Bond Atrium European Properties Ltd 3% ( XS1829325239 ) in EUR

Atrium European Properties Ltd

100 % ▲

Jersey

XS1829325239 ( in EUR )

3% per year ( payment 1 time a year)

11/09/2025

Prospectus brochure of the bond Atrium European Real Estate Ltd XS1829325239 en EUR 3%, maturity 11/09/2025

100 000 EUR

300 000 000 EUR

11/09/2025 ( In 61 days )

Atrium European Real Estate Ltd. is a real estate investment company focused on owning and managing a portfolio of shopping centers primarily located in Central and Eastern Europe.

The Bond issued by Atrium European Properties Ltd ( Jersey ) , in EUR, with the ISIN code XS1829325239, pays a coupon of 3% per year.
The coupons are paid 1 time per year and the Bond maturity is 11/09/2025

ATRIUM EUROPEAN REAL ESTATE LIMITED
(incorporated with limited liability under the laws of Jersey, registration number 70371)
EUR300,000,000 3.000 per cent. Notes due 11 September 2025
This prospectus constitutes a prospectus (the "Prospectus") within the meaning of Article 5.3 of Directive
2003/71/EC, as amended (the "Prospectus Directive").
The issue price of the EUR300,000,000 3.000 per cent. Notes due 11 September 2025 (the "Notes") of Atrium
European Real Estate Limited ("Atrium" or the "Issuer") is 98.457 per cent. of their principal amount.
The Notes bear interest from 11 September 2018 at the rate of 3.000 per cent. per annum payable annually in arrear
on 11 September in each year commencing on 11 September 2019. Payments on the Notes will be made in euro
without deduction for or on account of taxes imposed or levied by Poland, the Czech Republic, Slovakia, Russia,
Hungary, Romania or Jersey to the extent described under "Terms and Conditions of the Notes--Taxation".
Unless previously redeemed or cancelled, the Notes will be redeemed at their principal amount on 11 September
2025. The Notes are subject to redemption in whole at their principal amount at the option of Atrium at any time in
the event of certain changes affecting taxation in Poland, the Czech Republic, Slovakia, Russia, Hungary, Romania
or Jersey. The Notes may be redeemed at the option of Atrium in whole, but not in part, at any time at the Relevant
Early Redemption Amount. In addition, the holder of a Note may, by the exercise of the relevant option, require
Atrium to redeem such Note at its principal amount on a Change of Control Put Date. See "Terms and Conditions of
the Notes--Redemption and Purchase".
This Prospectus has been approved by the Commission de Surveillance du Secteur Financier (the "CSSF"), which is
the Luxembourg competent authority for the purpose of the Prospectus Directive. Application has been made for the
Notes to be admitted to listing on the official list of the Luxembourg Stock Exchange and admitted to trading on the
Luxembourg Stock Exchange's regulated market. By approving this Prospectus, the CSSF gives no undertaking as
to the economic and financial opportuneness of the transaction contemplated by this Prospectus or the quality or
solvency of Atrium in line with the provisions of Article 7(7) of the Luxembourg law dated 10 July 2005 on
prospectuses for securities, as amended.
The Notes are not regulated or authorised by either the Jersey Financial Services Commission ("JFSC") or the
Jersey Company Registry.
The Notes have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the
"Securities Act") and are subject to United States tax law requirements. The Notes are being offered outside the
United States by the Managers (as defined in "Subscription and Sale") in accordance with Regulation S under the
Securities Act ("Regulation S"), and may not be offered, sold or delivered within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.
The Notes will be issued in bearer form and in the denomination of EUR100,000 and integral multiples of
EUR1,000 in excess thereof up to and including EUR199,000. The Notes will initially be in the form of a temporary
global note (the "Temporary Global Note"), without interest coupons, which will be deposited on or around 11
September 2018 (the "Closing Date") with a common safekeeper for Euroclear Bank SA/NV ("Euroclear") and
Clearstream Banking, S.A. ("Clearstream, Luxembourg"). The Temporary Global Note will be exchangeable, in
whole or in part, for interests in a permanent global note (the "Permanent Global Note"), without interest coupons,
not earlier than 40 days after the Closing Date upon certification as to non-U.S. beneficial ownership. Interest
payments in respect of the Notes cannot be collected without such certification of non-U.S. beneficial ownership.
The Permanent Global Note will be exchangeable in certain limited circumstances in whole, but not in part, for
Notes in definitive form in the denomination of EUR100,000 and integral multiples of EUR1,000 in excess thereof
up to and including EUR199,000 each and with interest coupons attached. See "Overview of Provisions Relating to
the Notes in Global Form".
0091945-0000004 AMBA:6642761.27
