Adler S A : Q4 2024 Annual Results

UNAUDITED VERSION

2023

ANNUAL REPORT

INTEGRATED

2 Adler Group Integrated Annual Report 2023 Unaudited Version

Why is there still an unaudited version of the Annual Report for 2023?

A year ago, we reported on the reasons why we were unable to present audited consolidated financial statements and annual accounts for Adler Group S.A. ("the Company"). We have successfully engaged auditors to audit the consolidated financial statements and annual accounts of the Company and its group companies (collectively referred to as "Adler Group"). However, we still only have an unaudited version of the consolidated financial statements and annual accounts for 2023. Why is this the case, and what has happened?

Having spent a long time searching for an auditor, in May 2023, the local court (Amtsgeri- cht) Berlin-Charlottenburg appointed Rödl & Partner as the auditor of Adler Real Estate for the financial year 2022. In the following, we continued intensively the search for an auditor for Adler Group S.A. and other subsidiaries. On 27 November 2023, the general meeting of the Company approved the appointment of AVEGA Revision S.à r.l. as auditor for the stand- alone and the consolidated financial statements of the Company for the financial years 2022 and 2023. Three other audit firms will be responsible for the audit of the sub-areas relevant to the Group ("component audit"): Rödl & Partner for the sub-area audit of Adler Real Estate, Morison Köln AG for Consus Real Estate AG, and DOMUS Steuerberatungs-AG Wirtschaftsprüfungsgesellschaft for the individual financial statements of the German property companies of the Company.

The audit work on the financial statements for the financial year ending 31 December 2022 and 31 December 2023 has not yet been finalised. However, subject to the agreement of the Company on its Restructuring Plan, supported by and in close consultation with its bondholders, the Company has committed to submitting at least unaudited financial statements for 2023 by 30 April 2024 at latest. As part of the agreement, among other objec- tives, the Company envisages issuing audited consolidated financial statements and annual accounts for the financial years 2022 and 2023 by 30 September 2024. Until then, the Company will provide the unaudited version of its financial statements. The Company will then resubmit an audited version of the consolidated financial statements and annual accounts for the financial years 2022 and 2023.

Adler Group Integrated Annual Report 2023 Unaudited Version

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Key Figures 2023

Profit and loss statement

In EUR thousand

Income from rental activities

Adj. EBITDA from rental activities

Adj. EBITDA from rental activities margin

Adj. EBITDA Total

FFO 1 (from rental activities)

FFO 2 (incl. disposal results and development activities)

For the year ended	For the three months ended
31 Dec 2023	31 Dec 2022	31 Dec 2023	31 Dec 2022
314,656	369,354	77,615	88,037
109,558	148,235	23,464	29,999
52.3%	60.6%	47.3%	52.6%
20,629	95,080	908	15,746
(42,642)	86,779	(33,157)	18,811
(282,612)	(15,806)	(105,028)	(14,569)

Further KPIs

Residential(*)

Monthly in-place rent (EUR per m2)

Total vacancy rate

Number of units

Like-for-like rental growth (LTM)

(*) All values include ground floor commercial units and exclude units under renovation and development projects.

Balance sheet

In EUR thousand except per share data

31 Dec 2023

31 Dec 2022

7.607.58

1.1%1.3%

25,04326,202

5.1%1.5%

31 Dec 2023(*)

31 Dec 2022(*)

EPRA LTV	97.6%	74.5%
EPRA NRV	670,439	2,540,793
EPRA NRV per share (EUR)	4.42	21.62
EPRA NTA	528,527	2,440,111
EPRA NTA per share (EUR)	3.49	20.77

(*) Adjusted for BCP IFRS 5 illustration which has been disregarded; the corresponding line items have been reversed into respective balance sheet positions.

