The ailing Adler Group has corrected the value of its real estate in the balance sheet by around one billion euros. The result is a high loss. The group also has to sell more apartments.
The crisis of the real estate group Adler Group continues. In the balance sheet for the first half of the year, the company had to write down the value of its real estate portfolio by around one billion euros. That’s why Adler is slipping deeper into the red. The devaluations made led to a valuation of the entire portfolio of 6.4 billion euros, Adler said. At the end of 2022, the value was still 7.4 billion euros.
Less income from rentals
From January to June, the bottom line was a minus of around one billion euros. A year ago, the loss was still around 604 million euros. Net rental income fell in the first six months year-on-year from EUR 131 million to EUR 108 million.
The key operating earnings indicator FFO I (“Funds from Operations”) from letting fell from 50 million to 8 million euros. The decline reflects the significantly reduced rental portfolio after the portfolio sales last year and increased financing costs, it said.
The Management Board confirmed the outlook for 2023 and expects further net rental income in the range of EUR 207 million to EUR 219 million. At the end of the first half of the year, the Adler Group still had liquid funds of EUR 231 million.
Group wants to reduce debt
According to its own information, the Adler Group still has almost 26,000 apartments and intends to concentrate primarily on real estate in Berlin as part of its conversion in the future. To do this, Adler has to sell more apartments. But that’s difficult at the moment. The transaction markets are “still dried up,” said CEO Thierry Beaudemoulin. That’s why Adler is concentrating on liquidity management, “which is still our top priority.”
The focus of the group continues to be on reducing debt through the sale of assets and portfolios. The Adler Group is currently receiving early repayment of an intercompany loan from its subsidiary BCP in the amount of EUR 75 million, the company said.
Attestation denied
The entire real estate industry is currently in crisis. Loan interest rates are rising, as are construction costs, which makes new investments significantly more expensive. In addition, real estate prices are falling in many places and demand is weakening. Recently, project developers have repeatedly slipped into bankruptcy.
The Adler Group has been ailing for years. Most recently, the company wrote an annual loss of around 1.7 billion euros. KPMG’s auditors had refused to issue an attestation for the 2021 annual financial statements, among other things. In June, investigators searched the offices of the subsidiary Adler Real Estate on suspicion of false accounting, market manipulation and breach of trust. A spokesman for the parent company, the Adler Group, said at the time that the company was fully cooperating with the authorities.