Invest Millions In Russian Real Estate

By Liam Pleven
From The Wall Street Journal Online

An investment vehicle controlled by Maurice "Hank" Greenberg, the former chief executive of American International Group Inc., has created a subsidiary to invest hundreds of millions of dollars in Russian real estate, according to people familiar with the plans.

Starr Investments Russia will focus on prime office space, residential housing and hotels, initially in Moscow, and will invest in both developed properties and land. Starr has hired people who used to work for AIG in Russia to staff the operation, according to these people. AIG declined to comment.

The unit is being established by Starr International Co., whose chairman, Mr. Greenberg, left AIG in 2005 amid a probe of the insurance giant's accounting. AIG subsequently agreed to pay $1.64 billion in a settlement with authorities.

The value of Moscow real estate has soared in recent years as an economic boom has fueled a surge in demand that has overwhelmed the limited supply of modern facilities. Moscow's skyline is a forest of cranes as developers scramble to keep up, and their projects are transforming the city.

Western investors have been eager participants in the Russian stock market, one of the world's best performers in recent years. Until recently, real estate has attracted fewer big foreign participants amid concerns about murky ownership structures and questions about whether Russia's weak legal system would be able to protect property rights. But as major foreign companies have flooded into Russia in recent years, demand for quality office space has continued to grow.

One person said Starr is "comfortable" with the political circumstances in Russia. Mr. Greenberg wasn't available for comment.

Mr. Greenberg, 81 years old, has extensive experience working in emerging markets. While at AIG, he established a network of contacts in China that laid the groundwork for the company to expand there in recent years.

Go back to www.LagretRealEstate.com