Bulgarian Land Development plc, the AIM listed Bulgarian residential and commercial development company, is pleased to announce the acquisition of its inaugural office project. The acquisition will be made with a joint venture partner, enabling BLD, for the first time, to earn project management fees as well as participate in profits.

BLD and its joint venture partner have agreed to acquire the 29,000 sq m Dimitar Blagoev Printing House in downtown Sofia (the “Printing House”). Built in the 1950s, this is a historical landmark building located in a highly desirable area, ten minutes’ walk from the Parliament in Sofia and in close proximity to Eagles’ Bridge. The site is situated at the heart of the emerging Sofia CBD, on Tsarigradsko Chaussee, which is the main Sofia boulevard connecting the city centre with the airport and the Sofia-Plovdiv-Bourgas highway.

The Printing House is formed of five buildings which are part of industrial and office premises of approximately 50,000 sq m consisting of eight buildings on an island site surrounded by four streets. The key owner-occupier of the other three buildings that have not being acquired is the largest media and press company in Bulgaria, a subsidiary of German Westdeutsche Allgemeine Zeitung Group (WAZ).

BLD and its joint venture partner will convert the five buildings into modern class A commercial space consisting of 23,500 sq m of office accommodation and 3,500 sq m. of retail space, together with 182 underground and 58 above-ground parking spaces.

Total project costs (including land acquisition and development) are estimated at Euro 50m (£40m*), while the gross development value is estimated at Euro 70m (£56m*). Bank financing covering 75 per cent. of the project costs has been secured. In addition to bank finance, the joint venture will be funded by the partners investing €6.5m (£5.2m*) each, as per their 50/50 share in the joint venture company. The completed project is expected to attract first class tenants, due to its unique location and high end specification. Construction is expected to be completed in September 2010.

The joint venture will operate through a special purpose vehicle company owned by BLD and BLD’s financial partner in this transaction, Northridge Capital Ltd., London (“Northridge”). Northridge manages private client funds and has invested in a number of property transactions worldwide. BLD will be the development manager. Joining forces with Northridge on this project enables BLD to share the development risk with a reputable and experienced partner and to earn project management fees.

Christo Iliev, Chief Executive Officer of BLD, commented “This project serves as an example of BLD’s ability to identify an off market deal, identify and agree terms with a joint venture partner and convert an industrial building in a top location into a contemporary office complex, while preserving its unique architecture. This acquisition is consistent with our strategy of diversifying our portfolio by moving into commercial and office developments, and brings us a step closer to achieving our strategic objective of being fully committed to investment by the end of spring 2008.”

(extracted from “The Investor” magazine, p. 41, Tuesday 1, April 2008)

The company is seeking to consolidate a number of plots in one location with a total area of approximately 60,000 square metres by purchasing plots of land (with freehold title) adjacent to each other. This acquisition is the first purchase of such adjacent plots.

BLD will seek to change the zoning of the land so that a residential complex may be developed on the aggregated plots. The company expects this development project to be attractive to Sofia citizens as there is a trend for relocating from the city centre to the suburbs. The suburbs can provide a better standard of living, mountain views and good access to main roads. This acquisition is consistent with BLD’s strategy of diversifying its portfolio by developing residential city projects.

The consideration payable for the 38,146 square metres of agricultural land purchased to date is approximately Euro 1.7 million (£1.3m) and the company will fund this out of its own cash resources. Once the acquisition of the remaining
adjacent plots is complete, BLD will make a full announcement as to the location of the site.

Visit Harmony Hills’ website>

The plot location offers a unique combination of easy access to Borovets ski runs, Dolna Banya spa facilities and Ibar golf course, is in the vicinity of the planned gondola station, Five Mountains and Samokov golf courses and is close to Samokov town park, stadium and sport facilities and within walking distance of retail outlets and restaurants. Development of the Super Borovets ski resort project (which will spread from the town of Samokov to the village of Beli Iskar; including 33 new ski runs) has been moved forward and the work on the first new gondola station, which is close to BLD’s development site, has just started.

