspended are as follows: five each in Poland, Romania, and India; three each in the Czech Republic and Hungary; two in Serbia; and one each in Bulgaria and Greece.
Plaza Centers stressed that its "strong long-term development pipeline to help it retain its rate of growth even in the difficult economic conditions currently prevailing across Europe and America." The company is pursing a three joint mixed-use projects in Bangalore, Chennai, and Kochi in India with Elbit Imaging, and is seeking new opportunities in India and Ukraine. It also noted that its debt amounts to 40% of equity.
Plaza Centers added that it has secured bank loans for the construction of its malls: €42.2 million for a mall Suwalki and €35.1 million for a mall in Zgorzelec in Poland, and €18.1 million for a mall in Miercurea Ciuc in Romania.
Plaza Centers' share fell 6.1% in London today ₤0.50, giving a market cap of ₤142 million. Elbit Imaging's share closed at $7.70 on Nasdaq yesterday, giving a market cap of $241 million. Its share fell 16.2% on the TASE to NIS 30.50.
Published by Globes [online], Israel business news - www.globes-online.com - on November 20, 2008
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