DGAP-News: Adler Group S.A. / Key word(s): Half Year Results Adler Group S.A. raises Guidance for FY 2021 underpinned by strong operational and financial performance 2021-08-31 / 07:00 The issuer is solely responsible for the content of this announcement.

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Adler Group S.A. raises Guidance for FY 2021 underpinned by strong operational and financial performance

- Management increases FY 2021 Guidance with NRI target of EUR340-345m and FFO 1 target of EUR135-140m. Dividend to increase from EUR0.46/share paid over 2020 to EUR0.57-EUR0.60/share thanks to the anticipated increase in FFO - implying dividend growth of c.27%

- Strong performance across yielding portfolio through sector leading like-for-like ("LFL") rental growth of +4.3% YoY, fuelling LFL fair value uplift of +6.4% YoY

- Significant progress on non-strategic assets disposals with a volume of EUR503m YTD

- Following successful completion of EUR2.5bn refinancing in H1 2020, debt KPIs further improved bringing average cost of debt to 2.1%

- Strong ESG rating ranking Adler Group within the top 5% of real estate companies globally Berlin, 31 August 2021 - Adler Group S.A. ("Adler Group") has made a promising start to the new financial year with a strong and sector leading performance of its yielding portfolio, with LFL rental growth of +4.3% and LFL portfolio valuations uplift of +6.4%, alongside a successful capital rotation of c.EUR503m of non-strategic asset disposals YTD.

Management is increasing Guidance for the FY 2021, with a new Net Rental Income target of EUR340-345m and FFO 1 target of EUR135-140m whilst adding additional KPIs to the Guidance on the back of better than expected operational performance of the overall portfolio as well as stronger demand for its non-strategic development assets.

Maximilian Rienecker and Thierry Beaudemoulin, Co-CEOs of the Adler Group, explain: "We are very pleased that our strategic repositioning and M&A integration efforts are beginning to bear fruits and, supported by a strong market environment, we expect a correspondingly positive further development for the second half of 2021."

New sustainability rating from Sustainalytics ranks Adler Group in the top 5% of real estate companies globally following its strong Environmental commitment, clear Social consciousness and robust Governance practices.

Outstanding portfolio performance

Net rental income increased to EUR174.0m in H1 2021 from EUR114.8m in H1 2020, primarily due to strong portfolio performance with +4.3% like-for-like ("LFL") rental growth and the first-time consolidation of ADLER Real Estate AG (" Adler RE") at the beginning of April 2020.

EBITDA from rental activities increased by 45.5% to EUR112.5m in the first half of 2021 compared to EUR77.3m in the same period of the previous year. FFO 1 (from rental activities) increased to EUR67.8m in H1 2021 compared to EUR44.3m in H1 2020, corresponding to a FFO 1 per share of EUR0.58 (H1 2020: EUR0.88 per share).

Market leading LFL rental growth of +4.3%, driven by capex & re-letting (2.6%) and indexation (1.8%), was fuelled by a +4.0% growth in Berlin and stronger +4.6% growth across all remaining cities. Such performance still provides ample growth potential, which following cancellation of Berlin rent freeze in April 2021, provides a blended reversionary potential of approximately 20% to current market rents across the entire residential portfolio.

The average in-place rent of the rental portfolio increased to EUR6.55/sqm/month as of Q2 2021 (Q2 2020: EUR6.20/sqm/ month) as a result of successful active portfolio management and selective capital recycling measures, notably the disposal of 6,729 units located in smaller cities with lower growth potential and higher average vacancy rate. The vacancy rate decreased by 1.8ppts YoY from 5.6% to 3.8% mainly driven by success in letting of our Berlin development project Riverside. Vacancy is slightly higher compared to 3.4% in Q4 2020 due to seasonal effects and is expected to continue its downward trajectory for the remaining of the year.

Valuations remained resilient in H1 2021. The income from revaluation amounting to EUR479m representing a LFL fair value increase for the residential yielding portfolio of +6.4%. As at Q2 2021, the fair value of the portfolio amounted to EUR12.6bn (Q4 2020: EUR11.4bn). The yielding residential portfolio comprised of 69,701 units accounting for 82% of the fair value. The number of units has come down by 4,981 (Q2 2020: 74,682 units) following active capital recycling exercise in the last year.

