ADLER Real Estate AG: First half of 2017: Focus on improving the Group's capital structure

First half of 2017: Focus on improving the Group's capital structure
 

- Liabilities of around EUR 380 million repaid

- LTV down by 3.5 percentage points to 57.8 percent

- Equity ratio improves by 2.4 percentage points to 29.0 percent

- NAV grows by 2.3 percent to EUR 1,094.9 million

- FFO I increased by 30.8 percent to EUR 15.7 million

- Improvement in key operating performance figures

Berlin, August 14, 2017 - During the first half of the current financial year ADLER Real Estate AG continued to focus on improving its financing structure. "In this respect, we benefitted from the proceeds from the profitable sale of our stake in conwert Immobilien Invest SE", comments Arndt Krienen, CEO of ADLER Real Estate AG. "As a result, we were able to accelerate the repayment of existing liabilities on a scale of EUR 380 million. At the end of June, we also strengthened our equity base due to the maturity and conversion of a convertible bond. Consequently, at midyear we can therefore report a significantly higher equity ratio than previously reported and an LTV of 57.8 percent, close to our target of 55 percent for the 2017 business year. Further to the improvements to or capital structure, we were also successful in our operating business and increased our FFO I figures year-on-year by almost a third as well as improved our rental income and reduced our vacancy."

Liabilities of around EUR 380 million repaid

Overall, ADLER Real Estate AG repaid liabilities amounting to c. EUR 380 million in the first half of the year. This total comprised current liabilities of around EUR 200 million and non-current liabilities of around EUR 180 million. The non-current liabilities which were repaid had interest rates ranging between 6.0 percent and 9.25 percent. The repayments will therefore significantly contribute towards reducing interest expenses.

LTV down by 3.5 percentage points to 57.8 percent

The extensive debt repayments programme impacted positively on LTV, which expresses the ratio of financial liabilities (excluding convertible bonds) to total assets, with both figures adjusted to exclude cash and cash equivalents. At the end of the period under report, LTV amounted to 57.8 percent and thus improved by 3.5 percentage points in the first half of the year.

Equity ratio improves 2.4 percentage points to 29.0 percent

The repayment of liabilities and the 2013/2017 convertible bond, which matured in June increased the equity ratio by 2.4 percentage points to 29.0 percent. Conversions led to the creation of around 5 million new shares and these in turn boosted the company's equity. The issue of bonus shares at a ratio of 10 to 1 approved by the Annual General Meeting in June 2017 also increased the number of shares in circulation, but did not impact on the volume of equity as the shares were issued from the capital reserve, which also counts as equity.

NAV grows by 2.3 percent to EUR 1,094.9 million

EPRA NAV amounted to EUR 1,094.9 million at the end of the first half of 2017 (31 December 2016: EUR 1,069.9 million). This growth of 2.3 percent was partly due to the acquisition of two real estate portfolios close to Bremen and in Senftenberg in Brandenburg, which comprise a total of 893 rental units, and partly due to fair value adjustments on the existing real estate portfolio.

As of 30 June 2017, the Company's EPRA NAV per share came to EUR 15.87 (undiluted) and EUR 14.98 (diluted). Any year-on-year comparison of these figures should account for the sharp rise in the number of shares in June 2017.

FFO I increased by 30.8 percent to EUR 15.7 million

ADLER Real Estate AG not only strengthened its balance sheet during the first half of the year but also further improved its operating performance. Funds from operations (FFO I), the key figure referred to in the real estate sector, came to EUR 15.7 million in the first half of 2017, EUR 3.7 million, or 30.8 percent, more than in the previous year's period. This key earnings figure based on the operating cash flow thus performed more strongly than the results reported in the income statement, which also include non-cash income and expense items, as well as non-recurring and one-off items. Earnings before interest and taxes (EBIT) amounted to EUR 87.7 million in the first half of 2017 and were thus 4.7 percent higher than in the previous year's period (H1 2016 EUR 83.8 million).

Improvement in key operating performance figures

The company's operating success is closely linked to the improvement achieved in its key operating performance figures. Average rent (per square metre per month) across the overall portfolio including non-core rose to EUR 5.06, equivalent to an increase of EUR 0.08, or 1.6 percent, compared to the same figure last year. The average rent in the core portfolio alone even rose to EUR 5.09. At 89.5 percent, the occupancy rate across the entire portfolio (incl. non-core) increased by 0.6% at the end of the first half of 2017 compared to the previous year (88.9 percent). The core portfolio also saw increases in occupancy. At 90.7 percent, the equivalent midyear figure for the core portfolio was notably higher.

"Our performance in the first half of the year means we are well on course to reach our ambitious full-year targets", adds Krienen. "We intend to increase our rental income by three percent, generate FFO I of EUR 40 million and reduce our LTV to 55 percent. With regards to our rental income, we are absolutely on schedule to meet our guidance figures. Our FFO I in particular should benefit in the second half of the year from the reduction in our interest charges following the repayment of higher-interest liabilities. Finally, in regards to the LTV we are also very close to our target value already."

The complete interim report of ADLER Real Estate AG for the first half of 2017 is available at the website of ADLER Real Estate AG (www.adler-ag.com).

Contact for enquiries:

Dr. Rolf-Dieter Grass
Head of Corporate Communications
ADLER Real Estate AG
Tel: +49 (30) 2000 914 29
r.grass@adler-ag.com

Key financials for the first half of 2017

⁺ Undiluted