Obligation Atrium European Realty 4% ( XS0918754895 ) en EUR

Atrium European Realty

100 % ▲

Jersey

XS0918754895 ( en EUR )

4% par an ( paiement annuel )

20/04/2020 - Obligation échue

Prospectus brochure de l'obligation Atrium European Real Estate XS0918754895 en EUR 4%, échue

100 000 EUR

350 000 000 EUR

Atrium European Real Estate est une société d'investissement immobilier cotée en bourse, spécialisée dans les actifs commerciaux de détail en Europe centrale et orientale, principalement en Pologne, en République tchèque et en Slovaquie.

L'Obligation émise par Atrium European Realty ( Jersey ) , en EUR, avec le code ISIN XS0918754895, paye un coupon de 4% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 20/04/2020

2APR201305120941
ATRIUM EUROPEAN REAL ESTATE LIMITED
(incorporated with limited liability under the laws of Jersey, registration number 70371)
EUR350,000,000 4.00 per cent. Notes due 20 April 2020
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 EUR350,000,000 4.00 per cent. Notes due 20 April 2020 (the ``Notes'') of Atrium European Real
Estate Limited (``Atrium'' or the ``Issuer'') is 99.569 per cent. of their principal amount.
The Notes will bear interest from 19 April 2013 at the rate of 4.00 per cent. per annum payable annually in arrear on 20 April
each year commencing on 20 April 2014. Payments on the Notes will be made in euro without deduction for or on account of
taxes imposed or levied by the Czech Republic, Hungary, Latvia, Poland, Romania, Russia, Slovakia 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 20 April 2020. 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 Jersey. 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. 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 (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 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 19 April 2013 (the ``Closing Date'') with a
common safekeeper for Euroclear Bank S.A./N.V. (``Euroclear'') and Clearstream Banking, soci´
et´
e anonyme (``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''.
The Notes are expected to be rated BBB
by Standard & Poor's Credit Market Services Europe Limited (``Standard &
Poor's'') and BBB
by Fitch Ratings Limited (``Fitch'').
Standard & Poor's and Fitch are established in the EEA and registered under Regulation (EU) No 1060/2009, as amended
(the ``CRA Regulation''), and appear on the latest update of the list of registered credit rating agencies (as of 7 January 2012)
on the ESMA website http://www.esma.europa.eu. The ESMA website is not incorporated by reference into, nor does it form
part of, this Prospectus.
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.
DEUTSCHE BANK
HSBC
16 April 2013

IMPORTANT NOTICES
Atrium accepts responsibility for the information contained in this Prospectus and declares that, having
taken all reasonable care to ensure that such is the case, the information contained in this Prospectus to
the best of its knowledge is in accordance with the facts and contains no omission likely to affect its import.
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 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 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.
The JFSC has consented to the circulation of the Prospectus by Atrium. Atrium is regulated by the JFSC as
a certified fund pursuant to the Collective Investment Funds (Jersey) Law, 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 this Prospectus, unless otherwise specified, references to a ``Member State'' are references to a Member
State of the European Economic Area, references to ``EUR'' or ``euro'' are to the currency introduced at
the start of the third stage of European economic and monetary union, and as defined in Article 2 of
Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro, as amended.
Certain figures included in this Prospectus have been subject to rounding adjustments; accordingly, figures
shown for the same category presented in different tables may vary slightly and figures shown as totals in
certain tables may not be an arithmetic aggregation of the figures which precede them.
In connection with the issue of the Notes, Deutsche Bank AG, London Branch (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,
there is no assurance that the Stabilising Manager (or persons acting on behalf of a Stabilising Manager)
will undertake stabilisation action. 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 be ended 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.
i

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). Regulatory requirements, which may be deemed necessary for the
protection of retail or inexperienced investors, do not apply to Listed Funds. Holding an investment in
Atrium is suitable therefore only for professional or experienced investors, or those who have taken
appropriate professional advice. 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.
This Prospectus is addressed only to and directed only at (i) persons who are outside the United Kingdom
or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the ``Order'') and (iii) high net worth entities, and other persons to
whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons
in (i), (ii) and (iii) above together being referred to as ``relevant persons''). Any investment activity to which
this Prospectus relates will only be available to and will only be engaged with, relevant persons. Any person
who is not a relevant person should not act or rely on this Prospectus or any of its contents.
ii

TABLE OF CONTENTS
Page
IMPORTANT NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
PRESENTATION OF CERTAIN INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
DESCRIPTION OF ATRIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
DIRECTORS OF ATRIUM AND GROUP EXECUTIVE MANAGEMENT . . . . . . . . . . . . . .
34
MAJOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38
OVERVIEW OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM . . . . . . . .
52
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54
SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
INDEX OF DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
1

