Eastern Europe property company shelves AIM float

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The Independent Online

The Cyprus-based real estate investment group Bluehouse Accession Property has postponed its flotation on the Alternative Investment Market.

The group, whose business plan involves securing property in potential members of the European Union, predominately Romania and Bulgaria, has not given any indication as to where future funding might come from.

A spokesman for the company was unable to say when or if it would come to the market. There were indications that the float was in trouble on Friday when Bluehouse cut the amount of cash it hoped to raise from investors from £100m to £70m.

The past 12 months have seen a slew of new companies try to raise funds for property investments in Romania and Bulgaria. The two former Eastern Bloc countries are expected to join the EU before January 2008. Those buying property in the region hope EU accession will prompt a spike in prices.

Bluehouse's decision to pull its float came as little surprise to some industry experts, who are wary of the flooded real estate market. The investment bank Morgan Stanley saidlast week: "We are starting to find the weight of new issues is leading many generalist equity investors to become more sceptical towards the sector, and investors are becoming increasingly selective in deciding which issues to back."

Brokers specialising in AIM backed this view yesterday. One said: "East European real estate floats have saturated the market. Investors are finding it difficult to distinguish between potential successes and losses. Nevertheless, good companies will always generate good interest."

Deutsche Bank is acting as broker and nominated adviser to Bluehouse with Evolution Securities as co-lead manager for the project.