Atrium European Real Estate Limited

EANS-News: Atrium European Real Estate Limited
Credit Rating Upgrade


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Company Information


St Helier Jersey / Channel Islands (euro adhoc) - Credit Rating Upgrade

Jersey, 14 October 2011. Atrium European Real Estate Limited ("Atrium" or the
"Company") (VSE/Euronext: ATRS), one of the leading real estate companies
focused on shopping centre investment, management and development in Central and
Eastern Europe, is pleased to announce that, 'based on stronger fundamentals'
Standard and Poor's has upgraded the Company's long-term corporate credit rating
to 'BB+' from 'BB', with a 'Stable' outlook. Atrium's Short-term rating was
affirmed as 'B'. 

The press release issued by Standard and Poor's is included below:

Jersey's Atrium European Real Estate Long-Term Rating Raised To 'BB+' From 'BB'
On Stronger Fundamentals; Outlook Stable

* We believe the business fundamentals of Jersey-based Atrium European Real
Estate Ltd. <ATRS.VI> have strengthened as cash flow adequacy and profitability
have improved. 

* We are raising our long-term rating on Atrium to 'BB+' from 'BB', and are
affirming the 'B' short-term rating. 

* The stable outlook reflects our view that Atrium is likely to maintain its
historically moderate financial and dividend policy. 

PARIS (Standard & Poor's) Oct. 14, 2011 -- Standard & Poor's Ratings Services
said today it raised its long-term corporate credit rating on Jersey-based real
estate company Atrium European Real Estate Ltd. (Atrium) to 'BB+' from 'BB'. The
short-term corporate credit rating on Atrium is unchanged at 'B'. The outlook is
stable.

The upgrade follows Atrium's continuing improvement in operating performance,
especially compared to that of the real estate market in Europe. Over the first
six months of 2011, occupancy rates rose to 96.7%, rent turnover improved, and
rent incentives fell substantially, especially in Russia, which represents
26.53% of the company's total gross rental income.

We also believe Atrium's profitability has stabilized thanks to local efficiency
improvements and better rent collection overall, which compensated for most of
the first half of 2011's gross revenue decline in markets like Romania. We
believe profitability should gradually improve further as Atrium's assets
mature. We also expect the share of development activities in the group's
combined portfolio to remain below 30% over the medium term, thus limiting risk
associated with new development. 

We continue to regard Atrium's geographic diversity as relatively modest. We
categorize Atrium's business risk profile as "fair," because of this and our
concerns about the risks of operating in the developing retail markets of
Central and Eastern Europe. 

Atrium's financial risk profile has improved to "intermediate" from
"significant", in our view. This reflects our assessment of the company's
improving operating cash flows and its relatively low-leveraged capital
structure. 

The stable outlook reflects Standard & Poor's view of Atrium's improving
operating fundamentals and relatively low leveraged capital structure, which
support the current ratings. 

We believe Atrium should be able to pursue its growth strategy in key markets,
while maintaining ratios of EBITDA interest coverage and LTV above 3X and below
30%, respectively. 

In addition, we anticipate that its internal liquidity cushion will remain
sufficient to meet any unexpected shortfalls in income or cost overruns in its
development projects. 

We could raise the ratings if we see Atrium's business risk profile improving,
specifically if the share of recurring income from more mature real estate
assets in its total revenues continues to grow. At this point, we believe this
level of change in the cash flow generation profile would take more than two
years to come through. 

We could lower the ratings if we see unexpected changes in discretionary
spending or corporate governance that could hamper investors' confidence in the
company. We would consider a rise in the share of development activities in
Atrium's total asset value to above 30% a significant increase in the business
risk of the group. This might trigger a rating review. Consumer confidence in
Central and Eastern Europe, and specifically retail sector performance in
Atrium's main markets, remain the principal operating risks which could affect
Atrium's interest cover and other debt metrics. 

RELATED CRITERIA AND RESEARCH 
Key Credit Factors: Global Criteria For Rating Real Estate Companies, June 21,
2011 
Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers,
Sept. 28, 2011 
Criteria Corporate General: 2008 Corporate Criteria: Analytical Methodology,
April 15, 2008 

For further information:

FTI Consulting Inc.:                        +44 (0)20 7831 3113
Richard Sunderland 
Will Henderson
richard.sunderland@fticonsulting.com


Further inquiry note:
Financial Dynamics, London 
Richard Sunderland  / Laurence Jones
Phone: +44 (0)20 7831 3113 
mailto:richard.sunderland@fd.com

end of announcement                               euro adhoc 
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company:     Atrium European Real Estate Limited
             Seaton Place 11-15
             UK-JE4 0QH  St Helier Jersey / Channel Islands 
phone:       +44 (0)20 7831 3113
mail:     Richard.sunderland@fd.com
WWW:      http://www.aere.com
sector:      Real Estate
ISIN:        JE00B3DCF752
indexes:     Standard Market Continuous
stockmarkets: official market: Wien 
language:   English
 

 

 



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