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Atrium pretax loss widens on E.Europe writedowns

  Developer Atrium European Real Estate wrote down further the value of its shopping malls in emerging Europe in the final quarter of last year, but said on Tuesday its property was more crisis-proof than others’.

Atrium, formerly known as Meinl European Land, had a pretax loss of €924 million ($1.26 billion) last year, down from a €193 million profit in 2007, and implying a fourth-quarter loss of €439 million, Reuters calculations showed.

The group, controlled by Israeli investment group Gazit Globe, said it wrote down both property and development projects by a total of €665 million last year. A one-off payment to sever its ties to Meinl Bank also weighed.

Chief Financial Officer Robert Bolier said in an interview that market visibility was too low to say whether there would be further devaluations, but noted Atrium’s business model was resilient in the crisis.

“The advantage we have is that our shopping centers are anchored by supermarkets, and you would assume that people will still need food,” Bolier said. “When we get sales numbers (from tenants) we see a bit of a decline, but the decline is not like it is absolutely dramatic.”

He said the biggest risk for Atrium was a severe worsening of the economic crisis in Russia, one of its three biggest markets, along with Poland and the Czech Republic. Atrium said net asset value stood at €10.66 per share, down from €12.62 per share at end-September.

Its shares rose 3% to €2.08 on Tuesday, still at a steep discount to the net asset value. The stock has gained two thirds over the last two weeks as investors’ concerns about the emerging European economies calmed down.

Bolier also said the company would continue to buy back bonds issued under its 2006 guaranteed medium-term note program to reduce its interest costs.

It has bought back about €250 million worth of the bonds at less than 75% of face value over the past months, Bolier said, and would continue to do so as market conditions allow for the rather illiquid paper.

“It is very opportunistic, if someone comes along who wants to sell, we are happy to talk,” Bolier said. “We expect to buy small chunks if they are available,” he said.

Atrium plans to move its primary share listing to the Euronext stock exchange from Vienna, it said earlier this month. (Reuters)