4 Adler Group Integrated Annual Report 2023 Unaudited Version

Contents

1 To our Stakeholders

06 About the Group

1. Letter from the Chairman of the Board

1. Letter from the Senior Management

1. Adler Group Share

1. Sustainability Policies(*)

1. EU Taxonomy(*)

1. Corporate Governance Report(*)

1. Summary Remuneration Report

1. Responsibility for the Environment(*)

1. Responsibility for the Society and Social Matters(*)

2 Combined Management Report

1. Fundamentals of the Group

1. Portfolio Overview

1. Economic Review

1. Material Events

1. Forecast Report
2. Opportunities and Risk Report

1. Responsibility Statement

3 Consolidated Financial Statements

1. Consolidated Statement of Financial Position

1. Consolidated Statement of Profit or Loss
2. Consolidated Statement of Comprehensive Income
3. Consolidated Statement of Cash Flows

1. Consolidated Statement of Changes in Equity

1. Notes to the Consolidated Financial Statements

4 Annual Accounts

244 Balance Sheet

1. Profit and Loss Account
2. Notes to the Annual Accounts

1. Appendix: Key Figures Sustainability(*)
2. Financial Calendar & Imprint

(*) Non-financial reporting (Corporate Governance Report Compliance report only)

Adler Group Integrated Annual Report 2023

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1     TO OUR STAKEHOLDERS

About the Group

About the Group

The Adler Group S.A. (the Company) is a Luxembourg-­ based real estate holding company with more than 500 subsidiaries (Adler Group) mainly operating in Germany. It specialises in the management and development of income-­producing,multi-family residential real estate.

Adler Group owns and manages 25,043 residential rental units, largely concentrated in Berlin (around 71% of prop- erties) and North-Rhine-Westphalia (around 28% of prop- erties). Most of the properties fall into the market segment of affordable housing.

Besides the residential rental portfolio, Adler Group owns a portfolio of development projects located in some of the largest cities of Germany. Adler Group does not intend to hold them but rather to generate cash flow and earnings through either forward sales or upfront sales.

As of 31 December 2023, Adler Group had 597 employees based in Luxembourg and in several locations across Germany.

Rental portfolio as at 31 December 2023(*)

Berlin

Oberhausen Essen

Duisburg

Dortmund

Düsseldorf

Residential rental portfolio locations

1. Residential rental portfolio showing all locations with >100 rent- al units, not considering any assets classified as held for sale.

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1     TO OUR STAKEHOLDERS

About the Group

Adler Group Integrated Annual Report 2023 Unaudited Version

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"We will continue to focus operationally on our residential assets."

1     TO OUR STAKEHOLDERS

Letter from the Chairman of the Board

Letter from the Chairman of the Board

Stefan Brendgen

Dear Stakeholders,

On 19 February 2024, I assumed the Chairmanship of the Board of Directors of Adler Group S.A. I have been a member of the Board since 21 June 2023. My predeces- sor, Professor Dr. A. Stefan Kirsten, had resigned for health reasons, having chaired the Adler Group through a highly difficult phase in the Company's history for two years. On behalf of the Board of Directors, the Senior Management, and the employees, I would like to thank Stefan very much for his work and wish him all the best.

The environment in 2023 was a very difficult one for our Adler Group: the war in Ukraine continues and the war in

Israel has been added to the complex geopolitical environ- ment, meaning that the world remains highly uncertain and unpredictable. The stock

markets have performed fairly well, but the underlying economy remains difficult. The German economy even shrank by 0.1% in 2023. Inflation is coming down, but the in-

terest rate turnaround has not yet occurred. All in all, great uncertainty remains - especially for real estate markets.

Our industry in Germany was characterised by a series of insolvencies, pressure on value and prices, an almost complete standstill in development projects and a reluctance by banks and the capital markets to provide financing. Overall, the Adler Group performed well in this complex environment in 2023. However, given the macro-economic environment, this is not reflected in the share price or the prices of our bonds. The uncertainty of investors in general obviously translates into special uncertainty about our company.

Adler was able to undertake several measures and provide more security in 2023:

We have consistently implemented the restructuring programme launched in November 2022 and will continue to do so. Not only have we successfully sold various portfolios, but we have also been able to adjust our debt structure to gain more time to resolve our indebtedness. Ultimate success of the further restructuring will of course be dependent on

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"We have consistently implemented the restructuring programme launched in November 2022 and will continue to do so."

"Adler Group will once again be audited, which is good news for us and for all stakeholders."

1     TO OUR STAKEHOLDERS

Letter from the Chairman of the Board

market developments, but Adler will be ready to act when opportunities arise.

