The Company’s overall strategy is to strengthen its position as one of the leading developers of high-end properties in Moscow and the surrounding areas. To achieve this goal and in light of the Company’s revised strategy, RGI will act according to the following guidelines:


Effectively handle the current crisis:

To preserve cash and protect RGI’s long-term prospects, the Company will continue to be cautious in the short-term and limit its development activity (other than with respect to the Tsvetnoy Development) to obtaining approvals and permits from the relevant authorities. We will not commence any new construction work until sufficient long-term debt financing can be secured on commercially attractive terms and/or sufficient cash flow can be generated from pre-sales. We will consider further revising our strategy and specifications for individual developments while applying a more aggressive development strategy at the appropriate time.


Take advantage of opportunities arising from market distress:

RGI is a highly respected Moscow property developer led by a management team with a long track record covering all stages of the economic cycle. There are opportunities in the current market for RGI to leverage its reputation and operational capacity to take an economic interest, for minimal capital outlay, in new real estate projects which the existing development right owners are unable to progress. Management will examine such opportunities on a case-by-case basis and may seek to acquire interest in development projects where the terms are attractive and are likely to enhance shareholder value.

The Company's long-term development strategy will comprise of the following key aspects:


High-end residential developments:

The Board considers the development of high-end and elite residential property as an attractive segment of the Moscow real estate market in the long term. The Directors believe that the market for residential property in Moscow is characterized by low supply per capita and ageing stock, and therefore, that long-term demand for residential properties will continue to grow although at a slower pace than was predicted before the current crisis. Furthermore, the Board believes that long-term investment in high-end residential developments will enable the Company to continue to command premium prices on the sale of its residential property. The Company’s strategy is to dispose of its residential property developments upon completion of construction.


Office and retail developments:

Up until mid 2008, driven by strong economic growth, the demand for high-end office and retail property space in central Moscow and the surrounding areas has increased substantially. However, the supply of such property has not met demand due to high barriers to entry for developers and the intrinsic difficulties of developing properties in central Moscow.

The Board expects this trend to continue over the long-term especially since many of the proposed commercial developments in central Moscow are now being put on hold. Therefore, the Board is intending to allocate, as part of the Company's long-term plan, a significant proportion of capital resources to the development of high-end office and retail properties.

In general, the Company’s strategy is to retain ownership of, and lease and manage the completed office and retail properties within its developments, in order to maximize the return on these properties and to generate consistent income flow. However, in the right market conditions, RGI may dispose of all or part of its office and retail properties if the Board believes that doing so will optimize shareholder value.


Mid-tier residential development:

The Board believes that like the high-end residential market, the market for mid-class residential property in Moscow is broadly characterized by low supply per capita and ageing stock, and therefore, that demand for mid-class residential properties will resume its growth pattern when credit markets begin to operate normally again.

With regard to the Kingston Project, management is currently reviewing opportunities for the site and, after completing a new urban design, may decide to develop the site (solely or in partnership) or sell it to third party developers.


Geographic focus:

Boris Kuzinez, CEO of RGI has a great deal of experience and expertise in the Moscow real estate market. Drawing on this experience, the Group will continue to focus its activities principally within or proximate to Sadovoe Koltso, Moscow's "Garden Ring" road, which is generally accepted as the boundary of central Moscow. In certain circumstances, where the Company identifies specific attractive opportunities, the Group may develop properties in suburban Moscow.


Obtaining financing:

The Company intends to use debt finance to optimize its capital structure and to secure sufficient capital for the development of its projects. This can be obtained either through credit line facilities to RGI and its subsidiaries or by obtaining construction loans for the projects. When appropriate, the Company will also seek to obtain equity financing.


Dividends

The Company has not paid any dividends since its incorporation. The Company’s developments have initially been highly capital intensive and will continue as such, given the early stage nature of the Company’s portfolio. The Directors do not therefore currently anticipate paying dividends in the foreseeable future. In the long term, the Company expects to target a dividend rate of between 30% to 70% of recurring income