AFI Development, a leading real estate company focused on developing property in Russia and the CIS, has announced a number of recent developments in its business plan for 2010 that reflects its objective to enhance the construction activities and to continue the development of its main projects.

The Company’s Board of Directors approved on 18 January 2010 the following amendments to the Company’s business plan for 2010:

Mall of Russia

The company has reached a preliminary understanding with the City of Moscow, according to which it is expected to complete the public infrastructure works immediately adjacent to the Mall of Russia project on behalf of the City of Moscow, in consideration for which the City of Moscow is expected to offset the related costs against the City’s share in the Mall of Russia project.

As a result and after careful consideration by the Board of the volume of works required to complete the public infrastructure elements and the current status of construction works, the company has updated the expected completion to September-October 2010.

Leasing activity at the Mall of Russia continues to progress, reflecting improving demand from the Russian retail sector. Around 40 percent of the Gross Lettable Area is now fully pre-let and an additional 30 percent to 35 percent is covered by non-binding letters of intent and memoranda of understanding. Recent new tenants have included X5, the leading Russian supermarket chain, taking up circa 2,400 sqm, and the company believes that demand for retail space will strengthen in 2010.

Construction work at Tverskaya, Ozerkovskaya, Paveletskaya and Kalinina projects

Following the company’s announcement last November concerning the possible commencement of construction works at the Ozerkovskaya Embankment project (Phase III) and the Paveletskaya project, the Board has decided to resume these works. These projects are expected to be completed in the first half of 2011. Resuming works at the Ozerkovskaya Embankment Project (Phase III) remains subject to securing favourable bank financing.

The company is continuing the engineering works on the Tverskaya underground shopping mall project, according to the company’s business plan.

The company has further secured financing for its Kalinina hotel project in Zheleznovodsk (Caucasus Mineral Springs area in Southern Russia) from Sberbank through a Russian Ruble loan for a total amount equivalent to US$20 million at an effective interest rate of circa 9.25 percent. The Board has also decided to reactivate construction works at this project, which is financed to completion through the Sberbank loan. Completion of this project is expected in the first half of 2011. The Kalinina project complements the company’s existing developments in the region, including the operating Plaza Spa Hotel in Kislovodsk.

Commenting, Alexander Khaldey, Chief Executive Officer, said: “We have observed signs of strengthening in the market in the last few months of 2009 and we believe this is the right moment selectively to move forward with a number of our important projects. Having reached an agreement with the City of Moscow we see a clear path to completion for the Mall of Russia this year and we intend to resume work on three projects, including Ozerkovskaya where we have a successful track record from our first two phases of development. We are also expanding our hotel portfolio in southern Russia and intend to complete works at the Paveletskaya Business Park in Moscow.”

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