Riverland Ski & Leisure Resort is planned to provide a car-free environment by building parking places outside the residential area, so residents can enjoy a clean environment in harmony with the surroundings. The buildings will be low-rise with plenty of green areas in between, styled as an English park. Amenities of the resort will include two swimming pools (outdoor and indoor) as the outdoor one will act as a skating rink in winter, bowling, SPA and fitness leisure centre, a business office with a conference hall, a ski wardrobe, a lobby bar, two restaurant and a piazza café, sport facilities and children playground, retail area.

Designed by HoK International, the complex will consist of 10 residential buildings, which will offer completely furnished luxury apartments. Each building will comprise of 85 residential units including studios, one and two bedrooms apartments and spacious duplex apartments. Sales prices will be in the range of EUR 1,200 psm, studios starting form Euro 56,000, and luxury maisonettes offered at about EUR 170,000 per unit.

This launch follows the success of the Harmony Hills development project near Albena Black Sea resort (63% of the units sold as of end-November), July Morning project kick-off and the apartments acquired off-plan in Paradise Dune in Sozopol (100% of the units sold or reserved as of end-October).

Visit Riverland’s website>

Oman’s sultan and prime minister Qaboos bin Said Al Said was also present at the event. Oman’s State General Reserve Fund is one of the main investors in the project on behalf of the main shareholder, the investment fund Equest. Equest holds 67 per cent of the Rila-Samokov 2004 company that would develop the project. The rest of shares are divided between Samokov Municipality (25 per cent) and the construction company Glavbolgarstroy.

Rila-Samokov 2004 owns two million sq m of land in the Rila mountain area and plans to invest 500 million euro over the next few years in expanding one of Bulgaria’s most popular skiing resorts Borovets.

The first phase of the Super Borovets project, expected to be completed by the end of 2009 or in early 2010, should provide twice as much occupancy of the facilities in the currently existing resort. The second phase envisages construction of tourist facilities in the area enclosed by the Iskur River, Samokov and Borovets. Building of more facilities at an altitude of over 1400 m above see level is planned in the third phase of the concept.

Equest and its main sponsor from Oman were planning to also build an 80-km highway that would link Super Borovets with the capital Sofia, Georgi Kroumov, executive director of Equest, was quoted as saying by Sega daily newspaper on October 9. The new section would link the currently existing Trakia and Strouma highways and thus shorten the road to Greece and Macedonia for automobiles coming from Turkey and Eastern Bulgaria.

The 260-million-euro project for the highway, which is to be called Rila, will be implemented under a concession.

Sega quoted Regional development and Public Works Minister Assen Gagaouzov as saying that the tender procedure for Rila Highway would be called as soon as possible and the highway itself could be built and launched within two and a half years.

The Sofia Echo

The price of the home units in the 6 mln euro development will range between 750 and 1,200 euro/sq m, said BLD executive director Dimitar Savov.

Harmony Hills, located several kilometers from sea resort Albena, will comprise 20 detached homes and a further 182 apartments. The complex should be completed by May 2008.
A hundred of the holiday homes have been sold off-plan to British, Irish, Spanish, Russia and Romanian buyers. Around 95% of the home buyers have signed a property management contract.

BLD is developing a holiday complex on a 10 ha site near Kavarna, on Bulgaria’s Northern Black Sea coast.

In October, the company is expected to start the off-plan selling of home units in the vacation complex that will be developed on a 5.6 ha site between the city of Samokov and ski resort Borovets.

The company will also build a five-star hotel and apartment complex adjacent to the Kempinski Hotel Zografski in Sofia. The 40 mln euro scheme will e a mix of small and large apartments with the asking price expected to start from 3,000 euro/sq m. The company describes the property, which will offer a panoramic view of the capital city, as one of the most luxurious currently under development in Sofia. (Dnevnik)

Visit Harmony Hills’ website>

Construction is expected to take place in phases with the first one due to start in the beginning of 2008 with a 12 month building programme; this will comprise about one-third of the whole scheme. The first phase apartments should be available for the 2009-2010 winter season. Depending upon the rate of sales (due to commence in summer 2007), the rest of the construction will be in one or two phases. Total construction costs are expected to be about 27 mln euro if the work is carried out in two phases.

Funding of the site purchase will come from BLD’s own equity. Construction costs are expected to be funded by bank loans and deposits from pre-sales of apartments.

