The president of Citi Property Investors (C.N: Quote, Profile, Research, Stock Buzz) said on Monday he expected to retain his stake in troubled Austrian developer Atrium European Real Estate for at least 5-7 years, and that he was happy with the double-digit returns it yielded.

The Citigroup unit had joined Tel Aviv-listed Gazit Globe (GLOB.TA: Quote, Profile, Research, Stock Buzz) last July in an equal joint venture to take over Atrium (ATRV.VI: Quote, Profile, Research, Stock Buzz), known at the time as Meinl European Land, in a deal worth about 800 million euros ($1.11 billion).

It's more of five or seven year play and we never saw it as a quick flip, Roger Orf said at the Reuters Global Real Estate Summit in London, adding the joint venture now holds a 40 percent stake in Atrium.

Atrium's share price has plunged more than 46 percent since the deal was done, but Orf said he was happy with returns on the convertible debt securities, issued as part of the deal.

The company is paying us 10.75 percent per annum, and we get that return every quarter. That's a lot more than today's interest rates, he said.

The investment took an unusual twist earlier this month after Citicorp Trustees, trustee of Atrium's 2013 medium-term note program, said Meinl's share buybacks in 2007 constituted a default event and it may take steps to protect bondholders.

The news prompted Standard & Poor's to degrade Atrium's long-term credit rating to a lower speculative grade of BB-, from BB previously, and warned it may cut this further.

Orf said the Citigroup Trustees' action was completely independent, and he does not see this as a major concern due to Atrium's strong cash position.

The company has no liability structure issue and a net cash positive position, so we're comfortable, Orf said.

(Additional reporting by Tom Freke; Editing by Andrew Macdonald)

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