RISK FACTORS
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 risks inherent in investing in the Notes, but
Atrium may be unable to pay interest, principal or other amounts on or in connection with the Notes for other
reasons, and Atrium does not represent that the statements below regarding the risks of holding the Notes are
exhaustive. 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.
Factors that may affect Atrium's ability to fulfil its obligations under the Notes
Risks relating to the Group and its operations
If the downturn in general economic conditions in the Region continues or worsens it may reduce the Group's rental
revenue
Various economies in Europe have been subject to downturns and instability since the global financial
crisis beginning in 2007. In recent years, the financial markets in several of the countries in the Region
have experienced volatility in both debt and equity capital markets as well as reductions in foreign
investment. In addition, owing to the financial crisis and more recently the sovereign debt crisis in relation
to several Euro zone countries such as Greece, Spain and Ireland, some countries in the Region have
experienced a decrease in gross domestic product. In light of these developments, international ratings
agencies have downgraded the sovereign debt of several Euro zone countries (as well as some countries in
the Region), which reflects an assessment that there is an increased credit risk that the respective
governments may default on their obligations. These ratings downgrades and the continued volatility in the
financial markets may lead to a further reduction in foreign investment and an increased cost of borrowing
for some of the countries in the Region. Further there can be no assurance that the affected economies of
the Region will recover in the long term.
The economic uncertainty has contributed to deterioration in the consumer and investment climate,
affecting a range of economic activities, including the real estate sector. Lower disposable incomes due to
rising unemployment and decreased consumer confidence have translated into lower consumer spending,
which puts pressure on the profits of retailers. This, together with the reduced availability of financing, has
prompted certain retailers to scale back or postpone their expansion plans, which has made it more
difficult for retail property managers to find appropriate tenants.
If the downturn in general economic conditions as seen in some countries in which the Group has its
operations or assets continues or worsens it may further adversely affect consumer spending and prevent
retailers from expanding their activities and production volumes and also affect negatively the willingness
and ability of tenants to lease property. If demand continues to fall, the Group may have to let its
properties at lower rents or may not be able to let its properties at all and this could lead to a reduction in
the Group's rental income and a negative revaluation of the Group's properties. Further, a small
proportion of the Group's lease agreements provide for rents which are linked to the turnover of the
respective tenant. If the concerned tenants experience lower turnover, the rental income from such
properties would also correspondingly go down. Further, the occupancy cost ratio, which reflects a tenant's
rental cost as a proportion of its turnover, can be adversely affected by a fall in demand and consumer
spending leading a tenant to conclude that its rental costs are unsustainable and prompting requests for
discounts or potential defaults.
In their attempts to reduce their respective budgetary deficits which have also been adversely affected by
the ongoing economic crisis, the governments of various countries have resorted to the imposition of
higher taxes or the introduction of new taxes. Recent increases in the applicable rates of value added tax
introduced in most countries in which the Group has its operations or assets could lead to a decrease in
consumer demand and consumer spending in these countries and could adversely affect the turnover of
tenants. It is possible that these VAT rates may be increased further or that similar VAT increases could be
introduced in other countries of the Region. Further, certain countries in Western Europe and in the
2

Region have attempted to levy ``crisis'' taxes which range from higher income tax rates for individuals and
higher rates of corporation tax to special levies and exceptional taxes based on the annual revenue of a
company that is engaged in certain specific industries. It is possible that similar crisis taxes may be imposed
by other countries in which the Group has its operations or assets and could be extended to companies
operating in other industries such as retail and real estate. Such ``crisis'' taxes may have a negative impact
on consumer demand and spending and could have an adverse impact on the financial condition of the
Group's tenants and the demand for the Group's properties.
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 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, adverse local market conditions, the financial conditions of the retail
sector (including tenants), buyers and sellers of real estate, changes in availability of debt financing,
changes in interest rates, real estate tax rates and other operating expenses, environmental laws and
regulations, planning laws and other governmental rules and fiscal policies, environmental claims arising in
respect of properties acquired with undisclosed or unknown environmental problems or as to which
inadequate reserves had been established, energy prices, 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, and the value of properties. The value of properties may 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 value or decrease in rental income or the increase in
operating expenses would 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 an increase in available space and heightened
competition for stronger and better performing tenants. This could result in higher capital expenditure
required to contract or retain tenants, lower rental income owing to lower rental rates, as well as, shorter
lease periods. All of these risks if realised could have a negative impact on the business, financial
condition, prospects and results of operations of the Group.
The financial performance of the Group 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 thus 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 also negatively influence the terms of its lease agreements, including the amount of
3