Christo Iliev, chief executive of BLD, commented for the LSE news service: ‘This is our fourth significant purchase since our AIM flotation last March and fits in perfectly with our strategy of having a diversified portfolio. We will now have major developments in Sofia, the capital city, and in the Black Sea holiday resort areas, as well as in the ski mountains.

‘Our development portfolio will now have a completed development value of 235 mln euro and we have now committed 82% of the net proceeds received from our March 2006 IPO.”

BLD is in negotiations regarding additional property acquisitions and further announcements will be made in due course.(Dnevnik)

‘We look forward to investing additional funds into these potential projects and exploring further opportunities via our exclusive 3 year arrangement with Address Group, delivering increased shareholder value in the process,’ chief executive Christo Iliev was quoted as saying by news agency Dow Jones.

‘The Bulgarian property market remains strong. The average price of properties rose by 20% year on year in Q2, 2006. Substantial growth is expected in the holiday apartment sectors along the coasts and in the mountains. There is demand for high value residential space in Sofia. Mortgages are becoming more easily available. Demand from overseas purchasers includes some from the estimated 1.7 mln Bulgarians who live outside the country (the present population is 7 mln),’ said Iliev.

In March this year, BLD raised 33.8 mln euro via flotation on the AIM market of The London Stock Exchange.

The Company now has three projects underway.

Harmony Hills, Rogachevo is on a freehold site 4 km from the Black Sea coast and 38 km north of Varna and its international airport. The completed development will comprise 177 apartments and 22 villas with an estimated sales value of 10 mln euro.

Sales marketing began in August 2006 and reservations have already been taken for 11% of the units. Depending on the progress of the marketing, building work is expected to start early in January 2007 and to be completed 15 months later. Construction is expected to cost 5.5 mln euro and to be funded from bank loans and apartment presales deposits.

Contracts were signed in September 2006 whereby BLD acquired the right to develop the BLD Sofia Tower site in the centre of Sofia. BLD will build a 13 storey building of 32,000 sq m in a mixed development comprising 22,000 sq m of residential space containing about 150 luxury apartments, 6,000 sq m of retail/ office space on the lower floors and 4,000 sq m of underground space. The land is already zoned for planning for this use. The company believes the project has a projected sales value of more than 65 mln euro.

The Company expects that off-plan sales will start at the beginning of 2007 after a leading international firm of architects has completed design work. BLD expects the building stage of the project to be completed in the spring of 2009 at a cost of 23.5 mln euro).

Kavarna BLD has agreed to buy 85,000 sq m of freehold agricultural land right on the Black Sea coast, 48 km north of Varna. This has been achieved by assembling the site by off-market purchases of 8 plots. The total cost is 3.2 mln euro.

The company will now go through the planning process (which is expected to be completed in the summer of 2007) to create a 100,000 sq m holiday complex designed for the international holiday market with an estimated gross sale value of 100 mln euro.

The site is in the Balchik-Kavarna area, one of the most exclusive areas on the Bulgarian Black Sea coast. Three internationally designed golf courses are already under construction in the area and existing spa facilities are nearby.

The company will sink into the development 60% of the 25 mln British pounds raised earlier this year on the LSE.

The villa, apartment and hotel complex will occupy a 8.5 ha site bought for 3.3 mln euro. The company estimates the construction costs at 40 mln euro. The final market value of the complex should reach 100 mln euro, said BLD executive director Dimitar Savov.

Work on the design of the complex and the actual construction should get underway in the spring of 2007. BLD is in talks with an international property operator to manage the complex which should be completed in 3 years.

The fund expects to commit 90% of its capital by the end of the year, allocating the remainder for administrative costs, said Savov.

In related news, Kavarna mayor Tsonko Tsonev said the municipality has so far approved the investment projects of at least 10 Bulgarian and foreign companies which are already rolling or should be by the end of 2006.

The combined value of the approved investment projects is 700 mln levs.

One of the investors is British fund Equest which will build a vacation complex. A Spanish property development should get underway in early October. The projects of 3 Scottish, one Danish and one Swedish investors are also at their initial stage.

Most of the planned properties are clustered around the site of Thracian Cliffs, one of the 3 golf courses in development in the Kavarna area.

The bed capacity in the Kavarna area is expected to zoom up from 3,000 to 50,000 over the next 5 years.(Dnevnik)