Moody's and Fitch Assign the First Time Credit Ratings to JSC Sistema-Hals

JSC Sistema-Hals (LSE:HALS), one of the largest diversified companies on the Russian and CIS property market, today announces that it has received a "B1" long-term foreign currency Corporate Family Rating from Moody’s Investors Service, and a "B+" Issuer Default rating and "B" Short-term rating from Fitch Ratings. All ratings carry "Stable” outlooks. At the same time Moody’s Interfax Rating Agency has assigned to Sistema-Hals an "A1.ru" long term national scale rating, and Fitch Ratings has assigned a "A-(rus)" National rating. In a press release circulated today, Moody’s emphasised the following factors that influenced the ratings: "(i) the company’s leading position in the Moscow metropolitan area - the largest and fastest growing real estate market in Russia; (ii) concentration on the A-class office construction and business class residential construction segments, which are expected to experience a deficit in supply over the coming three years; (iii) diversification into related businesses, such as project management, asset management for owned properties, and facility management; (iv) further diversification into other Russian regions, with a particular focus on cities with a population over 1 million; (v) the company’s effective business strategy of maintaining cooperative relationships with city authorities, facilitating active participation in a number of important city infrastructure projects as a project manager, from which further unrelated business opportunities often also develop; and (vi) synergies derived from being part of the larger Sistema group.” Fitch Ratings said in a press-release that "ratings reflects Sistema-Hals’ leading position in the buoyant Moscow real estate market and high profit margins when compared to international peers, although these factors are offset by the still limited scale of operations. The Stable outlook reflects Fitch’s expectations that Sistema-Hals will maintain a steady credit profile over the coming 12 months as it executes its growth plans to take advantage of strong market conditions in the Moscow and regional real estate markets". "Sistema-Hals appreciates the confidence Moody’s and Fitch place on Sistema-Hals’ financial and operational effectiveness, which is represented by the highest credit rating awarded to Sistema-Hals among all other real estate developers in Russia. This represents a solid intermediate benchmark, which we plan to outperform as the Company continues its execution strategy”. says Michael Golomb, Sistema-Hals' Chief Financial Officer. About Sistema-Hals OJSC Sistema-Hals is a major diversified company operating in the Russia and CIS real estate markets. The company's core businesses are in real estate development, project and construction management, asset management and facility management. It is a public company and its shares are traded on the London Stock Exchange, the Moscow Interbank Currency Exchange, and the Moscow Stock Exchange. Sistema-Hals has built up a broad and well-balanced portfolio of assets in growing segments of the market. The company focuses on the construction of Class A and B offices, mixed-use complexes, business-class residential housing, single-family homes and land development. Since its launch in 1994, Sistema-Hals has successfully completed more than 30 projects in Russia with a total area of more than 265 000m². These include the headquarters of DaimlerChrysler, the Hals-Tower office building, the headquarters of TMK, and a hotel for the MaMaison chain (Orco Property Group). Sistema-Hals is now building the Leningradsky Towers complex, which will consist of two buildings, one of which will become the headquarters of Siemens in Moscow. It is working on an integrated program for the redevelopment of properties belonging to the Moscow City Telephone Network (MGTS), the reconstruction of the Hotel Peking and the Central Detsky Mir in Moscow and a number of other projects. As of 1 January 2007, the company Cushman & Wakefield valued Sistema-Hals' interest in the sites and projects within its portfolio at $2.04 billion.