OREANDA-NEWS. On 23 July 2008 LSR Group, one of the leading real estate developers and building materials producers in Russia (LSE: LSRG, MICEX, RTS: LSRG), announced that ZAO Mosstroyrekonstruktsiya, a subsidiary of LSR Group, has entered into a preliminary investment agreement with ZAO Kronshtadtsky Business Centre, the owner of a property complex at Golovinskoye Shosse in Moscow to develop one of Moscow’s largest mixed-use Class A business centres in an area of 5 hectares in partnership with MR Group, BVT and Central Properties.

Under the agreement Mosstroyrekonstruktsiya is to finance the completion of design work as well as the full volume of construction work that will ensure its majority participation in the project and ownership of a large portion of the mixed-use centre once completed. Taking into account the total area of the centre – 360 th sq.m (including 224 th sq.m of office space; 4.6 th sq.m of a shopping mall; 2.5 th sq.m of a fitness centre and a spa; and an underground parking with 4, 220 parking lots) and the other projects held in the ‘office’ portfolio of the company (the business centres at Sadovnicheskaya Street and Leningradskoye Shosse (Highway), Mosstroyrekonstruktsiya is turning into a major player in Moscow’s commercial property market where the construction volume today is over 500 th sq.m.

INVESTMENT

The total amount of investments is estimated at US\\$ 800 million. Construction is to begin in the first quarter of 2009. From 2010, Mosstroyrekonstruktsiya will start selling space at the new office centre side by side with the mixed-use business centre with apartments situated in Leningradskoye Shosse, just 1 km away Kronshtadtsky. The unique package offer of two projects by the company with a one-year gap will help to streamline the sales process.

PROJECT DETAILS

The concept of the mixed-use centre was developed and by MR Group and Central Properties companies and approved by the relevant state authorities. MR Group and Central Properties already have experience in the joint implementation of other large-scale projects such as the Dvintsev business centre of 60 th sq.m and the Fili 1 and Fili 2 business centres with a total area of 552 th sq.m near Moscow’s Big City.

The business centre project comprises seven office buildings with a focus on a 30-storied cylindrical tower. The business complex will comprise a 168-room hotel. For the convenience of those who will work there or visit the complex, it will include the retail and leisure zone of over 10 th sq.m with a fitness centre and retail outlets. The key distinctive feature of the business centre is the abundant space available at the underground three-level parking lot (the office centre will have less than 50 sq.m of office space per 1 vehicle slot), which is especially important due to the constantly growing traffic flows. The complex is being designed by Sergey Kiselyov & Partners architects. The marketing concept of the mixed-use centre was developed by Colliers Int. consultants.

The new project is unique not only by its scale but in terms of transport accessibility. The Kronshtadtsky office centre will be in fact the only Class A centre located so close to a metro station, 150 m away from the Vodny Stadion (Water Stadium) metro station to be connected to the business centre by a separate additional passage. The closeness to Moscow’s key transport artery – Leningradskoye Shosse, as well as the booming construction of traffic interchanges in the area explain why the new complex will attract both tenants and visitors. It also has an advantageous location for accommodating tourists: it takes 15 to 20 minutes to reach the Sheremetievo international airport.

Commenting on the project Ivan Romanov, General Manager of ZAO Mosstroyrekonstruktsiya said:

“Just like in the other projects of our company, we are trying to take care of all market requirements and future trends in the business centre to be constructed. The proximity of the new project to the mixed-use complex we are currently constructing at Leningradskoye Shosse, will enable Mosstroyrekonstruktsiya in the foreseeable future to create a strongly sought-for large-size business area in the northern part of Moscow, quite appropriate for such developments*. We are confident that our positive experience of cooperation with MR Group, Central Properties and BVT that prepared the project for development and the joint professional and investment potential of our companies will enable us to build a property whose value will keep growing even after the construction is completed, and that will remain advanced for a long time afterwards.”

* The research conducted by Colliers International specifically for the project has shown that the site selected is most appropriate for constructing a Class A business centre due to unmet demand for such space. According to Colliers International the base rental fees for space in the office buildings of the future business centre will be US\\$ 720 to US\\$ 800 per sq.m/year, and for space in the central 30-storied tower – US\\$ 800 to US\\$ 1,000 per sq.m/year (exclusive of maintenance costs and VAT).