Quarterly Report • May 13, 2016
Quarterly Report
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Q1/2016
This document is a non-binding translation only. For the binding document please refer to the German version, published at www.adler-ag.com
ADLER Real Estate AG, headquartered in Frankfurt am Main with administrative headquarters in Hamburg, focuses on the acquisition, management and privatization of residential property. ADLER mainly invests in portfolios or investments in residential real estate companies in B-locations of metropolitan areas, which have a positive cashflow and a sustained appreciation potential.
The ADLER subsidiary Accentro Real Estate AG is one of the largest German residential property privatisation companies. Accentro markets suitable residential properties from the ADLER Group holdings, in a targeted manner, to third parties owner occupiers and investors wishing to provide for their retirement.
In addition, ADLER holds a 23.5 per cent (as of December 31, 2015) stake in conwert Immobilien Invest SE, Vienna, one of the leading real estate companies in Austria. conwert holds more than 82 per cent of its property portfolio in Germany, many of them in A-cities.
With around 50,000 residential units, ADLER is among the five largest listed German residential property companies. In addition to the listing in the FTSE EPRA/NAREIT Global Real Estate Index in London and in the GPR General Index, ADLER's shares are listed in the Small Cap Index, the SDAX of the German Stock Exchange.
| In EUR '000 | 01.01.2016 | 01.01.2015 |
|---|---|---|
| Consolidated Statement of Income | – 31.03.2016 | – 31.03.2015 |
| Gross rental income | 42,036 | 25,208 |
| Income from the sale of properties | 21,633 | 7,663 |
| EBIT | 32,964 | 60,415 |
| Consolidated net profit | 4,480 | 42,904 |
| FFO I | 5,663 | 3,784 |
| FFO I per share in€EUR1) | 0.12 | 0.12 |
| FFO II | 8,871 | 3,035 |
| FFO II per share in€EUR1) | 0.19 | 0.09 |
| Consolidated balance sheet | 31.03.2016 | 31.12.2015 |
| Investment properties | 2,279,757 | 2,270,187 |
| EPRA NAV | 882,730 | 879,457 |
| EPRA NAV per share in EUR1) | 15.57 | 15.51 |
| LTV in %2) | 67.25 | 67.96 |
| 01.01.2016 | 01.01.2015 | |
| Cash flow | – 31.03.2016 | – 31.03.2015 |
| Net cash flow from operating activies | 18,811 | 4,851 |
| Net cash flow from investing activities | 14,030 | -70,847 |
| Net cash flow from financing activities | -14,602 | 60,611 |
| Portfolio | 31.03.2016 | 31.12.2015 |
| Number of residential units under management | 51,613 | 51,938 |
| thereof proprietary units in existing portfolio | 48,055 | 48,218 |
| thereof proprietary units for privatisation | 1,804 | 1,934 |
| Number of units sold | 193 | 3,726 |
| thereof privatised units | 180 | 600 |
| thereof non-core units sold | 13 | 3,126 |
| Contractually secured units3) | 502 | 572 |
| Occupancy rate in %4) | 88.8 | 88.8 |
| Monthly in-place rent5) in€EUR/m² | 4.94 | 4.93 |
| Employees | 31.03.2016 | 31.12.2015 |
| Number of employees | 309 | 268 |
| FTE´s (Full-time-equivalents) | 284.4 | 248.6 |
1) based on the number of shares outstanding at the reporting date
2) excluding convertible bonds
3) transfer of benefits and obligations still outstanding at the reporting date
4) proprietary rental units
5) in-place rent at the respective reporting date
| Federal State as at 31.03.2016 |
Rental units |
Propor tion of total portfolio in % |
Total rental area in m² |
Propor tion of total portfolio in % |
Average rent1) in EUR per m² |
Occupan cy rate in % |
Market value in EUR |
|---|---|---|---|---|---|---|---|
| Lower Saxony | 16,585 | 34.5 | 1,027,559 | 33.9 | 4.84 | 90.4 | 731,197 |
| North Rhine Westphalia | 9,714 | 20.2 | 670,749 | 22.1 | 5.02 | 89.0 | 532,895 |
| Saxony | 7,569 | 15.8 | 471,951 | 15.6 | 4.68 | 85.3 | 297,756 |
| Saxony-Anhalt | 3,787 | 7.9 | 216,029 | 7.1 | 4.61 | 84.1 | 130,003 |
| Brandenburg | 3,684 | 7.8 | 225,232 | 7.3 | 4.50 | 87.5 | 148,532 |
| Thuringia2) | 1,694 | 3.5 | 93,438 | 3.1 | 5.41 | 91.9 | 73,809 |
| Berlin2) | 1,542 | 3.2 | 102,690 | 3.4 | 5.41 | 98.2 | 115,000 |
| Mecklenburg Western-Pomerania |
1,509 | 3.1 | 83,538 | 2.8 | 5.15 | 86.6 | 53,622 |
| Schleswig-Holstein | 689 | 1.4 | 38,354 | 1.3 | 5.84 | 94.1 | 36,245 |
| Rhineland-Palatinate | 594 | 1.2 | 38,662 | 1.3 | 6.89 | 92.9 | 48,704 |
| Hesse | 434 | 0.9 | 41,878 | 1.4 | 6.83 | 85.4 | 47,019 |
| Bavaria | 161 | 0.3 | 14,158 | 0.5 | 5.64 | 83.9 | 10,657 |
| Baden-Württemberg | 45 | 0.1 | 3,374 | 0.1 | 7.69 | 80.1 | 5,264 |
| Bremen | 48 | 0.1 | 2,377 | 0.1 | 5.29 | 93.7 | 1,598 |
| Total | 48,055 | 100.0 | 3,029,989 | 100.0 | 4.94 | 88.8 | 2,232,301 |
| Additional rental areas | Rental units |
|---|---|
| Acquired rental units, transfer of benefits and obligations still outstanding | 502 |
| Privatisation portfolio ACC ENTRO Real Estate AG3) |
1,804 |
1) target rent for the leased units as at 31.03.2016
2) excluding project developments
3) primarily Berlin
| 10-11 Letter from the Management Board |
|
|---|---|
| ------------------------------------------- | -- |
