Property developer Plaza Centers has bought a controlling stake in a project in Sofia, Bulgaria, for the development of an 807,300 sq ft retail and office complex.

The London and Warsaw listed emerging markets developer has taken a 51% stake in the project from a local developer for a total consideration of €7.14m (£6.6m) consisting of a cash payment of €2.78m (£2.5m) and the assumption of €4.36m (£3.9m) of debt, representing 51% of the project's debt liability.

Plaza has also retained the right to acquire a further 24% stake in the project for six months following the start of construction, based on the current value of the project, as reflected in today’s announcement to the Stock Exchange.

The local developer, which has not been named, will retain the remaining stake as joint venture partners in the project, with Plaza managing the construction.

The design phase of the project, which is located 2.7km away from the centre of Sofia, is already underway with zoning approval for the construction of retail and office space as well as extensive parking.

The gross development budget for the project is expected to be €75m (£67m) with construction due to start in 2010.

This project is Plaza’s second project in Bulgaria, following its purchase in November 2007 of a 215,280 sq ft shopping centre development project in Shumen.

Ran Shtarkman, president and chief executive officer at Plaza Centers, said: ‘Plaza is uniquely placed to take advantage of opportunities in the current market, given its strong balance sheet and its expertise in developing assets across central and eastern Europe.

'There is considerable demand in Bulgaria, and in particular in Sofia, for well located, high quality retail space. Moreover there is a significant shortage of office space in the city, particularly with parking facilities.

‘The transaction required limited immediate funding from both partners, due to the level of bank financing provided for the land acquisition, which was achievable due to the experience and reputation of Plaza.

'This new project will enable us to create significant value by delivering a high quality product for which we expect to receive strong interest from potential international and domestic occupiers.’