OAO Open Investments (“Open Investments” or the “Company”), the Moscow-based real estate development and investment company, today announces its intention to proceed with an offering of its shares by the end of 2004. 

The proposed offering is expected to comprise an offer of shares in the Russian Federation and an offer of shares and Depositary Shares to institutional investors outside the Russian Federation .  The shares of the Company are listed on the Russian Trading System (B list). The Company intends to use the proceeds of the proposed offering to finance its development strategy, including new construction projects.

ING Investment Banking is acting as the lead manager and sole book-runner for the proposed offering.  OAO AKB Rosbank is acting as senior co-lead manager.

Commenting on today’s announcement, Sergei Ba ? hin, CEO of Open Investments, said:

“This is a significant and timely development for Open Investments. The current macroeconomic situation in Russia means that there are considerable opportunities in the Russian real estate market and I am confident that Open Investments is well-positioned to capitalize on these. 

We have a highly experienced and professional management team which is committed to quality in all aspects of our business and a focused business strategy in terms of project size, geography and sector segment.  Our portfolio of development projects and investment properties is strong and well-balanced, supported by our financial strength and good access to capital.   In addition, we are committed to the highest standards of transparency and corporate governance and believe that this will inspire a high degree of confidence in our customers, business partners and in our existing and potential investors”.

Full details of the offering will be included in the Preliminary Offering Circular to be ready in due course.

See Notes to Editors attached

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NOTES TO EDITORS

About Open Investments

Open Investments is a Moscow-based real estate development, management and investment company with a business focus on developing investment grade Class A office buildings, luxury residential housing, and commercial real estate (primarily, large retail and entertainment complexes and hotels).   Open Investments was established in September 2002 by the Interros Group, one of Russia ’s largest financial and industrial groups.

Open Investments’ existing real estate portfolio comprises projects in and around Moscow and consists of:

·         Two fully operational properties:

-          Meyerhold Office Centre, and

-          Novotel Moscow Centre Hotel;

·         Three real estate projects at various stages of development:

-          Pavlovo (a deluxe cottage community),

-          Sakharov Business Plaza , and

-          Raikin Centre (a retail and entertainment centre); and

• Several new development projects.

As part of its business strategy, the Company is also considering developing properties in other Russian regions outside of Moscow .

Open Investments prepares consolidated financial statements under International Financial Reporting Standards.  These show that during the first half of 2004 Open Investments generated net profit of US$11.3 million compared with a net profit of US$8.3 million for the whole of 2003.  As of June 30, 2004 , the Company had total assets of US$153.2 million (US$116.4 million as of 31 December 2003 ) and shareholders’ equity of US$87.8 million (US$74.2 million).  In July 2004, Interros made an additional equity contribution of US$17.3 million, meaning as of today the shareholders’ equity is over US$100 million. 

The Russian Property Sector

Russian property markets are growing rapidly. Impressive levels of economic growth have created demand for office and hotel space, while also supporting the development of a new middle class which requires higher standards of residential property and retailing. The existing stock of property is unable to meet these needs, leading to a major construction boom.

The uptake of office space has risen from 175,000m² in 1999 to 650,000m in 2003 for class A and B stock. Demand is strong among both Russian and international companies, supported by high rates of economic growth and continued international investment. Both types of tenant consistently demand high quality space, which remains in short supply, since only around 23% of class A and B office stock is considered to be of international standard.

In the residential sector, economic growth and rising personal income have increased demand for deluxe cottages in some areas of the Moscow region.  Prices for countryside residential properties have grown by 40-50% per annum since 1999.

The retail sector in Moscow has been experiencing unprecedented growth since 2000 due to rapid growth in disposable income (real wages grew 15.6% on average between 2001 — 2003). According to the 2003 AT Kearney survey, Russia remained the top country for international retail expansion for the second year in a row. The supply of shopping centres has doubled year-on-year, but still remains relatively low by European standards: Moscow possesses 100m of retail space for 1,000 people, compared with around 200m in Budapest, over 400m in Berlin and over 550m in Madrid. Both domestic and international retail chains continue to expand.

The opportunity for increased hotel space is shown by the fact that hotel occupancy rates in Moscow remain among the highest in Europe, above those in London , Paris , Rome or Berlin . Revenue per room grew by 9% in 2003, with room rates averaging $160 per night.