Atrium European Real Estate Limited

EANS-News: Atrium European Real Estate Limited
CREDIT RATING UPGRADE TO INVESTMENT GRADE


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Ratings


St Helier Jersey / Channel Islands (euro adhoc) - CREDIT RATING UPGRADE TO
INVESTMENT GRADE

Jersey, 8 October 2012. Atrium European Real Estate Limited ("Atrium" or the
"Company") (VSE/ Euronext: ATRS), a leading owner, operator and developer of
retail real estate and shopping centres in Central and Eastern Europe, is
pleased to announce that, to reflect "Atrium's strong operating performance
driven by the growth economies of Central Eastern Europe and a more mature
rental income stream", Fitch has upgraded the Company's Long-term Issuer
Default Rating to the investment grade level of 'BBB-' with a 'stable' outlook.


Rachel Lavine, CEO of Atrium, commenting on the upgrade, said:

"Achieving an investment grade rating for Atrium has been a long standing
target of the management team and, together with the upgrade by Standard &
Poor's announced last month, today's upgrade from Fitch recognizes several
years of hard work in restructuring the Company. The decision by Fitch reflects
Atrium's increased financial strength, which provides a firm foundation on which
to further build the Company's portfolio of assets and grow profitability."


The press release issued by Fitch is included below:

FITCH UPGRADES ATRIUM TO 'BBB-'; OUTLOOK STABLE

Fitch Ratings-London-08 October 2012: Fitch Ratings has upgraded Atrium
European Real Estate Limited's (Atrium) Long-term Issuer Default Rating (IDR)
and senior unsecured rating to 'BBB-' from 'BB+'. The Outlook on the IDR is
Stable. The agency has also upgraded the Short-term IDR to 'F3' from 'B'.

The upgrade reflects Atrium's strong operating performance driven by the growth
economies of Central Eastern Europe and a more mature rental income stream
benefiting from improved average lease tenure of 5.5 years and operational
efficiencies. Material litigation claims are now largely resolved and following
the debt buyback during 2012, the average debt maturity profile at 4.9 years is
closely aligned to its lease maturity profile.

Fitch believes Atrium's EBIT NIC should remain comfortable at around 6.0x with
an LTV remaining within managements range of 30%-35% over the medium term, even
when assuming modest acquisitions. These key financial metrics on a
forward-looking trajectory look above average for the investment grade EMEA REIT
universe. However, Atrium is only funded on a secured debt basis, which to some
extent limits operational flexibility. However, around 40% of Atrium's
investment property portfolio is unencumbered and current liquidity is
reasonable for the rating. Overall, the stronger than average balance sheet and
interest serviceability offset the lack of unsecured funding.

The tenant profile continues to benefit from solid diversification with a focus
on food anchor tenants, typically large European-based retail chains that pay
rents in euros, mitigating currency risk. Geographical diversification is broad,
with the main focus on Poland (47% of investment properties), Czech Republic
(21%) and Russia (16%). Divestments in countries where Atrium lacks a solid
market presence would be viewed favourably. Conversely a material refocusing of
the portfolio towards Russia could be viewed as increasing operational risk.

Fitch expects future rental income to demonstrate resilient characteristics
driven by indexation and modest rent increases upon renewals. Recent rental
income performance is solid, with H112 gross rental income increasing 5.6% on a
like-for-like basis. Growth relates to indexation stemming from the relatively
higher inflation outlook in Central Eastern European countries. Solid demand and
supply dynamics are evident from Atrium's high renewal rates, with Fitch
expecting the occupancy rate to remain above 95%. Atrium's geographical markets
are benefiting from structural growth with strong retail spending allowing for
higher retail space density. Until FY14, only 28% of the total rent roll is
scheduled for renewal, providing high visibility over future cash flows.

Fitch views Atrium's liquidity position as reasonable for the rating, with
unrestricted cash of EUR207m at H112. This is sufficient to cover debt
maturities (EUR86m) and committed development costs (EUR74m) until FY14.


For further information:


|FTI Consulting Inc.:            |+44 (0)20 7831 3113                       |
|Richard Sunderland              |                                          |
|Will Henderson                  |                                          |
|Daniel O'Donnell                |                                          |
|atrium@fticonsulting.com     |                                          |



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