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The Notes are expected to be rated Baa3 by Moody's Investors Service Ltd ("Moody's") and BBB- by Fitch Ratings
Limited ("Fitch"). Moody's and Fitch are established in the EEA and registered under Regulation (EU) No
1060/2009, as amended (the "CRA Regulation").
A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension,
reduction or withdrawal at any time by the assigning rating agency.
Global Co-ordinators
Deutsche Bank
HSBC
Joint Active Lead Managers
Citigroup
ING
Raiffeisen Bank International
The date of this Prospectus is 7 September 2018.
0091945-0000004 AMBA:6642761.27
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IMPORTANT NOTICES
Atrium has confirmed to the Managers named under "Subscription and Sale" below (the
"Managers") that this Prospectus contains all information regarding Atrium and the Notes which
is (in the context of the issue, offering and sale of the Notes) material; such information is true
and accurate in all material respects and is not misleading in any material respect; any opinions,
predictions or intentions expressed in this Prospectus on the part of Atrium are honestly held or
made and are not misleading in any material respect; this Prospectus does not omit to state any
material fact necessary to make such information, opinions, predictions or intentions (in such
context) not misleading in any material respect; and all proper enquiries have been made to
ascertain and to verify the foregoing.
Atrium has not authorised the making or provision of any representation or information
regarding Atrium or the Notes other than as contained in this Prospectus or as approved for such
purpose by Atrium. Any such representation or information should not be relied upon as having
been authorised by Atrium or any of the Managers.
Neither the Managers nor Deutsche Trustee Company Limited (the "Trustee") nor any of their
respective affiliates have authorised the whole or any part of this Prospectus and none of them
makes any representation or warranty or accepts any responsibility as to the accuracy or
completeness of the information contained in this Prospectus. Neither the delivery of this
Prospectus nor the offering, sale or delivery of any Note shall in any circumstances create any
implication that there has been no adverse change, or any event reasonably likely to involve any
adverse change, in the condition (financial or otherwise) of Atrium since the date of this
Prospectus.
This Prospectus does not constitute an offer of, or an invitation to subscribe for or purchase, any
Notes.
The distribution of this Prospectus and the offering, sale and delivery of Notes in certain
jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are
required by Atrium and the Managers to inform themselves about and to observe any such
restrictions. For a description of certain restrictions on offers, sales and deliveries of Notes and
on distribution of this Prospectus and other offering material relating to the Notes, see
"Subscription and Sale".
In particular, the Notes have not been and will not be registered under the Securities Act and are
subject to United States tax law requirements. Subject to certain exceptions, Notes may not be
offered, sold or delivered within the United States or to U.S. persons.
MIFID II product governance / Professional investors and ECPs only target market
Solely for the purposes of each manufacturer's product approval process, the target market
assessment in respect of the Notes has led to the conclusion that: (i) the target market for the
Notes is eligible counterparties and professional clients only, each as defined in Directive
2014/65/EU (as amended, "MiFID II"); and (ii) all channels for distribution of the Notes to
eligible counterparties and professional clients are appropriate. Any person subsequently
offering, selling or recommending the Notes (a "distributor") should take into consideration the
0091945-0000004 AMBA:6642761.27
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manufacturers' target market assessment; however, a distributor subject to MiFID II is
responsible for undertaking its own target market assessment in respect of the Notes (by either
adopting or refining the manufacturers` target market assessment) and determining appropriate
distribution channels.
PROHIBITION OF SALES TO EEA RETAIL INVESTORS  The Notes are not intended to
be offered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the European Economic Area ("EEA"). For these
purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in
point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of Directive
2002/92/EC (as amended, the "Insurance Mediation Directive"), where that customer would
not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II.
Consequently no key information document required by Regulation (EU) No 1286/2014 (as
amended, the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them
available to retail investors in the EEA has been prepared and therefore offering or selling the
