ADLER Real Estate AG: The first nine months of 2017: Back on growth track

The first nine months of 2017: Back on growth track

- Growth: Property portfolio expanded by 6.4 % to 53,254 rental units

- Increased earnings: FFO I improved by 45.3 % to EUR 27.1 million

- Operational strength: Net Rental Income increased by 3.8 % to EUR 130.5 million

- Value growth: NAV increased by 3.0 % to EUR 1,101.8 million

- WACD lowered to 3.4 %

- Acquisition of new built apartments in central Berlin (Europa City)

Berlin, 14 November 2017 - ADLER Real Estate AG is back on the growth track in 2017. After acquiring several individual portfolios during the course of the year, as of 30 September 2017 ADLER Real Estate AG owned a total of 53,254 rental units, 50,641 held for permanent letting and 2,613 for trading. Over the course of the year, the property holdings increased by 6.4 percent.

Parallel to this, key performance data were further improved. At the end of the period under review, the average contractually agreed rent per square metre per month for the units held in permanent letting portfolio amounted to EUR 5.08, EUR 0.13 higher than the figure for the previous year's period (9M 2016: EUR 4.95), while for the core portfolio it reached EUR 5.11 which was up by EUR 0.07 against the end of 2016 when this figure was reported for the first time. The occupancy rate for the portfolio came to 89.9 percent at the end of the first nine months of 2017 against 89.3 percent one year earlier, for the core portfolio it reached 91.1 percent. "Slowly, but surely," said Arndt Krienen, Chairman of the Management Board of ADLER Real Estate AG, "the investment we made in internalising our property and facility management which we initiated in January is beginning to deliver results. We expect to have our entire portfolio to be managed internally by year end and therefore benefit from the greater governance for 2018 and beyond"

The Company showed promising Net Rental Income increases for the first 9 months of the current financial year. Net rental income totalled EUR 130.5 million and thus increased 3.8 percent year-on-year.

Increased earnings: FFO I improved by 45.3 percent

The Group's FFO I benefited from the extensive repayment of debt in the first six months as well as the increase in collected rent. In the first nine months, FFO I totalled EUR 27.1 million, EUR 8.5 million or 45.3 percent more than in the first three quarters of the previous year (9M 2016: EUR 18.6 million).

Stronger capital structure

The extensive repayment of debt in the first six months resulted in a strong improvement of the capital structure over the course of the year. Between January and September, the Loan-to-Value (LTV) at ADLER Real Estate AG declined from 61.3 percent to 59.6 percent. A further improvement is anticipated in the fourth quarter, when the sale of ACCENTRO Real Estate AG agreed in October becomes effective. The company's reported financial policy targets an LTV below 55 percent and reaching investment grade by 2019. The weighted average cost of debt (WACD) fell to 3.45 percent and thus already reached the level targeted for the end of the year. At the same time, the equity ratio was strengthened. At the end of September 2017, it reached 28.0 percent, 1.4 percentage points higher than at the beginning of the year. This was partly due to the conversion of the 2013/2017 convertible bond due in June resulting in approximately 5 million new shares.

NAV increased by 3.0 percent

At the end of the first nine months of 2017, EPRA NAV reached EUR 1,101.8 million. As a result, it increased by 3.0 percent in the course of the year (31 December 2016: EUR 1,069.9 million). This upturn is due partly to the acquisition of the real estate portfolios with 3,398 rental units and also due to minor fair value adjustments on some of the existing real estate portfolio.

As of 30 September 2017, EPRA NAV per undiluted share was EUR 16.10 and on a fully diluted basis EUR 15.19 per share. In comparison to the start of the year, it should be taken into consideration that the number of shares increased sharply after the issue of bonus shares and the conversion of the convertible bond.

Acquisition of new built apartments in central Berlin (Europa City)

ADLER Real Estate AG has today, via a subsidiary, entered into a share purchase agreement with respect to the acquisition of 94.9 percent of the shares in eight project development companies. These project development companies engage in the development of plots in Berlin-Mitte (Europa City) with regard to the project development "Wasserstadt Mitte", comprising the construction of        c. 700 residential units with c. 44,000 square meters of living space and additional c. 5,200 square meters of office and retail space. First construction measures have already been implemented. Completion of this project is expected by year-end 2019.

The total consideration to be paid by ADLER until completion of the project amounts up to c. EUR 120 million. Upon completion and lease, which is expected to occur within the next c. three years, ADLER expects an indicative market value of c. EUR 385 million and an annual net rental income of c. EUR 11 million from this project.

Arndt Krienen, CEO of ADLER Real Estate AG commented: "When making our acquisitions this year, we gained the impression that the strategy of growing solely by buying portfolios is now starting to run its course: fewer and fewer portfolios are available on the market. And increasingly, the asking prices are so high that they are no longer attractive to us. In such a situation, development, densification or loft-conversion projects look more attractive. That is why we now aim to pay more attention to these issues - even if it is only to supplement our existing business model rather than replace it."

"The development of the first nine months," said CEO Krienen "show that we are on track to achieving our key targets for the year."

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

Your contact for enquiries:

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

Key financials for the first nine months 2017

*undiluted