LSR Group to Develop Further 17 Hectares of Land in St. Petersburg

LSR Group, one of the leading real estate developers and building materials producers in Russia (LSE: LSRG, MICEX, RTS: LSRG), announced today that one of its subsidiaries, OOO City House Building Company, has entered into an investment agreement with OOO Neva Galaxy to conduct joint investment activities. Under the agreement City House Building Company (GDSK) will act as the co-investor in housing construction projects to be implemented at Belysheva Street and Badaeva Street in the Nevsky district of St. Petersburg. The project was reviewed and approved by the Board of Directors.

The design provides for the construction of mass market class housing, commercial property and parking lots on two sites of 16.58 hectares in area with a total net sellable area of over 330,000 sq.m including the parking lots. Construction is to start in 2009 and to be fully completed by 2013. The development sites are located only a 10-minute walk from the Prospekt Bolshevikov metro station. Over recent years the neighbourhood has been rapidly developing and is now turning into a showcase of the Nevsky district with new houses built and retail outlets and social infrastructure facilities developed at an accelerated pace. As a result, a comfortable living environment is being created ensuring sustainable demand for flats, particularly in new houses. Today the price per square meter of housing in the area adjacent to the Prospekt Bolshevikov metro station is 10% to 15% higher than in the district as a whole.*

Commenting on the new project Yury Belyshev, General Manager of OOO City House Building Company, said:

“We got involved in this project as part of the company’s long-term strategy aimed at forming a diversified offerring of mass market residential property in the most sought-after or promising parts of the city to meet the growing demand for real estate. That is why, in addition to this new project, GDSK’s portfolio includes integrated development plans of certain parts of the Krasnoselsky, Krasnogvardeysky, Moskovsky, Frunzensky and Primorsky districts in St. Petersburg with a total sellable area of around 6.5 million sq.m. Supplementing the portfolio with the Nevsky district project is very efficient for our company.” 

As of today, land plot has been prepared for construction. The site development plan has been prepared and is currently under approval.

*According to SPb Realty marketing agency, the average offer price of mass market housing in the Nevsky district in June 2008 was US$ 3,294 per sq.m.

Notes to Editors:

OOO City House Building Company (formerly OOO Gatchinsky DSK) was founded in 2001. The company engages in making arrangements for, investing in and constructing modern residential compounds of mass market class as the investor and developer. The company forms part of LSR Group.

OJSC LSR Group is a diversified construction company founded in 1993 and operating in a number of complementary market segments. Its core business areas are building materials, construction and real estate development. The Group includes enterprises for extraction and processing of aggregates, production and transportation of building materials, and housing construction — from mass market large-panel housing to elite property built after designs made by leading domestic and foreign architects.

LSR Group has operations and offices in a number of cities in the Leningrad Oblast, in St. Petersburg, Moscow, Yekaterinburg, Lithuania, Latvia, Estonia, Ukraine and Germany. LSR Group employs over 15,000 people.

In 2005 and 2006, the revenues of LSR Group (according to IFRS statements) were US$ 463 million and US$ 777 million respectively. In 2007, the revenues amounted to US$ 1,403 million.

LSR Group has a B1 rating from Moody’s Investors Service (outlook – Stable) assigned in July 2007 and confirmed on 30 May 2008 and a B+ rating by Fitch Ratings (outlook — Stable) assigned on 30 May 2008. The Group’s shares are listed on MICEX and RTS and on the London Stock Exchange in the form of GDRs since its IPO in November 2007.

In 2007, LSR Group was awarded ‘The Company of the Year’ National Award in the ‘Construction’ category.

For more details please contact:

Press Service, LSR Group
+7 (812) 314-1044
press@lsrgroup.ru
www.lsrgroup.ru