Notes or otherwise making them available to any retail investor in the EEA may be unlawful
under the PRIIPS Regulation.
In addition, in the United Kingdom, the attached document is being distributed only to and is
directed only at persons in circumstances where section 21(1) of the Financial Services and
Markets Act 2000 does not apply (such persons being referred to as "relevant persons"). Any
person who is not a relevant person should not in any way act or rely on the attached document
or any of its contents. Any investment activity in the United Kingdom (including, but not limited
to, any invitation, offer or agreement to subscribe, purchase or otherwise acquire securities) to
which the attached document relates will only be available to, and will only be engaged with,
such persons.
The JFSC has consented to the circulation of this Prospectus by Atrium. Atrium is regulated by
the JFSC as a certified fund pursuant to the Collective Investment Funds (Jersey) Law 1988, as
amended ("CIF Law"). The JFSC is protected by the CIF Law against liability arising from the
discharge of its functions under this law. The Notes are not regulated or authorised by either the
JFSC or the Jersey Company Registry.
In connection with the issue of the Notes, HSBC Bank plc (the "Stabilising Manager") (or
persons acting on behalf of the Stabilising Manager) may over allot Notes or effect
transactions with a view to supporting the price of the Notes at a level higher than that
which might otherwise prevail. However, stabilisation may not necessarily occur. Any
stabilisation action may begin on or after the date on which adequate public disclosure of
the terms of the offer of the Notes is made and, if begun, may cease at any time, but it must
end no later than the earlier of 30 days after the issue date of the Notes and 60 days after
the date of the allotment of the Notes. Any stabilisation action or over-allotment must be
conducted by the Stabilising Manager (or persons acting on behalf of the Stabilising
Manager) in accordance with all applicable laws and rules.
Atrium is regulated by the JFSC as a certified fund pursuant to the CIF Law. In order to
facilitate the internalisation of its management, Atrium was, in 2008, granted permission
by the JFSC to be treated as a Listed Fund (as published by the JFSC) under a fast-track
0091945-0000004 AMBA:6642761.27
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authorisation process. Holding an investment in Atrium is suitable therefore only for
professional or experienced investors, or those who have taken appropriate professional
advice. Regulatory requirements, which may be deemed necessary for the protection of
retail or inexperienced investors, do not apply to Listed Funds. Any person holding an
investment in Atrium will be deemed to have acknowledged that he or she is a professional
or experienced investor, or has taken appropriate professional advice, and has accepted the
reduced requirements accordingly. You are wholly responsible for ensuring that all aspects
of this fund are acceptable to you. Investment in listed funds may involve special risks that
could lead to a loss of all or a substantial portion of such investment. Unless you fully
understand and accept the nature of this fund and the potential risks inherent in this fund
you should not invest in this fund.
Further information in relation to the regulatory treatment of Listed Funds domiciled in
Jersey may be found on the website of the Jersey Financial Services Commission at
www.jerseyfsc.org.
0091945-0000004 AMBA:6642761.27
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TABLE OF CONTENTS
RISK FACTORS .............................................................................................................................5
OVERVIEW ..................................................................................................................................35
FORWARD-LOOKING STATEMENTS.....................................................................................39
DOCUMENTS INCORPORATED BY REFERENCE ................................................................40
PRESENTATION OF CERTAIN INFORMATION ....................................................................42
OVERVIEW OF FINANCIAL INFORMATION ........................................................................45
DESCRIPTION OF ATRIUM AND THE GROUP .....................................................................51
DIRECTORS OF ATRIUM AND GROUP EXECUTIVE MANAGEMENT.............................64
MAJOR SHAREHOLDERS .........................................................................................................70
USE OF PROCEEDS ....................................................................................................................71
TERMS AND CONDITIONS OF THE NOTES ..........................................................................72
OVERVIEW OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM...............95
TAXATION...................................................................................................................................98
