Morgan Stanley Real Estate Announces First Investment in Russia

Moscow —

Morgan Stanley Real Estate's Special Situations Fund III ('Special Situations') today announced that it has acquired a stake of approximately 10 percent in RosEuroDevelopment ('RED'), a real estate development company that is active in the retail, logistics, office and residential sectors in Russia. Special Situations made this investment through a dedicated capital increase.

This transaction is Morgan Stanley Real Estate's first investment in Russia. Morgan Stanley has had a continuous investment banking presence in Russia since 1994.

Commenting on the transaction, John Carrafiell, Global Co-Head of Morgan Stanley Real Estate, said: "Morgan Stanley Real Estate has a proven track record in identifying opportunities in exciting new markets, having already made pioneering investments in China, India and Turkey. We believe Russia's strong economic growth, and its fundamental undersupply of quality real estate, provide an attractive opportunity to expand our investment platform."

Mr. Carrafiell added: "RED is a fast-growing and entrepreneurial company with an outstanding track record of organic growth. We are excited at the prospect of contributing to its future success through this capital injection, which will be used to invest in several attractive projects in Moscow and other parts of Russia"

Ivan Sitnikov, Chief Executive Officer of RED, said: "The investment by Morgan Stanley Real Estate in our company is a further vote of confidence in the abilities of the group to capture future growth opportunities in the exciting markets of Russia. Morgan Stanley Real Estate is a premier name in the industry and we are delighted at the prospect of developing a partnership with them."

Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking, and Lending. Since 1991, Morgan Stanley has acquired $87.7 billion of real estate assets worldwide and currently manages approximately $51 billion in real estate assets on behalf of its clients. In addition, Morgan Stanley Real Estate provides a complete range of market-leading investment banking services to its clients including advice on strategy, mergers, acquisitions and restructurings, as well as underwriting public and private debt and equity financings. Morgan Stanley is also a global leader in real estate lending and, using its own capital, originated upwards of $33 billion in commercial mortgages in 2005. For more information about Morgan Stanley Real Estate, go to www.morganstanley.com/realestate.

Morgan Stanley is a global financial services firm and a market leader in securities, investment management, and credit services. With more than 600 offices in 30 countries, Morgan Stanley connects people, ideas and capital to help clients achieve their financial aspirations.


Notes to Editors:

Special Situations Fund III

Special Situations, a global diversified fund managed by Morgan Stanley Real Estate, makes non-controlling, minority investments in public and private real estate companies.

RosEuroDevelopment

RosEuroDevelopment is part of the RosEuroGroup, a conglomerate of businesses with operations in Russia. RosEuroDevelopment is an established property development company with a significant and fast-growing pipeline in Moscow and the Russian regions. The Company controls a large land bank of over 1.8 million sq m and plans to develop over 2 million sq m of real estate over the next five years. RED has projects in ten regional capital cities with populations over 1 million each. RosEuroDevelopment specializes in innovative, large-scale projects in four property sectors: shopping- entertainment centers, business centers, logistics parks, and residential complexes.


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