Consultancy Firm Hints At Litigation With Lewis Charles Sofia Property Fund

On March 27, UK-based real estate consultancy Emerging Markets Understood Ltd (EMU) has hinted it would take Lewis Charles Sofia Property Fund (LCSPF) to court over missed payments and loss of profits after the relationship between the two parties broke down over a Bulgarian project.

In April 2007, EMU was assigned to sell approximately 450 apartments in the Vitosha and Krustova Vada districts of Sofia by LCSPF chairman, Lord Philip Howard of Penrith, EMU said in a statement on its website.

EMU were required to deal directly with BuySell, the building company charged with the construction and delivery of the project, which turned out very poor and with over-stated building costs, EMU managing director Simon Feek claimed.

BuySell also provided EMU with no building specifications and prices, acting as a competing sales agency to EMU, which nevertheless continued with its planned marketing and sales campaign through participation at events in Birmingham, Moscow and Sofia in 2007, the real estate agency said.

The company spent its own money on those events, receiving only 20 000 euro out of the outstanding 223 000 euro stage payments, which LCSPF has been unwilling to pay off, EMU said.

The real estate consultancy has been approached recently by UK and Ireland-based clients, who had bought off-plan property, only to discover that they had trouble securing mortgage financing, due to the specifics of the properties' design, namely very large common areas.

LCSPF has not addressed the buyers' concerns concerning financing, quality and safety, EMU said, which prompted the consultancy firm to extend an offer to all buyers to assist them in resolving issues.

Outstanding stage payments and loss of profits "evidently requiring legal action" amounted to 7.28 million euro, according to EMU, although it did not say whether it has filed charges against LCSPF, which is listed on the alternative investment market of the London Stock Exchange.

LCSPF focuses on investment in Bulgarian residential property, with a pipeline of eight residential schemes in Sofia that have a combined price tag of more than 45 million euro. The fund's property portfolio has a total build area of 567 590 sq m and currently has a valuation of 83 852 536 euro, according to the a fund’s media statement.

In the Bulgarian capital, the fund is developing gated communities in the Vitosha, Simeonovo and Krustova Vada boroughs. The first project was completed in 2007 while the other five are expected to be completed during 2009. One of these projects is still at the foundation stage and the firm also owns land in Dragalevtsi and Kambanite suburbs.

Projects outside Sofia include developments in Banya (Razlog municipality), Govedartsi (Samokov municipality), Bansko, Plovdiv, Veliko Tarnovo and Dolna Banya.propertywisebulgaria.com