DGAP-News: ADLER Real Estate AG: First half year 2018: Boost to growth through first-time consolidation of Brack Capital Properties and ADLER operational performance

First half year 2018: Boost to growth through first-time consolidation of Brack Capital Properties and ADLER operational performance

- Net Rental Income increased by 32.1 percent yoy to EUR 109.1 million

- FFO I grew by 123.6 percent yoy to EUR 35.1 million

- Diluted EPRA NAV (excl. Goodwill) increased by 11.7 percent to EUR 17.17

- WACD reduced to 2.26 percent per annum and ICR increased to 2.27x

Berlin, 31 August 2018 - During the first half of 2018 ADLER Real Estate AG registered significant growth through the first-time consolidation of Brack Capital Properties N.V. (BCP), and through its on-going focus on operational performance.

Net rental income increased by 32.1 percent to EUR 109.1 million compared to the same period in previous year
At the end of the first half year 2018, ADLER Real Estate operated a portfolio comprising of 62,059 rental units, 23.4 percent more than the same period a year ago. The portfolio growth is primarily attributable to the acquisition of BCP. However, whilst this acquisition contributed to growth, ADLER Real Estate also showed significant operational performance on a like-for-like basis. The average rent per square meter per month in ADLER's core portfolio increased from EUR 5.07 to EUR 5.26 which corresponds to a 3.7 percent growth rate. The occupancy on ADLER's core portfolio also increased by c.0.50 percentage points. With the inclusion of BCP the average rent per square meter across the core portfolio reached EUR 5.40. The corresponding occupancy rate increased by 1.6 percentage points to 92.3 percent.

The strong portfolio growth was the main driver for the increase in net rental income, which stood at EUR 109.1 million in the first half of 2018 and thus 32.1 percent higher than in the same period during the previous year (EUR 82.6 million). In addition, net rental income also increased as ADLER was able to improve the operational performance through successful re-letting resulting from the internalization of property and facility management.

Net of expense items, which comprise recoverable and non-recoverable operating costs and maintenance expenses, earnings from property lettings amounted to EUR 96.5 million in the first half of 2018, 61.1 percent more than in H1 2017 (EUR 59.7 million).

FFO I grew by 123.6 percent to EUR 35.1 million
FFO I for the first half of 2018 amounted to EUR 35.1 million with a contribution from ADLER on a standalone basis in an amount of EUR 27.5 million including the financial expenses incurred to acquire BCP, which in turn has contributed in an amount of EUR 7.6 million. Compared to the corresponding figure of the previous year (EUR 15.7 million), FFO I has thus more than doubled.

Basic FFO I per share amounted to EUR 0.53 as of June 30, 2018 compared to EUR 0.23 one year ago. On a fully diluted basis FFO I per share increased to EUR 0.44 compared to EUR 0.19 for the first half year 2017.

EPRA NAV increased further to EUR 1,228.6 million
At the end of the first half 2018, EPRA NAV (excl. Goodwill) amounted to EUR 1,228.6 million, EUR 122.6 million more than what had been achieved at the end of last year (EUR 1,106.0 million). This corresponds to an increase of 11.1 percent. On a fully diluted basis and excluding Goodwill the value per share shows EUR 17.17.

WACD was further reduced to 2.26 percent and ICR increased to 2.27x
As of the first half of the year, the calculation of the Weighted Average Cost of Debt (WACD) including the liabilities of BCP was reduced to 2.26 percent compared to 2.72 percent at the end of the previous year. A positive impact resulted from the sizeable repayment of higher yielding promissory notes (Schuldscheindarlehen), the timely redemption of the 2013/2018 bond and the premature redemption of EUR 200 million of the 2015/2020 bond. The aforementioned liability management and operational performance contributed to a significant improvement to the company's Interest Coverage Ratio (ICR) which increased from 1.53x to 2.27x compared to the previous year.

Tomas de Vargas Machuca, Co-CEO of ADLER real Estate AG commented: "Through the acquisition of BCP, ADLER has once again delivered growth. With this latest acquisition we have significantly improved FFO, as well as our WACD and ICR - key metrics that rating agencies utilize when assessing the quality of an enterprise and are therefore working towards obtaining an Investment Grade rating.

Maximilian Rienecker, Co-CEO of ADLER Real Estate AG, added: "In the first three months in ̶which BCP has become part of the ADLER Group, all our expectations have been met. We are all set to develop our company in the right direction and look forward to unlocking synergies and economies of scale."

The complete financial report of ADLER Real Estate AG for the first half year 2018 is available on the company's website (www.adler-ag.com).

Your contact for enquiries:

Dr. Rolf-Dieter Grass
Head of Corporate Communication
ADLER Real Estate AG
Tel: +49 (30) 2000 91 429
r.grass@adler-ag.com

Key financials H1 2018