The independent consultant DTZ has revalued the real estate property portfolio owned by LSR Group. As of December 31 2007 (the effective valuation date) the Group’s development portfolio included 8.24 million sq.m of land compared to 7.8 million sq.m held by LSR on June 30, 2007. The value of LSR’s development projects grew by USD 774 million to total USD 5,672 million (compared to USD 4,900 million in June 2007).

Commenting on this revaluation Evgeny Yatsyshin, Managing Director for Real Estate Development and Construction of LSR Group, said:

“The increase in the value of LSR’s real estate property portfolio was the result of a number of factors, including the acquisition of new land assets, mostly in Yekaterinburg, and investments in construction projects, as well as the growth of real estate prices in the 2nd half of 2007.”

At the end of 2007, as part of LSR Group’s strategy of geographical diversification, it acquired 100% of the share capital of Investproekt LLC, a Yekaterinburg company that owns land plots in that city with a total area of 50 hectares. The transaction amounted to EUR 50 million and was financed with borrowings as well as proceeds from the IPO of the Group in the autumn of 2007. The company intends to use the plots for neighbourhood development projects to create economy class housing.

According to the reports of DTZ, as of late 2007 the cost per sq.m of economy and business class residential property in Yekaterinburg was USD 2,150-2,500 while average wages were 16,000 roubles per month (by this indicator Yekaterinburg is the third highest in Russia). In 2007, Standard & Poors assigned a BB rating to Yekaterinburg, with a stable outlook.