Letko Brosseau to Vote Against Gazit's Offer for Atrium European Real Estate

MONTREAL, Oct. 11, 2019 /CNW Telbec/ - Letko, Brosseau & Associates Inc., ("Letko Brosseau") exercises investment control or direction over approximately 2.71% of the outstanding shares of Atrium European Real Estate Limited ("Atrium" or the "Company") and is the Company's second largest shareholder.

On July 23, 2019, the Board of Directors announced an agreement with majority shareholder Gazit-Globe Ltd ("Gazit") who owns approximately 60.1% of Atrium's shares to acquire the remaining stake.

After diligently analyzing the recommended offer and engaging with concerned stakeholders including representatives of Gazit and Atrium, Letko Brosseau has unequivocally concluded that the proposed transaction is unacceptable to minority shareholders and will vote AGAINST the offer. The offer price of EUR3.75 per share heavily undervalues the Company and unduly benefits Gazit at the expense of minority investors.

Letko Brosseau's rejection of the proposed offer is based on the following factors:

-- Significant discount of 25.7% to Atrium's own reported EPRA Net Asset
Value (NAV) per share of EUR5.05 as of June 30, 2019.
-- Atrium's portfolio of high-quality shopping centres is predominantly
situated in the best locations in Poland and Czech Republic, including
over half of the assets in Warsaw and Prague. While Gazit's offer
implies a capitalization rate of 7.5%, the yields for prime shopping
centres in Warsaw and Prague are 4.5%.(1 2 )Further, this valuation is
in direct conflict with Atrium's recent sale of two shopping centres in
Poland for EUR298 million, representing a premium to book value and the
purchase of Wars Sawa Junior retail centre in Warsaw for EUR301.5
million. This transaction is widely believed to have been executed at
capitalization rate below 5%.
-- Termination of regular and special dividends EUR0.41 per share or 12.9%
annual yield based on Atrium's pre-acquisition share price of EUR3.17.
The current offer price of EUR3.75 consists of a one-time special
dividend of EUR0.60, offering an immaterial premium to the dividends
historically paid to shareholders.
-- Immediately following the proposed acquisition announcement, Gazit's
share price appreciated by 11.7%, creating over EUR150 million in
instant value for Gazit shareholders.
Finally, Atrium operates in some of the fastest-growing economies in Europe, with strong labour markets and consumption trends. Store-based retail sales are projected to grow at 4.2% annually in the next 5 years in Poland(3 )and 3.2% in 2020 in Czech Republic.(4) Atrium has reported strong operational results including a high occupancy rate and net rental income growth. The balance sheet is in solid shape, with an investment-grade rating and low financing costs, making Atrium ideally positioned to execute on its significant development plans.

It is therefore Letko Brosseau's position that Atrium should continue to create value for its shareholders and refrain from taking actions that unfairly prejudice the minority.

Letko, Brosseau & Associates Inc. is a Canadian independent investment manager founded in 1987. As of September 30, 2019, the firm manages approximately C$27 billion in assets for institutional investors and private clients. It has offices in Montreal, Toronto and Calgary.


Certain information contained in this press release may constitute forward-looking statements. Forward-looking statements may include estimates, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although Letko Brosseau believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Letko Brosseau's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained in this press release are made as of the date hereof and Letko Brosseau does not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.


(1) Cushman & Wakefield, Poland Retail Snapshot Second Quarter 2019

(2) Cushman & Wakefield, Czech Republic Retail Snapshot Second 2019

(3) Euromonitor International, May 2019

4 Oxford Economics, December 2018

For further information: Peter Letko, peter@lba.ca, (514) 499-1200; Daniel Brosseau, daniel@lba.ca, (514) 499-1200

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