Obligation Atrium European Properties Ltd 3.625% ( XS1118586244 ) en EUR

Atrium European Properties Ltd

100 % ⇌

Jersey

XS1118586244 ( en EUR )

3.625% par an ( paiement annuel )

17/10/2022 - Obligation échue

Prospectus brochure de l'obligation Atrium European Real Estate Ltd XS1118586244 en EUR 3.625%, échue

100 000 EUR

500 000 000 EUR

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

**L'Obligation d'Atrium European Real Estate (ISIN: XS1118586244) Arrive à Maturité et Est Intégralement Remboursée** Le marché obligataire a récemment enregistré le remboursement à échéance d'une émission significative, à savoir l'obligation avec le code ISIN XS1118586244, émise par Atrium European Real Estate Ltd. Atrium European Real Estate Ltd, une entité reconnue dans le secteur immobilier européen, est spécialisée dans la détention, le développement et la gestion d'actifs immobiliers, principalement des centres commerciaux et des propriétés résidentielles, avec une forte présence en Europe centrale et orientale. Basée à Jersey, cet émetteur a démontré sa capacité à lever des capitaux sur les marchés financiers internationaux, comme en témoigne cette émission. L'obligation en question, de type classique, était libellée en Euros (EUR) et offrait un taux d'intérêt fixe de 3.625%, avec une fréquence de paiement annuelle. La taille totale de l'émission s'élevait à 500 000 000 EUR, marquant une opération de financement d'envergure pour l'émetteur. Avec une taille minimale d'achat fixée à 100 000 EUR, cette obligation ciblait principalement les investisseurs institutionnels ou sophistiqués. Arrivée à maturité le 17 octobre 2022, cette obligation a été entièrement remboursée à sa valeur nominale de 100%, assurant ainsi un retour complet du capital aux porteurs. Ce remboursement témoigne de la solide gestion financière d'Atrium European Real Estate Ltd et de sa capacité à honorer ses engagements financiers en temps voulu, renforçant la confiance des investisseurs dans la qualité de son crédit.

ATRIUM EUROPEAN REAL ESTATE LIMITED
(incorporated with limited liability under the laws of Jersey, registration number 70371)
EUR350,000,000 3.625 per cent. Notes due 17 October 2022
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 3.625 per cent. Notes due 17 October 2022 (the "Notes") of Atrium European Real Estate
Limited ("Atrium" or the "Issuer") is 99.788 per cent. of their principal amount.
The Notes will bear interest from 16 October 2014 at the rate of 3.625 per cent. per annum payable annually in arrear on 17 October
in each year commencing on 17 October 2015. There will be a long first coupon for the period from and including 16 October 2014
to but excluding 17 October 2015. 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 17 October 2022. 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 the Czech Republic, Hungary, Latvia, Poland, Romania, Russia, Slovakia 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. 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 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 16 October 2014 (the "Closing Date") with a common safekeeper
for Euroclear Bank S.A./N.V. ("Euroclear") and Clearstream Banking, société 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 at 21 May 2014) 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
The date of this Prospectus is 14 October 2014.

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
i

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 and references to "EUR", "" and "euro" are to
the lawful currency introduced at the start of the third stage of European economic and monetary
union, pursuant to the Treaty establishing the European Community as amended by the Treaty on
European Union.
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.
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
IMPORTANT NOTICES .............................................................................................................i
RISK FACTORS ........................................................................................................................ 1
OVERVIEW ............................................................................................................................. 24
FORWARD-LOOKING STATEMENTS ................................................................................. 27
DOCUMENTS INCORPORATED BY REFERENCE .............................................................. 28
PRESENTATION OF CERTAIN INFORMATION ................................................................. 30
SELECTED FINANCIAL INFORMATION ............................................................................. 32
DESCRIPTION OF ATRIUM AND THE GROUP ................................................................... 40
USE OF PROCEEDS ................................................................................................................ 50
DIRECTORS OF ATRIUM AND GROUP EXECUTIVE MANAGEMENT............................ 51
MAJOR SHAREHOLDERS ..................................................................................................... 57
TERMS AND CONDITIONS OF THE NOTES ....................................................................... 58
OVERVIEW OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM .............. 80
TAXATION .............................................................................................................................. 82
SUBSCRIPTION AND SALE .................................................................................................. 87
GENERAL INFORMATION .................................................................................................... 89
INDEX OF DEFINED TERMS ................................................................................................ 91

