PROPERTY INVESTORS FUND

There are now many indications that western investors are turning their attention to the opportunities for successful investment that exist in Eastern Europe. From the many people who have contacted us for information concerning the Moscow property market it has become evident that the formation of a syndicate which could accept small investments from individuals or companies of the order of $5000 upwards is a necessary and very satisfactory way to enter the market.

The following Executive Summary outlines the activities of our Fund and calls for expressions of interests from potential investors. Of particular interest is underwriting of a large proportion of the share issue to enable early participation in a number of projects and therefore a swift return on investments.

Once sufficient funds have been invested, immediate acquisitions can be made to develop a portfolio and to provide early dividends to the members of the order of 30/50% per annum.

When a successful operation has been launched, attention can be given to forming a PLC and an eventual flotation which would enable the original members to benefit from whatever premiums that would be obtained in addition to their dividends. We will update this page with details of funds received to date, plus proposed or actual investments made.

Anyone who is interested in joining this venture should contact us for more details. We will be happy to host visitors to Moscow to see the current scene at first hand and can assist with all aspects of such a visit.

EXECUTIVE SUMMARY

This BUSINESS PLAN has been prepared to provide potential Investors with details of a proposed fund for involvement in the rapidly growing and highly lucrative property market in Moscow and other regions of Russia.

BUSINESS DESCRIPTION

It is proposed to establish a British Sponsored Property Investment Syndicate headed by an experienced, informed, reliable well established team of long standing in Russia. It is intended to offer 5,000,000 one dollar shares at par to potential investors who recognise the viability of the Moscow property market. But by virtue of their present commitments are unable to devote time and substantial resources in order to enjoy the considerable dividends which are obtainable by investing in the property sector. The subsequent benefits are by being part of an aggressive, fast moving organisation dedicated to the market with the express intention of proceeding to a public floatation on the London based AIM market.

The use of the fund can cover a mix of the various sectors of the market which offer substantial profit margins. The sectors to be considered are the following.

1) Purchase and renovation to full western standards of secondary marketdomestic and office accommodation for resale or leasing on completion.

2) Purchase of selected off plan apartments for appreciation and sale on completion.

3) Investment in warehousing accommodation, construction, renovation, sale or lease, depending on the situation pertaining.

4) Involvement in the “Cottage” sector of the market.

5) Participation in two unique construction projects for the Russian Orthodox Church.

Initially investments will be through a limited company established in Russia in order to enable the promoters to address potential international investors via the Internet. Subsequently to form an offshore PLC, banking with a blue chip Western bank. Preference and ordinary shares in the company will be offered to participating individuals and reallocated in the name of the PLC.. Minimum investment will be $5000, larger investments in tranches of $5000. Dividends can be payable off shore or through a participating Russian Bank. Initially the promoters are at this stage inviting expressions of interest from potential investors to whom a full prospectus will be available.

CURRENT POSITION & FUTURE OUTLOOK

The promoter, Peter Gray, has thirteen years experience in Russia and has been engaged in a variety of operations. Trade, Finance, IT, telecommunications and for the past two years in property. He has made many useful connections and gained a wealth of experience in this market. In particular the areas covering mortgages, insurance, due diligence and legal issues are to hand. An existing agreement with professional real estate company Astera is also of assistance in these matters. The proposed executive team will also bring first hand current market involvement to the fund.

For the fourth year running Moscow residential property prices have continued to rise. In 2003 housing prices rose by an average of 40% with some apartments increasing in value by more than 50%. Since the beginning of 2004 prices have grown by an additional 20% and there are no significant changes in demand. Average returns on renovated property taking six months to complete are forecasted at around 25/30%. As a member of the Russian Orthodox Church, the promoter has unique access to two viable building projects in which the fund could be involved.

The fund would be established in an off shore company with a representative office in Moscow. It is proposed to offer 5,000,000 one dollar shares at par in two different grades, A preference and B. ordinary. On reaching a certain level of investment in the fund (approximately $100000) and if deemed advantageous to the operation, underwriting of a substantial amount by the bank will enable projects to be put in hand at an early stage whilst further investment continues.

MANAGEMENT & OWNERSHIP

The management will consist of senior figures recruited from branches of the industry having specific connections in the fields outlined. In the early stages the requirement will be for a CEO, Sales Manager and personal assistant, Financial controller, book=keeper, Secretary and assistant. Two further board members to include the Promoter who will act as Chairperson and Consultant. For certain operations the services of a Project Manager will be required. A suitable individual has been identified tThe above initial personnel should be sufficient to carry the project through the first year of operations as described in this summary. Additional personnel may be required according to the level of investment in the fund. Renovations will be carried out by locally contracted personnel to the company’s requirements and specifications.

INVESTMENT STRATEGY & PROJECT FEATURES

The strategy proposed, calls for the selective purchase, renovation and sale or at a later stage the leasing of renovated apartments aimed at the middle sector of the market, to the increasing number of expatriate personnel and companies working in Moscow. As funds become available a mix of sales and leasing of apartments can be employed.

Apartments will be selected according to their location, which must be central, for the quality of the entrance and surrounding area and for their price which must where possible be below the norm.
The Moscow residential market has enormous potential as incomes continue to rise and the availability of secondary market properties requiring total renovation is almost inexhaustible.

The knowledge and experience of western management is particularly necessary in order to satisfy the needs of foreign clients and to provide Russian clients with up to date attractive apartments utilizing western domestic equipment. At the same time buildings or apartments suitable for renovation and office use can be added to the operating plan. Negotiations covering all other sectors must be commenced at an early stage, particularly in respect of warehousing, there being a large requirement in this area of the market.

SECURITY & RISK FACTORS

Security of the properties will be a factor influencing any purchase or lease agreement. Insurance will be mandatory and if using local western bank mortgage facilities the property titles and client status will be rigorously investigated and validated by the bank in accordance with their standard procedures.
Contrary to general western opinion and sensationalist media hype, security in Moscow is no worse than in any other European capital city.

With care and fore knowledge and particular attention to every detail of purchasing and sale or leasing of property in this market together with professional due diligence and including the very strict regime of the mortgage providers, risk factors are minimal. Other risk factors to be considered are, Interest rates, inflation rates, currency fluctuations, GDP, Property and land prices, Gearing.

FUNDS SOUGHT & USAGE

To create a substantial property holding a total fund of $5 million can be employed by the promoter. However operations can commence at an early stage given a small initial investment in the fund. Especially if underwriting can be employed. Dividends can be paid six monthly according to the individual investment and the date of deposit expressed as a percentage of an initial share capital of Five million, one dollar shares.

The following example illustrates the purchase of an apartment of approximately 100 sq,m. at a price of $200000 and renovation at $400 per sq.m. given a minimum initial investment of $10000. And utilizing mortgage facilities.

USAGE

Current Funds to be involved

The above relates to a one off operation using mortgage facilities and minimum fund investment. Given sufficient initial investment in the fund the expensive and time consuming mortgage facilities would not be required.

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