rent that the Group charges and the incentives to tenants that it provides, thereby adversely affecting the
business, financial condition, prospects and results of operations of the Group.
The Group's focus on shopping centres increases its exposure to trends in consumer behaviour
The Group's focus is on food anchored and retail properties shopping centres that meet the everyday
needs of consumers. The lack of industry diversification increases the risk associated with these
investments. A downturn in consumer preference for shopping centres may have a more pronounced
negative effect on the Group's revenues and profitability than if it had diversified its investments into
different types of properties. This strategy makes the Group vulnerable to changes in trends in the
behaviour of consumers. The current economic crisis has negatively affected the disposable incomes of
consumers due to rising unemployment and decreased consumer confidence. Lower consumer confidence,
and a shift in consumer preference towards alternative shopping channels, such as mail order companies,
discount stores and internet-based retailers may have an effect on consumer spending levels at shopping
centres which could, among other things, result in lower occupancy rates, with a direct negative impact 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 rent renewals or re-lettings and
manage lease expiries
The financial performance of the Group is subject to the Group's ability to secure rent renewals or
re-lettings and manage lease expiries which are reflected in the occupancy rates of the Group's properties.
The ability to manage occupancy of the Group's properties depends in large part on the condition of the
markets in countries in which the Group has its operations or assets. A negative change in any of the
factors affecting the property market and its occupancy rates, including the economic situation, may
adversely affect the business, financial condition, prospects and results of operations of the Group. The
ability of the Group to manage occupancy rates is also dependent upon the remaining terms of the current
lease agreements, the financial position of current tenants and the attractiveness of its properties to
current and prospective tenants. As of 31 December 2012, the percentage of lease agreements with a
remaining contract term, based on lease expiry date, of more than five years was 41.4%. The corresponding
percentage as at 31 December 2011 and 31 December 2010 was 41.2% and 42.8%, respectively. 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 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 tenants, which
typically have a duration of between fifteen and twenty-five years, 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. The Group may also 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
business, financial condition, prospects and results of operations of the Group.
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 adverse economic effects. The expiration of an anchor lease may
make the refinancing of such a centre, if required, difficult. Furthermore, the deterioration of Atrium's
relationships with any of its anchor tenants may negatively impact on Atrium's ability to secure anchor
tenants for its future projects. Any of the above risks, if realised, could have an adverse effect on the
business, financial condition, prospects and results of operations of the Group.
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. Although the Group
4

receives and holds advance deposits, the amounts payable to it under its lease agreements with tenants that
are not secured (by deposits, bank guarantees or corporate guarantees) bear the risk that its 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 or seek bankruptcy protection. The Group is not insured against this credit risk. If a tenant
seeks bankruptcy protection, the Group may be subject to delays in receipt of rental and other contractual
payments, if it is able to collect such payments at all, and the Group may not be able to secure vacant
possession of the property without an order of the relevant bankruptcy court, thus preventing the Group
from re-letting that property to a new tenant. The Group may not be able to limit its potential loss of
revenues from tenants who are unable to make their lease payments. At 31 December 2012, the Group was
a party to approximately 3,300 lease agreements. If a lease is terminated, the Group may be unable to
re-let the property for the rent previously received or at all. If any of these risks are realised it could affect
the Group's business, financial condition, prospects and results of operations.
The ability of the Group to increase rents in line with market fluctuations may be restricted by terms of the Group's
lease agreements
The Group may be restricted in its ability to raise rents in line with market fluctuations owing to certain
terms in its lease agreements. Rental levels and market value for properties are generally affected by
overall conditions in the economy. Both rental income and property values may also be affected by factors
specific to the real estate market, including, (i) rent reviews with anchor tenants may not be agreed at the
then estimated rental values and rents by such anchor tenants may be tied to their turnover--thus, if the
turnover of such tenant declines, the rent payable by such tenant also decreases; and (ii) most lease
agreements to which the Group is a party to include clauses which provide for partial or full indexation of
rent, which, in most cases, is indexed in line with a consumer price index and consequently, the increase in
the rental proceeds from such leases is dependent not only on general economic developments or market
conditions, but also on future rates of inflation. Each of these factors may restrict Atrium's ability to
increase rents in line with market fluctuations and could therefore have a material adverse effect on the
Group's business, financial condition, prospects and results of operations.
The Group may be unable to be reimbursed by tenants for increases in operating and administrative expenses
The Group's operating and administrative expenses could increase without a corresponding increase in
turnover or tenant reimbursements, mainly owing to reimbursement caps that may be included in various
lease agreements or other legal restrictions. Further, there may be expenses which are not rechargeable to
tenants. Factors which could increase operating and administrative expenses include, amongst others,
increases relating to the rate of inflation, payroll expenses, legal expenses, property taxes and other
statutory charges, energy costs and cost of services provided by third party providers; movements in foreign
exchange rates; increases in insurance premium and the costs of maintaining properties and increases in
capital expenditure which arise as a result of defects relating to the properties needing to be rectified. Such
increases, which if not reimbursed, could have a material adverse effect on the Group's business, financial
condition, prospects and results of operations.
The Group's claims to title of its properties may be subject to challenge and permits may have been obtained in
breach of applicable laws
As a result of, among other things, the process of registration of title at the relevant real estate and
corporate registries, the purchase of property from public authorities, restitution laws and untested
law-enforcement procedures, Group Companies may not in all cases have undisputable title to properties
and/or land on which properties are located or title to the shares of companies which own the land and
properties of the Group in certain countries in which the Group has its operations or assets. There can be
no assurance that all permits necessary to legally own, develop or operate the properties have been
obtained in compliance with all applicable laws. The Group's, direct or indirect ownership interests in a
property may therefore be challenged by government authorities and third parties in certain countries of
the Region. If the Group's ownership interests over its property or permits are successfully challenged, it
could have a material adverse effect on Atrium's business, financial condition, prospects and results of
operations.
5