iii

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
Slow or negative economic growth may have an adverse effect on the real estate market and
the Group's rental revenue
The real estate market, demand for premises, rental levels and tenants' ability to pay rent are
affected significantly by economic fluctuations and developments. Notwithstanding some
positive indicators in 2010, economic sentiment turned negative during the latter part of 2011, in
particular due to the sovereign debt crisis in the euro area. Some positive signs were seen during
2012, but the risks to economic growth persisted in 2013. The uncertainty in the financial
markets has continued in 2014, affecting the cost and availability of financing. Consequently, the
financial markets in several of the countries in the Region continue to experience volatility in
both debt and equity capital markets. The continued volatility in the financial markets may
increase the cost of borrowing for some of the countries in the Region and there can be no
assurance that the affected economies of the Region will recover in the long term.
Economic uncertainty can contribute to a deterioration in the consumer and investment climate,
which in turn can adversely affect a range of economic activities across different sectors,
including the real estate sector. Private consumption is currently being supported by, amongst
other things, low interest rates. Weaknesses in the economies of the Region may further decrease
consumer confidence and affect consumption. Should growth in private consumption slow in the
Region, this may put pressure on the profits of retailers which may lead to a decreased demand
for retail space. This, together with the reduced availability of financing, may prompt certain
retailers to scale back or postpone their expansion plans, which may make it more difficult for
the Group to find appropriate tenants.
If the general economic conditions in the countries in the Region do not improve or worsen,
demand for retail space may fall. As a result the Group may have to let its properties at lower
1

rents or may not be able to let its properties at all which could lead to a reduction in the Group's
rental income. Further, a significant proportion of the Group's lease agreements provide for rents
which are linked to various indices and the turnover of the respective tenant. Thus, the
development of rental income levels is dependent on the future rate of inflation and other rates
and the revenue of the tenant. Rents are adjusted upwards for indexation and a decrease in the
various indices will not result in a downward adjustment of the rent levels under the majority of
the rental agreements of the Group. The occupancy cost ratio, which reflects a tenant's rental
cost as a proportion of its turnover, could be adversely affected by a fall in consumer spending
leading a tenant to conclude that its rental costs are unsustainable and prompting requests for
discounts or potential defaults. In addition, if tenants experience lower turnover, the rental
income from these properties would also decrease. There can be no assurance that the Group will
in the future be able to maintain the current high occupancy rates and rental levels of its
properties.
Any of these factors, alone or in combination, could have a material adverse effect on the
Group's business, financial condition, prospects and results of operations.
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, market rent levels, currency fluctuations,
vacancy rates, property investor yield requirements and competition. The most significant
macroeconomic factors affecting the general price levels of properties are interest rates, GDP
growth, consumer spending and inflation. As a result, valuations are subject to uncertainty and
volatility and may change from one valuation period to the next. Because the Group uses the fair
valuation model under IFRS in the valuation of its investment properties, this valuation volatility
can affect the Group's statement of financial position and income statement. 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 which could also be adversely affected
by a decrease in the market value of its investment properties, such as an obligation to maintain a
maximum loan to valuation ratio. 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.
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 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, 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
2

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.
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 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. All of these risks, if realised, could have a material adverse effect on the
Group's business, financial condition, prospects and results of operations.
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.
3

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's focus is on food anchored shopping centres and retail properties that meet the
everyday needs of consumers. This strategy 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 and
electronic goods. Shopping centres will need to adapt 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 protect themselves against 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 Group may face increased maintenance and redevelopment costs
As properties age, they generally require greater maintenance, refurbishment and redevelopment
costs. Numerous factors, including the age of the relevant building, the material and substances
used at the time of its construction or unknown building code violations, could result in
substantial unbudgeted costs for refurbishment, modernisation and decontamination required to
remove and dispose of hazardous materials such as asbestos. If the Group does not carry out
maintenance, refurbishment and redevelopment activities with respect to its properties, these
properties may become less attractive to tenants and the Group's rental income may decrease,
thereby adversely affecting 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. As at 30 June 2014, the Group was a party to approximately 3,400 lease
agreements. 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 the Group's occupancy
rates, including the economic situation, may adversely affect the Group's business, financial
condition, prospects and results of operations.
The Group's ability to manage occupancy rates is also dependent upon the remaining term of the
Group's lease agreements, the financial 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 42.3% as at 30
June 2014. 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
4

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. 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 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 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. Although the Group 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. As at 30 June 2014, the Group was a party to approximately 3,400
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. The realisation of any of these risks could have a material
adverse effect on the Group's business, financial condition, prospects and results of operations.
5

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 payable by such anchor
tenants may be tied to their turnover--such that, 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 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 the Group'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, as well as increasing repair and maintenance
costs related to the gradual ageing of the Group's properties, 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; increases in construction, redevelopment and maintenance costs
and increases in capital expenditure which arise as a result of defects relating to the properties
needing to be rectified. Any such increases, if not reimbursed by the Group's tenants, 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, the Group may not in all cases have undisputable title to
its properties and/or land on which its 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. In addition, some of the countries in the Region have been subject to
extensive privatisation programmes in respect of property which has previously been
appropriated by the state. To the extent that the Group contains any such property in its
investment property portfolio, any challenge by an interested party to such appropriation by the
state could result in restitutionary claims against the Group as the current owner of the affected
property. There can be no assurance that all permits necessary to legally own, develop or operate
6