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LUXEMBOURG (dpa-AFX) – According to its own estimates, the weak development group Adler Group (ADLER) performed well in the day-to-day operations in the first quarter. Compared to the same period last year, net rental income fell almost 16 percent to 71.1 million euros, the company said on Monday evening, based on preliminary data. The operating result (FFO I) amounted to EUR 29.7 million, 8% lower than a year earlier. Adler attributed the decline primarily to the sale of its real estate portfolio. In terms of a similar average rent, it increased by 2.1%. up to 7.46 euros per square meter.
Shares continued on Wednesday on a recovery trajectory after initially feeling pressure in early trading. Recently, the price has risen by a good six percent, making it the biggest winner in the SDax Small Cap Index.
According to UBS analyst Charles Boissier, the real estate group was stable in its day-to-day operations in the first quarter. Retailers also positively assessed the confirmed annual targets. The share price was still at a record low of EUR 3.80 a week ago, and since then the gains from the recovery have totaled a quarter.
The dealer has analyzed that rental and property sales revenues have decreased slightly more than expected. However, he mentioned that the operating result (FFO I), which was close to expectations, was positive, even if it was lower than the year before.
Due to the sale of the properties, liquidity increased by more than EUR 200 million to EUR 760 million at the end of the quarter. Ultimately, however, the first quarter was still under the dash due to high other costs: the net loss to owners was EUR 2 million after a profit of EUR 83.2 million a year ago. The company initially did not comment on the query, which meant “other expenses”.
The management board confirmed the forecast for this year. The net rental income should be between EUR 203 and 212 million, the operating profit between EUR 73 and 76 million.
Meanwhile, the company has pulled back a real estate bundle sale due to non-payment. According to the company, the contract with Partners Immobilien Capital Management was canceled as the company still owed the group money for a transaction worth 313 million euros in May 2020.
Partners has acquired seven development projects from its subsidiary Adler Consus. Consus had only received part of the purchase price by the end of 2021, and it was questionable when and in what amount payments would be made. Therefore, the best solution for Consus was to cancel the contract and thus avoid lengthy legal proceedings against the buyer.
This is why leverage (LTV) continued to increase in the first quarter, CEO Thierry Beaudemoulin said in a conference call with analysts. The loan-to-value ratio was 52%. at the end of the quarter, compared with 50.9 percent. at the end of December.
According to the manager, the Adler Group wants to significantly reduce the level of debt through the planned sale of the remaining shares in the subsidiary Brack Capital Properties (BCP). The LEG development group (LEG Immobilien) has an option to purchase the Adler package in the amount of 63 percent. In the first step, the Düsseldorf-based company has already acquired a 31 percent stake in BCP for EUR 328 million.
Financial regulator Bafin is currently examining Adler’s books. Authorities intervened after a real estate firm came under pressure from the short sale seller Fraser Perring for the first time in October. This and his research service Viceroy raised serious allegations against Adler, which included the appraisal of real estate projects. The company has always rejected the allegations.
In late April, Adler released data for 2021, despite KPMG’s refusal to certify – it suffered a billion-dollar loss due to high depreciation. KPMG is no longer available as an auditor for the 2022 annual and consolidated financial statements. Almost all members of the Management Board resigned due to the lack of an audit certificate. However, the head of the board, Stefan Kirsten, only accepted four of them.
Adler’s shares have recently traded below € 5. In early 2021, it still cost almost € 30 when it was high. Currently, the most important shareholder of Adler is the largest German group of residential real estate Vonovia (Vonovia SE (ex Deutsche Annington)), which owns approximately 20.5% of Adler’s shares. The Adler Group has approximately 27,400 apartments, of which nearly 20,000 are in Berlin./men/mne/jha/
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