The Chelsea Development is a proposed multi-building development comprising primarily residential areas in addition to some retail space. The total area of the development comprises 15 hectares spread over three city blocks. Chelsea is located to the east of Tsvetnoy Boulevard approximately 2 kilometers north of the Kremlin within the Garden Ring.

The Sretenka district, in which the Chelsea Development is located, is part of the heart of the historical city-centre and has a large number of quiet lanes and churches. The historical richness of one the oldest districts in Moscow combined with modern development, both commercial and residential, make this area one of the most attractive in the city. The site borders the Garden Ring road and metro stations Sukharevskaya, Trubnaya and Sretenka are nearby making the site extremely accessible.

Design
RGI’s current design for the Chelsea Development entails the construction of 2 new buildings across the site which would involve the demolition of existing buildings followed by the construction of new multi-functional blocks with apartments, office and retail space.

The company is currently working on completing designs and obtaining permissions for 2 separate developments totaling 60,002 sq.m. The projects would be built independently over time as the Company obtains the necessary permissions and financing. Additional sub-projects may be added as the Company progresses with the development and new opportunities arise.

Status
The Company has reassessed the economics of the Chelsea Development in light of the continued market crisis and the virtual absence of available credit to fund the massive relocation cost that was needed for the project in its previous format and decided to further reduce its expected scope and size. This decision resulted in a reduction of 6 additional buildings from the previous scope of the projects. The current proposed development plan for the Chelsea Development is based on the Company’s possession of an Investment Contract covering the entire multi-city block area. In addition, RGI has a land lease for one of the plots within the area, and ownership of existing buildings and apartments in several other buildings across the site.

All of the planned projects for the development are currently in the pre-design phase. RGI is currently focusing on completing preliminary designs for the first two sub-projects while seeking to prolong the current Investment Contract for the area. Relocation will be completed after obtaining design approvals and when financing is in place. The 2 individual projects currently planned are expected to be completed by 2013 assuming the necessary financing for construction is organized and design and construction permissions are obtained on a timely basis.

Strategy
RGI’s strategy for the Chelsea development is to develop projects individually when construction rights are secured and financing is in place. The Company expects to be able to finance the majority of construction expenses with proceeds generated from pre-sales. The Company’s plan is to sell all of the residential and commercial space either prior or after completion.