DGAP-News: ADLER Real Estate AG: Continued strong performance for the third quarter 2019

PRESS RELEASE

Adler Real Estate AG: Continued strong performance for the third quarter 2019

- Strong earnings growth with FFO I up 12.9% year-on-year (YoY) to EUR 62.0m driven by strong underlying like-for-like (l-f-l) rental growth

- Diluted EPRA NAV per share (excl. goodwill) 16.5% higher at EUR 23.91 (FY 2018: EUR 20.77)

- Reduction of LTV by 5.2ppts YoY to 56.2%, on track to achieve year end guidance

- Circa 71% (GAV or EUR 341.4m) of BCP's retail assets have been sold to date at an average discount of c.3.0% to book value

- ADO Group merger expected to close between 8-10 December 2019 following 100% shareholder approval and merger control clearance

- Dividend policy to be revised in 2020

Berlin, 14 November 2019 ADLER Real Estate AG (ADLER) continues to make solid progress in 2019 as evidenced by strong Q3 operational and financial performance as well as agreeing to acquire a 33% stake in ADO Properties S.A. (ADO Properties) through the acquisition of ADO Group Ltd. (ADO Group) for c. EUR 708m.

Net rental income increased by 8.3% to EUR 187.7m YoY
As of Q3 2019, ADLER's portfolio comprised of 58,089 units. Net rental income increased by 8.3% YoY to EUR 187.7m as of Q3 2019. This significant increase was driven by operational improvements achieved as a result of the internalisation of our property and facility management activities. Consequently, all our main key performance indicators improved. ADLER achieved l-f-l rental growth of 2.7%, and a 50bps YoY decrease in vacancy rate to 6.3%. The average in-place rent increased to EUR 5.57 per sqm/month (Q3 2018: EUR 5.45 sqm/month).

FFO I grew by 12.9% to EUR 62.0m
As of Q3 2019 FFO I was EUR 62.0m, representing 12.9% YoY increase (Q3 2018: EUR 54.9m). Fully diluted FFO I per share amounted to EUR 0.78 (Q3 2018: EUR 0.70). The strong growth in FFO reflects our positive operational performance and ongoing management to reduce our cost of debt.

EPRA NAV increased further by 16.5% to EUR 1,909.8m
As of Q3 2019 EPRA NAV (excl. goodwill and fully diluted) amounted to EUR 1,909.8m, a 16.5% increase compared to EUR 1,639.0m as of FY 2018. Diluted EPRA NAV per share (excl. goodwill) was EUR 23.91 (FY 2018: EUR 20.77).

LTV reduced by 5.2ppts to 56.2% compared to FY 2018
With the proceeds from the sale of the non-core portfolio and large parts of BCP's commercial portfolio ADLER was able to reduce debt. This had a positive impact on net financial liabilities and correspondingly LTV, which has reduced by 5.2ppts to 56.2% as of Q3 2019.

Portfolio activity
In the first nine months we moved significantly closer towards remaining a pure German residential real estate company. To that effect, we completed a number of sales.

Retail sales
In addition to the two transactions announced during the first half of the year, at the end of October, we sold another retail asset in Borken with a GAV of EUR 19.4m. We expect this sale to complete over the next three months as per customary market conditions.

As of November 2019, c.71% (GAV of EUR 341.1m) of the BCP's retail assets were sold at an average discount of c.3.0% to book value. We are in negotiations for the remaining assets in the portfolio with GAV of EUR 138.9m and expect to sell another part of the remaining retail portfolio by the end of 2019 or Q1 2020.

Development sales
In September, via Brack Capital Properties (BCP), we entered into a binding sale and purchase agreement with private real estate investors to dispose of one of the development projects in Düsseldorf. BCP will retain a 25% interest in the venture and the on-going management of the project. The sale price of EUR375m represents an 83% premium to H1 2019 reported book value and the proceeds amount to approximately EUR195m for the 75% stake after repayment of allocated debt.

Treasury shares exchanged for assets
As announced in July 2019, ADLER opportunistically used 980,000 of its treasury shares to pay for 61 units in Potsdam and Berlin with a GAV of EUR 37m. Treasury shares were exchanged at a price of EUR 14.5 per share which represents 20.8% premium to the then closing share price of EUR 12.00. Some 1,603,232 treasury shares remain outstanding.

Acquisition of ADO Group
The merger with ADO Group which was announced in Q3 is well underway and within the timeline originally indicated. This transformational transaction will create - on a fully consolidated basis - a German residential company with a combined real estate portfolio with a gross asset value (GAV) of EUR 8.6bn (EUR 6.2bn on a proportional consolidation basis). It will deliver greater scale and geographical diversification as well as speeding up the de-leveraging process and accelerating changes to our dividend policy.

ADLER will be looking to pass on the future dividend received from ADO Properties to its own shareholders. The purchase price represents an 18% discount to ADO Properties' H1 2019 reported EPRA NAV and an implied underlying residential real estate asset value of EUR 2,088/sqm which we believe is an exceptional entry price for good quality assets in Berlin.

ADLER has received merger control clearance and approval for merger by ADO Group's shareholders at its EGM on 7 November 2019. The merger is expected, therefore, to close between 8-10 December 2019, 30 days after the EGM as required by Israeli law.

The complete financial report of ADLER Real Estate AG is available on the company's website (www.adler-ag.com).

Your contact for media enquiries:

Bellier Communication
Emma Villiers
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T: +44 (0)20 7947 4076
M: +44 (0) 7799 133387

Key financial data 9M 2019