Atrium European Real Estate Limited

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

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Ratings


St Helier Jersey / Channel Islands (euro adhoc) - Atrium European Real Estate
Limited

Credit Rating Update

Jersey, 18 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 Fitch Ratings has affirmed Atrium´s
Long-term Issuer Default Rating (IDR) of `BB+´, senior unsecured rating of `BB+´
and Short-term IDR of `B´. Fitch Ratings also upgraded Atrium´s outlook to
`Postive´.

A copy of the Fitch Ratings announcement is below:

Fitch Revises Atrium's Outlook to Positive; Affirms at 'BB+' 
18 Oct 2011 
Fitch Ratings-London-18 October 2011: Fitch Ratings has revised Atrium European
Real Estate Limited's (Atrium) Outlook to Positive from Stable and affirmed its
Long-term Issuer Default Rating (IDR) at 'BB+', senior unsecured rating at 'BB+'
and Short-term IDR at 'B'. 

"Fitch expects Atrium's financial metrics to remain resilient and stable in the
next two years, despite two major shopping centre acquisitions in 2011," says
Jean-Pierre Husband, a Director in Fitch's EMEA Corporate Finance team. "The
Positive Outlook reflects Atrium's substantial progress in resolving outstanding
litigation claims, which is a prerequisite for any upgrade of the ratings." 

Fitch believes Atrium's EBIT NIC should settle between a still comfortable 5.0x
and 5.5x in 2011-2013 (including the Prague and Promenada, Poland shopping
centre acquisitions completed this year) despite the agency's assumption of
higher interest costs on bank debt during the period. Fitch expects Atrium to
maintain an EBIT NIC of above 2.0x for an investment grade rating. 

Net leverage should also stay moderate in the next three years (loan-to-value
ratio (LTV) of between 5% and 25%) and below industry averages in the short to
medium term (LTVs of around 35%-45%). This allows Atrium some financial
flexibility, although recent acquisitions have used secured debt, which may
constrain the group's unsecured asset cover. Fitch expects Atrium to diversify
its access and sources of funding in the next two to three years. 

The contentious position between Meinl Bank AG (Meinl) and Atrium was resolved
in June 2011, with all claims and lawsuits against each other withdrawn. Fitch
notes that Atrium made no cash payments under this settlement. The companies
also agreed to sever all business ties and new bond trustees were appointed. 

The ratings are constrained by the remaining outstanding litigation regarding
the share buybacks in 2007. Although Fitch believes that the ultimate liability
to the owners and management is limited, there is still some residual
uncertainty and Atrium's ability to issue new bonds may be constrained. The
resolution of all residual litigation claims would be a strong positive towards
the restoration of an investment grade rating for the group. 

Atrium's EBIT net interest cover (NIC) improved to 7.7x in 2010 (8.6x at H111)
from 2.7x in 2009. This was due to stable rental income, reduced property costs
and lower interest payments, resulting from high-coupon bond buybacks. 

Gross rental income increased by 1.8% in 2010 (+14.5% at H111 compared to H110),
as Atrium restricted temporary letting discounts in Russia and improved
occupancy rates. This positive trend is underlined by increased occupancy across
the group's CEE shopping centre portfolio, now at 96.6% at H111 (94.6% at H110).


At 30 June 2011, while the group had no undrawn committed debt facilities,
Atrium had EUR210m of cash deposits available, sufficient to pay the outstanding
development costs and total debt maturities of EUR51m in H211 and 2012. With
only EUR8m of committed development spending, Atrium's liquidity remains
relatively strong (with a liquidity score of around 4.1x at H111). A liquidity
score of at least 1.75x is considered appropriate for a return to a 'BBB-' IDR
rating. 

For further information:


FTI Consulting Inc.:    +44 (0)20 7831 3113
Richard Sunderland      
Will Henderson

        
richard.sunderland@fticonsulting.com  
        

This press release appears as a matter of record only and does not constitute an
offer to sell or a solicitation of an offer to purchase any security.

Atrium is established as a closed-end investment company domiciled in Jersey.
Atrium is registered with the Dutch Authority for the Financial Markets as a
collective investment scheme which may offer participations in The Netherlands
pursuant to article 2:66 of the Financial Supervision Act (Wet op het financieel
toezicht). All investments are subject to risk. Past performance is no guarantee
of future returns. The value of investments may fluctuate. Results achieved in
the past are no guarantee of future results. The Dutch and Austrian paying agent
of Atrium is Kempen & Co. N.V., Beethovenstraat 300, 1077 WZ Amsterdam, the
Netherlands.


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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