First mass market project in the Moscow region

LSR Group launches its first mass market project in the Moscow region

CJSC Mosstroyrekonstruktsiya and OJSC Zavod ZhBI-6 (subsidiaries of LSR Group in the Moscow region) launched a new product - low-rise 8 and 12 unit panel houses under the brands EURO-8 and EURO-12.

On 31 March 2010, CJSC Mosstroyrekonstruktsiya entered into an investment contract with Moscow developer Morton Group to jointly develop a mass market neighbourhood on a land plot of 30 hectares in the Moscow region. The total investment in the project is estimated to be approximately RUR 3 billion (excluding the value of land) including 30% to be invested by LSR Group in the form of reinforced concrete panels to be produced by Zavod ZhBI-6.

The neighbourhood comprising 114 low-rise houses is to be built in the Novsky township, Balashikha, 13 km from Moscow. The project provides for the integrated development of two- and three-storey houses of 8 and 12 single- and double-room flats, with areas of 32 to 54 square meters respectively. Under the investment contract with Morton Group, the total sellable area will be 79 thousand square meters including approximately 20 thousand square meters (41 low-rise houses) to be transferred to LSR Group for subsequent sale to end users. The construction of the new neighbourhood is planned to start this spring and is to be completed in stages by the end of 2011.

Igor Levit, the CEO of LSR Group commented as follows:

"Using the production capacities of Zavod ZhBI-6 and the expertise of Mosstroyrekonstruktsiya in real estate development, we aim to combine the economies of scale of prefabricated panel production with the attractiveness of low-rise housing in the Moscow region making such projects affordable for mass consumers.

In the future, after the testing of this product we will consider applying our Moscow region experience in other key regions of our presence such as St. Petersburg, the Leningrad region and the Urals where we also have our own housebuilding capacities. We believe in the prospects of the production and construction of low-rise mass market houses as a new business area for our company. On the one part, it is in line with the global suburbanization trend i.e. the development of low-rise suburbs around big cities, and on the other part, it complies with the government's policy aimed at resolving the housing problems. Furthermore, according to different experts, standard low-rise developments fully meet the expectations of prospective mass-market buyers, with some of them even today preferring to move to low-rise countryside neighbourhoods."

Subsequently, Zavod ZhBI-6 and Mosstroyrekonstruktsiya are planning to develop additional modifications to the new houses, to further enhance their design and layout solutions with a view to offer a wider variety of housing to customers.

Note to Editors: OJSC LSR Group is a real estate development and building materials company founded in 1993 and operating in a number of complementary market segments. Its core business areas are building materials, real estate development and panel construction. LSR Group's main operations are located in St. Petersburg, Moscow, Yekaterinburg and Ukraine. In 2008, the sales revenues of LSR Group were RUR 49,813m (IFRS). LSR Group is a public company, with its GDRs traded on the London Stock Exchange and its ordinary shares traded on MICEX and RTS.

CJSC Mosstroyrekonstruktsiyais an investment and construction company founded in 2001. In 2007, the company completed its first project, the Dom na Davydkovskoy business class residential complex. Currently the company is completing a unique project, the Grunwald elite residential development, and is also designing a new multi-purpose business complex New Balchug at Sadovnicheskaya Street, 500 m from the Kremlin. In 2008, the company has strengthened its presence in Moscow's real estate market through the acquisition of property complex at Leningradskoye Shosse. In 2009 Mosstroyrekonstruktsiya became a subcontractor to construct a residential neighbourhood for the military personnel in Balashikha for the use by the RF Ministry of Defence. OJSC Zavod ZhBI-6, a subsidiary of LSR Group, is a leader in reinforced concrete production in Moscow. Established in 1955, it was merged with LSR Group in 2006. The production capacity of the plant working double shift is 170,000 cub.m of reinforced concrete per year, with a total of 15 million cub.m of products manufactured over the years of its operation. The use of flexible reconfiguration schemes enables the plant to promptly produce large quantities of reinforced concrete items. The plant is also capable of manufacturing non-standards products by virtue to its design office that complies with customer's drawings. The company offers over 1,500 reinforced concrete items including those used for housing and commercial property construction. In 2009 Zavod ZhBI-6 supplied reinforced concrete items and ready-mix concrete to construction objects and became an exclusive producer of reinforced concrete for a new series of EuroPa houses. The core business area of the company is fulfilling public procurement orders through supplying its products for the construction of government buildings and social and transport infrastructure. The products turned out by ZhBI-6 have been used for the construction and renovation of the White House (headquarters of the Council of Ministers of Russia), Mayor's Office in Moscow, Olympic Games Complex, Poklonnaya Gora Memorial Complex, Tsaritsyno Museum-Reserve, Izvestiya Publishing House, Third Transport Ring, Moscow City International Business Centre.

Morton Group, a member of the Russian Association of Builders, builds residential neighborhoods on a turnkey basis in Moscow and Moscow Oblast. Established in 1994, Morton Group has various divisions that handle every aspect of residential neighborhood projects: devising an investment strategy, design and construction, as well as sales and management of completed projects. The company has completed residential buildings in the city of Klin, the Proletarsky residential complex in the city of Shchelkovo, the First of May neighborhood and the Pearl of Balashikha residential complex in Balashikha, and the Ozerny residential complex in the village of Medvezhi Ozera. Houses in seven large-scale residential neighborhood projects are currently for sale in three cities of Moscow region: Balashikha, Zheleznodorozhny and Lobnya. In 2009 the company won a tender held by RF Ministry of Defence to construct a residential neighbourhood for military personnel in the Moscow region as a general contractor. In March 2010 the company started to construct Solntcevo-Park neighbourhood which residential area amount to more than 500 thousand square meters.

For more details please contact: LSR Group Press Service Tel.: +7 812 314 10 44 Fax: +7 812 458 83 72 E-mail: [email protected]www.lsrgroup.ru