SUBSCRIPTION AND SALE ....................................................................................................101
GENERAL INFORMATION......................................................................................................103
INDEX OF DEFINED TERMS ..................................................................................................106
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RISK FACTORS
Investment in the Notes involves certain risks.
Atrium believes that the following factors may affect its ability to fulfil its obligations under
the Notes. All of these factors are contingencies which may or may not occur and Atrium is
not in a position to express a view on the likelihood of any such contingency occurring.
Factors which Atrium believes may be material for the purpose of assessing the market risks
associated with the Notes are also described below.
Atrium believes that the factors described below represent the principal risk factors inherent in
investing in the Notes, however Atrium may be unable to pay interest, principal or other
amounts on or in connection with the Notes for other reasons that are currently unknown to
Atrium or that Atrium does not currently consider to be material. Prospective investors should
also read the detailed information set out elsewhere in this Prospectus (including any
documents incorporated by reference in, and forming part of, this Prospectus) and reach their
own views prior to making any investment decision.
Risks relating to the Group's operations and business
The Group is exposed to certain risks relating to real estate investments
Investing in real estate is generally subject to various risks, including adverse changes in national
or international economic conditions, political instability, sanctions, weaker demographics
(including aging) and changes in urbanisation trends, declining flow of capital due to global
changes and reduced available liquidity, adverse local market conditions, the financial condition
of the retail sector (including tenants and buyers and sellers of real estate), changes in the
availability of debt financing, changes in interest rates and foreign exchange rates, real estate tax
rates and other operating expenses, environmental and operational laws and regulations (for
example, opening hour restrictions), planning laws (including compulsory purchase orders) and
other governmental rules and fiscal policies, claims arising in respect of properties acquired with
undisclosed or unknown environmental or other issues or as to which inadequate reserves had
been established, energy prices, changes in technology and on line retailing, changes in the
relative popularity of real estate types and locations leading to an oversupply of space or a
reduction in demand for a particular type of real estate in a given market, and risks and operating
problems arising out of the presence of certain construction materials.
These factors could cause fluctuations in rental income or operating expenses, causing a negative
effect on the operating returns derived from properties. The value of properties may also be
significantly diminished in the event of a downturn in real estate prices or the occurrence of any
of the other factors noted above. Such a decrease in rental income, increase in operating
expenses or decrease in the value of properties could have a material adverse effect on the
Group's business, financial condition, prospects and results of operations.
0091945-0000004 AMBA:6642761.27
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The fair value of the Group's properties is inherently uncertain due to fluctuation in economic
conditions
The fair value of the Group's investment properties is inherently uncertain due to the individual
nature of each property and the characteristics of the local, regional and national real estate
markets. The fair value is influenced by several factors, such as general and local economic
conditions, interest rates, inflation expectations, current and future market rent levels, currency
fluctuations, vacancy rates, property investor yield requirements and competition. The valuation
of investment property is inherently subjective due to, among other factors, the individual nature
of each property, its location, the expected future rental revenues from that particular property
and, in the case of development land, the expectations as to the cost and timing of that
development and its ability to attract tenants. As a result, the valuations of investment property,
which account for the vast majority of the Group's assets, will be subject to a degree of
uncertainty and will be made on the basis of assumptions, which may not prove to be accurate,
particularly in periods of volatility or low transaction volume in the real estate property market.
The Group and/or an independent appraiser may be required to make good faith determinations
as to the fair value of this investment property on an annual basis in connection with the
