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Adler Group S.A. reports resilient Q1 2021 financial results and reiterates guidance for 2021

DGAP-News: Adler Group S.A. / Key word(s): Quarterly / Interim Statement
28.05.2021 / 07:00
The issuer is solely responsible for the content of this announcement.

Adler Group S.A. reports resilient Q1 2021 financial results and reiterates guidance for 2021

  • Strong performance of rental portfolio with like-for-like rental growth outside Berlin of +3.8% and a sustained low vacancy rate in top 13 locations of 2.9%
  • EPRA NRV stands at €6.2bn equating to EPRA NRV per share of €53.09
  • €2.5bn successfully refinanced year-to-date thus further improving debt KPIs
  • ESG firmly anchored in the long-term strategy with target for reduction of CO2 emissions by 50% until 2030
  • Management reiterates 2021 guidance, generating NRI of €325-339m and FFO 1 of €127-133m, targeting 50% dividend payout ratio

Berlin, 28 May 2021 - Following a transformative financial year 2020 adding ADLER Real Estate AG (ADLER RE) and Consus Real Estate AG (Consus) into the Group, Adler Group S.A. (Adler Group) has made a promising start to the new financial year confirming its guidance for the financial year 2021. Significant growth in rental income compared to Q1 2020 is mainly due to consolidation of ADLER RE.

Solid performance

Income from rental activities increased significantly to €112.4m in Q1 2021 from €29.4m in Q1 2020. This was primarily attributable to the first-time consolidation of ADLER RE at the beginning of April 2020, which was partially offset by the disposals made in 2020. Net rental income increased to €84.3m in Q1 2021 from €27.9m in Q1 2020.

EBITDA from rental activities more than tripled to €54.2m in the first three months of 2021 compared to €17.7m in the same period of the previous year. FFO 1 (from rental activities) increased to €32.3m in Q1 2021 compared to €11.5m in Q1 2020, corresponding to a FFO 1 per share of €0.28 (Q1 2020: €0.26 per share).

Despite the Berlin rent freeze legislation ("Mietendeckel") coming into force on 23 February 2020, partially restricting like-for-like rental growth of c.37% of NRI of Adler Group's asset base, the portfolio performed strongly. Outside Berlin, the company has been able to generate rental growth of 3.8% and was able to post a 1.3% like-for-like rental increase for the total rental portfolio as of 31 March 2021. After the reporting date, the Federal Constitutional Court has ruled the Berlin rent freeze law unconstitutional and therefore Adler Group expects like-for-like rental growth to improve accordingly for the rest of the year.

The average in-place rent of the rental portfolio increased to €6.34/sqm/month as of 31 March 2021 (Q1 2020: €6.18/sqm/month). The vacancy rate for the top 13 cities of the rental portfolio increased to 2.9% as of 31 March 2021 (total vacancy as of 31 March 2021: 3.8%), slightly higher compared to 2.3% as of 31 December 2020 mainly driven by seasonal effects.

Riverside development fully leased

Following the lease of the 213 co-living apartments, all residential units of the development project Riverside located in Berlin have been fully leased.

Resilient asset class

Despite the Berlin rent freeze legislation coming into force in 2020, valuations remained resilient. In Q1 2021, the income from revaluation amounted to €200.9m representing a like-for-like value uplift of +2.7% for the quarter. As at 31 March 2021, the fair value of Adler Group's portfolio amounted to €11.7bn (31 December 2020: €11.4bn). The portfolio comprised of 69,712 units (31 December 2020: 69,722 units), with 82% of fair value located in the top 13 cities in Germany.

The EPRA Net Reinstatement Value (EPRA NRV) of the portfolio amounted to €6,238m (EPRA NAV: €5,402m), which equals €53.09 per share as of 31 March 2021 (EPRA NAV per share: €45.97).

ESG firmly anchored in the long-term strategy

Earlier this month, Adler Group published its first sustainability report reflecting the sustainability efforts to date and providing a detailed overview of the most material topics: environmental protection, social affairs and corporate governance. The most important measurable ESG target Adler Group has set itself is to reduce CO2 emissions within the whole portfolio by 50% until 2030.

In the course of 2021, a detailed roadmap will be presented with all necessary steps and measures enabling the company to achieve its target to half CO2 emissions within the portfolio over the next 10 years.

Further €2.5bn refinanced in Q1 2021

Adler Group continued its substantial refinancing program to streamline the overall capital structure of the Group. In January 2021, the company placed a €1.5bn dual tranche unsecured bond across 5- and 8-year maturities with a 1.875% and 2.250% coupon to repay the remaining bridge facility and refinance existing mezzanine debt. In April 2021, Adler Group placed a €500m fixed rate senior unsecured bond with a 6-year maturity and a 2.25% coupon under its newly established EMTN programme. The proceeds were used to call and repay the EUR 450m 9.625% high yield bond issued by Consus thereby realising further EUR 33m of annualised financial synergies. Secured markets remained attractive with €500m volume secured with an average cost of debt of 1.53% in Q1 2021. Furthermore, in Q1 2021 Adler Group signed a €300m syndicated Revolving Credit Facility to provide additional liquidity, replacing the previous RCF of €150m.

Since integration of Consus in July 2020, Adler Group successfully refinanced more than €1.9bn of mezzanine debt with a weighted average cost of debt (WACD) of around 10% leading to improvement of all of the debt KPIs. As of 31 March 2021, WACD improved significantly to 2.58% compared to 3.7% at the first-time consolidation of Consus in July 2020. Weighted average debt maturity increased to 4.3 years (3.2 years as of July 2020). Following early repayment of the €450m Consus HY bond in May 2021, further improvement in debt KPIs was achieved with WACD reducing to 2.2% and average debt maturity increasing to 4.4 years. In Adler Group's continued efforts to further delever through portfolio revaluation and selective asset disposals, net LTV ratio decreased to 53.0% (50.4% excluding convertibles), compared to 53.4% as of 31 December 2020 (50.7% excluding convertibles).

Corporate structure further simplified

In April 2021, WESTGRUND Aktiengesellschaft ("WESTGRUND"), a subsidiary of Adler Group, announced a squeeze-out of the remaining minority shareholders in order to further simplify Adler Group's corporate structure. The shareholders will receive a cash compensation of €13.24 per WESTGRUND share. The resolution of the transfer shall be passed at the extraordinary general meeting of WESTGRUND, which is scheduled for 9 June 2021 and squeeze-out is expected to be completed in the second half of 2021.

Reiterating guidance for 2021

Adler Group confirms its guidance for the financial year 2021 with net rental income (€325-339m), FFO 1 (€127-133m) and dividend payout (50% of FFO 1).

Earnings call
An Analyst & Investor webcast and conference call will be held today, 28 May 2021, at 3pm CET / 2pm GMT / 9am EDT.


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28.05.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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