In November 2023, a General Meeting of Adler Group S.A. confirmed AVEGA Revision as auditors for the years 2022 and 2023. The audit of the Group-relevantsub-entities will be performed by three other auditing companies for 2022 and 2023: Rödl & Partner will audit Adler Real Estate AG (after the delisting transformed into a 'GmbH'), which is no longer listed on the stock exchange, Morison Köln AG will audit Consus Real Estate AG and DOMUS Steuerber- atungs-AG Wirtschaftsprüfungsgesellschaft will audit individual financial statements of German property companies. This means that Adler Group will once again be audited, which is good news for us and for all stakeholders.

Following the implementation of the restructuring plan agreed upon in April 2023, Adler Group has taken various actions aimed at stabilising the business and managing debt maturities effectively. These measures have been instrumental in reinforcing the Group's capacity to continue as a going concern. For further details, I would like to

refer to the Letter of the Senior Management and to Note 2 (Basis of preparation) of the Consolidated Financial Statements in this Report.

We have already and will continue to adopt our structures to the re-

spective size of the Company. At the same time, we will continue to focus operationally on our residential assets, continue to complete pre-sold projects, continue to sell development projects, and continue to actively market our portfolios to further lower our indebtedness. This is a major task for our teams in the various disciplines, and I would like to thank all our employees most sincerely on behalf of the Board of Directors. They are the face of Adler in daily operations - towards our tenants, local politicians, banks and financing institutions, and construction and operations partners.

There have been changes to the Board of Directors over the course of 2023:

At the annual General Meeting in June, Dr. Heiner Arnoldi, Thomas Echelmeyer and I were appointed to the Board of Directors for a term of office until the annual General Meeting to take place in 2026. Following the departure of Prof. Dr. A. Stefan Kirsten, the Board of Di-

rectors consists of the following persons: Stefan Brendgen (Chairman and chairing the Nomination and Compensation Committee), Dr. Heiner Arnoldi (Chairman of the Investment and Finance Com- mittee), Thilo Schmid (Chair- man of the Audit Committee) and Thomas Zinnöcker, who

informed us about his intention to step down from the Board of Directors with the annual General Meeting in June 2024. From Senior Management, CEO Thierry Beaudemoulin and CFO Thomas Echelmeyer are members of the Board of Directors. The Board of Directors therefore has extensive expertise in governance, real estate, finance, and restructuring. Our Senior Management is completed by Sven-Christian Frank as CLO (Chief Legal Officer) and, since June 2023, Hubertus Kobe as Chief Restructuring Officer (CRO).

Our Company continues to face on-going challenges. We are hopeful that interest rates will decrease in 2024, and we anticipate a revival in the development and investment markets. Your Adler Group is willing to face these challenges and, where necessary, to take further steps to realign the Company. We will continue to report on this in a timely and transparent manner.

Yours sincerely, Stefan Brendgen

Mr Stefan Brendgen

CHAIRMAN OF THE BOARD OF DIRECTORS

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1     TO OUR STAKEHOLDERS

Letter from the Senior Management

Letter from the Senior Management

Thierry Beaudemoulin

Dear Stakeholders,

We write to you amidst another challenging year, marked by unprecedented geopolitical tensions and ongoing economic uncertainties. Despite the adversities, we are steadfast in our commitment to transparency and resilience in our operations, and it is with this spirit that we share with you an overview of our journey through 2023 and our aspirations for the year ahead.

The year 2023 presented us with a host of challenges, compounded by the escalation of conflicts in various re- gions, notably the wars in the Middle East and Europe.

Despite hopes for a more favourable business environment in the real estate sector, we encountered significant hurdles. Persistent high interest rates, escalating construction costs, and increased cost of capital continued to exert pressure on valuations. However, amidst these challenges, the demand for housing remained ro- bust, driven by factors such as limited new construction, net immigration-particularly from Ukraine-and growing demand in key markets like Berlin.

Despite turbulent times, our operating rental business demonstrated resilience, with strong operational key performance indicators including record-high occupancy rates of 98.9% at year-end 2023 and like-for-like rental growth of 5.1% realised during the course of the year.

Moreover, we made substantial progress in the restructuring process of our Adler Group, with the approval of the Restructuring Plan by the High Court of Justice of England and Wales in April 2023. We immediately executed the plan through the amendment of our bond terms. Alongside other significant milestones, this prompt execution underscores our commitment to navigate these challenges effectively. The decision of the Court of Appeal to set aside the sanction order in Janu- ary 2024 does not hinder our commitment: the decision has no impact on the Adler Group or the effective amendments to the bond terms.

Another important milestone was the successful conclu-

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