preparation of its consolidated financial statements in accordance with International Financial
Reporting Standards ("IFRS") and net asset value determinations. A reduction of the market
value of a property based on such a valuation analysis could have an adverse effect, among other
things, on the Group's value of its total assets and its profitability. In addition, the Group's
existing debt facilities contain certain covenants, such as an obligation to maintain a maximum
loan to valuation ratio, which could also be adversely affected by a decrease in the market value
of its investment properties. As a result, fluctuations in the valuation of the Group's properties
could have a material adverse effect on the Group's business, financial condition, prospects and
results of operations.
A decreased demand for, or an increased supply of, or a contraction of the market for,
properties in the Region could adversely affect the business and financial condition of the
Group
Changes in supply and demand for real estate, or a contraction of the property market in any of
the countries in which the Group has its operations or assets, in particular in respect of its
Standing Investments, may negatively influence the occupancy rates of the Group's properties,
the rental rates, the level of demand and ultimately the value of such properties. Similarly, the
demand for rental space at the Group's existing properties may decrease as a result of poor
economic conditions, an increase in available space, new or renewed adjacent competitive
schemes and heightened competition for stronger and better performing tenants. This could result
in lower occupancy rates, higher capital expenditure required to contract or retain tenants, lower
rental income owing to lower rental rates, as well as, shorter lease periods. In addition, the
capital invested or committed to be invested in the countries which the Issuer operates by various
global investors might decrease on the back of changes in global relative returns and available
liquidity. All of these risks, if realised, could have a material adverse effect on the Group's
business, financial condition, prospects and results of operations.
0091945-0000004 AMBA:6642761.27
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The Group's financial performance relies on its ability to attract and retain tenants which may
suffer as a result of increased competition from other owners, operators and developers
The Group faces competition from other owners, operators and developers of retail real estate.
One of the primary areas of focus for the Group is the active management of its Standing
Investments through optimising its tenant mix and ensuring asset attractiveness is achieved and
improved by finding the right balance between retaining existing tenants and re-letting rental
space to new tenants. The Group competes with local real estate developers, private investors,
property funds and other retail property owners for tenants. Other than the requirement for
capital, there are few other barriers to entry to the property market. Some of the Group's
competitors may have properties that are newer, better located or in superior condition to its
properties.
The dominance of a shopping centre in a particular area is an important factor that determines the
shopping centre's ability to compete for tenants. If there are several centres in the same area,
competition is more intense and the Group may experience increased competition for tenants.
The competition for tenants may negatively affect the Group's ability to optimise the tenant mix,
attract new tenants, retain existing tenants and may also negatively influence the terms of the
Group's lease agreements, including the amount of rent that it charges and the incentives that it
provides to tenants, thereby adversely affecting the Group's business, financial condition,
prospects and results of operations.
A further increase in internet and mobile shopping could have an adverse effect on shopping
centre sales and decrease demand for retail premises
The Group has a majority of food and fashion anchored shopping centres and retail properties
that meet the everyday needs of consumers. This makes the Group vulnerable to changes in
trends in the behaviour of consumers. The retail industry is undergoing a transformation as e-
commerce grows and consumers become increasingly comfortable with internet and mobile
shopping. The growth in on-line retail is more pronounced in certain sectors, particularly the sale
of books, apparel and electronic goods. Shopping centres are constantly adapting their services
and tenant offerings to meet changing consumer behaviour and demand to continue to attract
customers in the future. An increase in internet and mobile shopping and an improvement in
delivery services may lead to a decrease in footfall in the Group's shopping centres and may
cause tenants to increase their online presence and decrease their floor space. If the Group's