The EPRA NRV of Adler Group amounted to EUR6,543m (EUR55.68 per share) representing an increase of 8.4% compared to FY 2020 EPRA NRV of EUR6,037m (EUR51.38 per share). The EPRA NTA for H1 2021 amounted to EUR4,950m (EUR42.12 per share) representing an increase of 11.4% versus FY 2020 EPRA NTA of EUR4,443m (EUR37.81 per share). Riverside Berlin Development fully leased

Following the lease of the 213 co-living apartments, all residential units of the development project Riverside in Berlin have been fully leased and are generating annual net rental income of EUR10.4m. This project alone accounts for circa 3% of total rental income and a significantly higher EBITDA margin given the 100% occupancy, lower maintenance and lower management costs given the concentration.

Sale of non-strategic assets YTD gathers pace

In the first half of the year, Adler Group continued to progress with its active capital recycling strategy and in total sold non-strategic yielding residential assets with a value of EUR95m. Following reporting date, speed of disposals gathered pace with an incremental EUR408m of non-strategic development projects sold around book value, totalling a EUR503m of disposals year-to-date. Significant progress across build-to-hold and build-to-sell divisions

Build-to-hold

The municipality of Hamburg has approved the urban development plan for the Holsten Quartier, one of Adler Group's major Build-to-hold development projects (GAV of EUR364m). Construction is expected to start in 2022 and, once completed, it is expected to have c.1,600 units.

In addition, a significant milestone was achieved for Grand Central development project in Duesseldorf, (GAV of EUR208m) as the building permit was obtained and start of construction is now scheduled for 2022, with expected delivery of c.900 new residential units.

Lastly, five Build-to-hold projects with a total GDV of EUR705m are already under construction.

Build-to-sell

Three forward sales projects with a total GAV of EUR172m are on track to be completed by the end of the year. Additionally, Adler Group will be handing-over to retail buyers three condominium projects (Palatium, Dreizeit and Westend) with a GAV of EUR139m in the next couple of months. New ESG rating, ranking Adler Group in the top 5% of global real estate companies

Following publication of its first sustainability report, published in May 2021, Adler Group has received external recognition for all the efforts put into increasing transparency around ESG and its improvements already implemented, particularly when it comes to corporate governance.

Sustainalytics assigned new rating to Adler Group of 10.7, ranking the company as the 46th best real estate company in Sustainalytics' global coverage of 1,001 real estate companies which represents a very strong rating, positioning the company in the top 5% of the real estate coverage.

Most recent accomplishments include improvement of ESG oversight, by establishing an ESG Board which is led by Sven-Christian Frank, Chief Legal Officer and reports directly to the senior management of the company and is in charge of all ESG related activities in the company.

Furthermore, Adler Group has become a member of the UN Global Compact and subscribes to the targets of the organisation.

The company has also become a member of the German Association of Sustainable Building (DGNB). It has committed itself that all new buildings will comply with the DGNB Gold standard or the comparable LEED standard, building carbon-neutral houses for the better future. A similar certification shall be obtained for all major modernisation projects, including energetic improvements of existing buildings, aiming to modernise around 1% of its residential portfolio each year. In H1 2021 EUR2.5bn of debt refinanced

Adler Group continued its substantial refinancing program to streamline the overall capital structure of the Group. In January 2021, the company placed a EUR1.5bn 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 EUR500m 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 EUR500m volume secured with an average cost of debt of 1.53% in Q1 2021. Furthermore, in Q1 2021 Adler Group signed a EUR300m syndicated Revolving Credit Facility (RCF) to provide additional liquidity, replacing the previous RCF of EUR150m.

Since integration of Consus in July 2020, Adler Group successfully refinanced more than EUR1.9bn 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 Q2 2021, WACD improved significantly to 2.1% 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). Management sees no refinancing risk as most of the early maturing debt has either already been refinanced or is fully covered by EUR370m of cash on hand.

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August 31, 2021 01:00 ET (05:00 GMT)