The Group is exposed to risks arising from the illiquidity of its portfolio
The market for the types of properties the Group owns or may acquire in the future is generally illiquid.
Were the Group required to liquidate parts of its portfolio on short notice for any reason, including raising
funds to support its operations or repay outstanding indebtedness, the Group may not be able to sell any
portion of its portfolio on favourable terms or at all. In addition, a significant proportion of the portfolio
may not be disposed of since it is pledged to external creditors under secured financings. In the case of an
accelerated sale, there may be a significant shortfall between the fair value of the property and the price at
which the Group could sell such property. In planned disposals in the ordinary course of business, an
illiquid market may result in a sales price that is lower than anticipated or in a delay of the sale. Any such
shortfall could have a material adverse effect on the business, financial condition or results of operations of
the Group. In addition, the Group may be subject to restrictions on its ability to sell properties pursuant to
covenants and pledges limiting asset disposals in the Group's credit agreements.
The Group may face claims for defective construction, which could have an adverse effect on its generation of rental
income
The construction of properties is subject to a risk of claims for defective construction, corrective or other
works and associated adverse publicity. Any claim brought against the Group, and the surrounding
negative publicity concerning the quality of its properties or projects, irrespective of whether the claim is
successful, or an inability to complete the construction of a project on schedule or on budget, could also
have a material adverse effect on how its business, properties and projects are perceived by target tenants.
This could negatively affect the Group's ability to market and lease its properties in the future, which could
have a material adverse effect on its generation of rental income and, thereby, its business, financial
condition, prospects and results of operations.
The Group is exposed to foreign exchange risk
The rents payable to the Group under the various lease agreements with tenants are mainly denominated
in Euros. The tenants however, mostly have their income denominated in the local currency of the relevant
country in which they are based, such as the Ruble or the Czech Koruna. The occupancy cost ratio, which
reflects the tenants' rental cost as a proportion of its turnover, can be severely affected by fluctuations of
the Euro, the currency in which rent is based or payable, against the relevant local currency in which the
tenant generates turnover. Accordingly a weakening of the local currency against the Euro could result in
the Group's properties becoming less attractive, or over-rented. Such fluctuations could also result in such
rent becoming unsustainable with respect to the concerned tenant leading to a demand for discounts or
even default by the respective tenants. These risks if realised could adversely affect the Group's business,
financial condition, prospects and results of operations.
The real estate sector is susceptible to fraud
Certain activities in the real estate sector have, from time to time, been subject to allegations of
embezzlement of cash in connection with arranging large scale real estate transactions. The Group is
currently not aware of any such fraud taking place within its business. However, even though it has taken
precautionary measures to reduce the risk as much as possible, it may become the target of fraud or other
illicit behaviour in any of the markets in which it operates. This may have a material adverse effect on the
Group's reputation and may affect the Group's business, financial condition, prospects and results of
operations.
The Group is exposed to the counter-party risk of its partners with respect to certain co-ownership or co-operation
arrangements, including joint venture arrangements
Some of the Group's properties are held and operated or may be proposed to be developed through
co-ownership or co-operation arrangements (including among others joint venture arrangements) with
third parties who operate units within premises in which the Group is present. In addition, but to a limited
extent, title to certain of the Group's properties is shared. The Group has co-ownership agreements with
certain of the Group's largest tenants. Such arrangements may result in the Group sharing control of such
assets with third parties. As a result, certain decisions relating to those assets within such arrangements
may depend upon the consent or notification of the Group's relevant partners. Disputes may arise between
Group and the relevant partners in respect of an arrangement, which could mean that the Group is not
able to manage or deal with a particular asset or property as it sees fit. These risks are accentuated where
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