shopping centres, as well as its tenants, are unable to adjust to the increasing influence of on-line
retail, a significant increase in internet and mobile shopping could decrease shopping centre sales
and affect the Group's occupancy rate and rental income which could have a material adverse
effect on the Group's business, financial condition, prospects and results of operations.
The financial performance of the Group is subject to the Group's ability to secure initial
tenants, rent renewals or re-lettings and manage lease expiries
The financial performance of the Group is subject to the Group's ability to secure initial tenants,
rent renewals or re-lettings and manage lease expiries which are reflected in the occupancy rates
of the Group's properties. The Group's ability to manage occupancy rates is also dependent upon
its ability to attract tenants, the remaining term of the Group's lease agreements, the financial
0091945-0000004 AMBA:6642761.27
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position of its current tenants and the attractiveness of properties to current and prospective
tenants. The percentage of lease agreements with a remaining contract term, based on lease
expiry date, of more than five years was 29.8% as at 31 December 2017. In order to retain
current tenants or attract new tenants the Group may be required to offer lease incentives such as
reductions in rent, capital expenditure programmes, rent clauses based on turnover rent, gross
rentals and other terms in its lease agreements that make such leases less favourable to the
Group. Some of the Group's lease agreements with anchor and other tenants provide for break
clauses after an initial tenancy period of five to fifteen years. It is possible that some of the
tenants may choose to exercise their rights under the respective break clauses and terminate their
leases early. In addition, the Group may not be successful in maintaining or increasing
occupancy rates or successfully negotiating favourable terms and conditions in relation to its
lease agreements. A failure to do so could have a material adverse effect on the Group's
business, financial condition, prospects and results of operations.
The Group is dependent on the presence of anchor tenants
The Group relies on the presence of anchor tenants in its retail centres. Anchor tenants play an
important part in generating consumer traffic and making a centre a desirable location for other
tenants. The failure to renew the lease of an anchor store, the termination of an anchor store's
lease, or the bankruptcy or economic decline of an anchor tenant can have a material adverse
effect on the economic performance of the centres. There can be no assurance that, if the anchor
stores were to close or fail to renew their leases, the Group would be able to replace such anchor
tenants in a timely manner or that it could do so without incurring material additional costs and
suffering adverse economic effects. The presence of an alternative anchor tenant with similar
retail strength and the ability to maintain similar or better lease terms is highly correlated to the
size of the relevant market, competitive environment, market conditions and asset position; the
expiration of an anchor lease may make the refinancing of such a centre, if required, difficult.
Furthermore, the deterioration of the Group's relationships with any of its anchor tenants may
negatively impact on the Group's ability to secure anchor tenants for its future projects. Any of
the above risks, if realised, could have a material adverse effect on the Group's business,
financial condition, prospects and results of operations.
The Group is subject to the counterparty risk of its tenants
The Group is subject to the counterparty risk of its tenants as the net revenue generated from the
Group's properties depends on the financial stability of its tenants and the commercial
relationships with them. The creditworthiness of a tenant can decline over the short or medium
term, leading to a risk that the tenant will become insolvent or be otherwise unable to meet its
obligations under the lease. Developments in the markets the Group is operating, in such as the
crises in Russia and the weakening of the Ruble, Sunday trading restrictions, increased on line
trading, access to cheap labour force (e.g. Asia), made tenants' resilience and agile capabilities
important more than ever to their financial sustainability. Although the Group receives and holds
advance deposits, such deposits are likely to be insufficient and the amounts payable to the
Group under its lease agreements with tenants that are not secured (by deposits, bank guarantees
or corporate guarantees) bear the risk that these tenants may be unable to pay such amounts when
due. While the Group has a broad tenant base, it may suffer from a decline in revenues and
profitability in the event a number of its significant tenants are unable to pay rent owed when due
0091945-0000004 AMBA:6642761.27
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