Adler Group S.A. meets 2021 FFO 1 guidance supported by positive operational performance

• Like-for-like rental growth of +2.5% compared to 2020, vacancy rate significantly reduced to 1.1%
• FFO from rental activities (FFO 1) up by +28% to €137.1m
• Strategy of focusing on residential real estate in top German cities consistently implemented: strategic asset disposals of c. €2.3bn completed above book value
• Loan-to-value stood at 50.9% as of 31 December 2021
• Goodwill impairment significantly impacts consolidated result
• Solid liquidity position at €556m as of 31 December 2021
• Dividend proposal to be announced before AGM on 29 June 2022

Luxemburg, 30 April 2022: Adler Group S.A. ("Adler Group") can look back on a successful operating business in the financial year 2021. With net rental income amounting to €346.2m (+18% compared to previous year) and funds from operations from rental activities (FFO 1) in the amount of €137.1m (+28%), the Company achieved its guidance for the financial year 2021. The FFO 1 per share was at €1.17 (2020: €1.34). On a comparable basis, net rental income of the yielding assets portfolio was up +2.5% compared to the previous year. Non-cash value adjustments on goodwill significantly affect the reported result for the year.

"The operational basis of Adler Group is stable and robust, and we are making progress in improving our capital structure", Maximilian Rienecker, Co-CEO of Adler Group states. Co-CEO Thierry Beaudemoulin adds: "Adler Group has a valuable core portfolio and attractive project development pipeline in top locations."

EBITDA from rental activities increased by +22% to €227.7m in 2021, representing a margin of 65.8% (2020: 63.7%). The average rent per square-meter grew significantly from €6.30 to €7.45 over the course of the year on the back of sizable non-strategic disposals. At the same time, the operational vacancy rate of the core portfolio fell from 3.4% as at end of 2020 to just 1.1% as at 31 December 2021, which is an extremely low figure compared with other listed housing companies. The announced disposals of non-strategic portfolios with higher vacancies have been reflected in these improvements.

Fair value uplift by +10.1% of yielding portfolio in 2021

At the end of the financial year 2021, on a like-for-like basis, the fair value of the yielding portfolio increased by +10.1% compared to the end of previous year. The fair value of the entire portfolio including developments was at €10.0bn (year end 2020: €11.7bn). As at 31 December, the core yielding portfolio consisted of 27,469 units, which was significantly lower than one year before (69,722). This decrease is mainly driven by the announced portfolio disposals to LEG and Velero/KKR as well as the anticipated exercising of LEG's option for the remainder of the Company's 63% stake in Brack Capital Properties N.V. (which has been accounted under assets held for sale per FY21). The remaining portfolio will be supplemented in the coming years by the new apartments from the build-to-hold project developments. The entire build-to-hold development pipeline of Adler Group consists of approx. 6,000 units and is complemented by additional 10,000 units in the build-to-sell segment.

The EPRA NTA amounted to €4,269m (€36.33 per share) at year-end 2021, compared to €4,419m (€37.60 per share) in the previous year.

Strategic focus on German top cities implemented

To focus on Germany's top cities and metropolitan regions stands at the core of Adler Group's strategy. Furthermore, the Company aims to further reduce the leverage by using the proceeds from the sale of non-strategic portfolios. In the last quarter of 2021, Adler Group announced the sale of two large residential portfolios together comprising c. 29,800 units. Both sales, one of which has been closed with effect on the balance sheet in the financial year 2021, with a combined total volume of c. €2.3bn were signed with a premium versus latest appraised book values, thereby confirming the robustness of the asset valuations in general. As of today, 97% of the asset-deals signed with Velero/KKR have closed while the complete asset management has already been transferred. The remainder is expected to close in the coming months subject to receiving consent of municipalities with a right of first refusal.

The Group also continues to dispose of non-strategic development projects in order to further reduce debt and decrease its development exposure. While six forward and condo sales projects have been completed and delivered since the beginning of 2021, the Company made progress on a number of upfront disposals with five sales and additional disposals expected to be singed in Q2 2022.

As of 31 December 2021, the Loan-to-value (LTV) ratio of Adler Group was at 50.9% (2020: 54.3%), including convertibles.

Impairment on goodwill

The profit / loss before tax of €-1,023m (2020: €+383m) includes the effects of an impairment on the goodwill relating to the acquisition of Consus Real Estate AG in the amount of €1,083m. The need for impairment was mainly due to effects from increased construction costs and a significant reduction in the expected project development volume.

The impairment influences the unencumbered asset ratio of the Adler Group, which was below 125 percent as of 31 December 2021. In the covenants of one bond issued by Adler Group's predecessor company ADO Properties S.A., it is defined that in such case no additional funds can be raised by the Adler Group, while refinancing is still possible. In particular, falling below the threshold expressly does not constitute an event of default.

Outlook

Following significant disposals made from the yielding asset portfolio, Adler Group expects to generate net rental income for 2022 in the range of €203-212m and FFO 1 in the range of €73-76m. In the coming weeks, the Company will carefully determine its dividend proposal, taking into account the Company's new environment, and will announce its proposal by the Annual General Meeting to be held on 29 June 2022.

Adler Group S.A. has received as a result of the audit a disclaimer of opinion for the consolidated financial statements and the annual accounts 2021 by its auditor. The auditor was not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these annual accounts. The company has published its audited consolidated financial statements and its audited annual accounts 2021 on 30 April 2022 and therewith complied with the reporting obligations under the terms of its outstanding bonds.

The annual report and consolidated financial statements for 2021 is available on the Company's website (www.adler-group.com).

Earnings call

An Analyst & Investor webcast and conference call will be held on 3 May 2022, at 10:00am CET / 9:00am BST.

Contact

Investor Relations:
T +352 278 456 710
F +352 203 015 00
E investorrelations@adler-group.com