| Foundations of the Group | 12 |
|---|---|
| Business model | 12 |
| Management System | 15 |
| Employees | 16 |
| Development on the stock markets and capital markets | 17 |
| Shareholder structure | 19 |
| Economic report | 20 |
| General economy and the property market | 20 |
| Economic development of the Group | 21 |
| Opportunities and risk | 22 |
| Report on post-balance-sheet date events | 22 |
| Report on expected developments | 23 |
| Results from operations, Net assets, Financial position | 24 |
| Results from operations | 24 |
| Net assets | 28 |
| Financial position | 30 |
| Consolidated balance sheet (IFRS) as at 31 March 2016 | 32 | |
|---|---|---|
| Consolidated statement of comprehensive income (IFRS) | ||
| for the period from 1 January to 31 March 2016 | 34 | |
| Consolidated statement of cash flows (IFRS) | ||
| for the period from 1 January to 31 March 2016 | 35 | |
| Consolidated statement of changes in equity (IFRS) | ||
| for the period from 1 January to 31 March 2016 | 36 | |
| 38–48 | Selected Notes on the Group interim financial statements in accordance with IFRS as at 31 March 2016 |
|
| 49 | Legal remarks | |
50 At a Glance
Results from operations, Net assets and Financial position
It is now exactly four years since we realigned ADLER Real Estate AG as a residential property company. In the period since then, we have seized numerous good market opportunities and built up a residential property portfolio of around 50,000 apartments virtually from scratch. The German residential property market, which – following a long period of stagnation – has performed positively since 2009, offers good prospects for our Group and above all for gaining and retaining the trust of our investors and shareholders. At the same time, we have put in place an organisational structure that offers a strong foundation on which we are building and which will enable us to optimise and increase the earnings from our growing portfolios.
Axel Harloff, the company CEO, helped shape decisively this four-year period of particularly intense activity in the company's development. After 13 years on the Management Board, Mr. Harloff has decided for personal reasons not to extend his contract again. He will be leaving the company upon the conclusion of the Annual General Meeting on 9 June 2016. He would like to thank the company's employees, shareholders and investors, as well as the large number of external service providers, who have long accompanied ADLER and Mr. Harloff himself, and continue to do so, for their trust.
The Supervisory Board has appointed Arndt Krienen as Chief Executive Officer (CEO) and Sven-Christian Frank as a new member of the Management Board and as Chief Operating Officer (COO), with both appointments taking effect as of 9 June 2016. Mr. Frank joined the company as Director of Asset Management at the beginning of September 2015. The company will now generate benefits of scale by integrating portfolios, increasingly using in-house capacities to take over property management tasks and gradually streamlining the portfolio.
Not only that, vacant apartments will be gradually renovated and modernised to enable them to be let subsequently on attractive terms. Given current market developments, many portfolios have very good prospects of consistently raising rents. In the current year already, the occupancy rate is set to rise by two percentage points to 90.8 per cent while the average rent per square metre of living space should increase by around two per cent to EUR 5.04/m².
These measures – together with the fact that the previous year's acquisitions will be included in the company's figures for the first full year in 2016 – will lead to further substantial growth in revenues and operating earnings. ADLER Real Estate AG also intends to grow by making further acquisitions. Investments in new portfolios will still be governed by the same quality criteria as previously, while takeovers should contribute to the operating cash flow or offer notable potential for value appreciation.
Dr. Dirk Hoffmann, Supervisory Board Chairman of ADLER Real Estate AG, was elected to the Administrative Board of conwert Immobilien Invest SE at the extraordinary shareholders' meeting held by that company on 17 March 2016. Following his election, he is intended to support the management in implementing the set objectives and thus create added value for all of that company's shareholders.
ADLER Real Estate AG can expect to benefit once again from strong underlying conditions in 2016. The ongoing favourable interest rate climate will allow the company to further optimise its borrowing costs and finance acquisitions. Housing markets in Germany, and especially in conurbations, are still characterised by strong demand. This is now also noticeable in B and peripheral locations, where ADLER Real Estate AG has a large share of its holdings. We expect another good year.
Kind regards
Axel Harloff Arndt Krienen Management Board Member Management Board Member
ADLER Real Estate AG is focusing on building up a residential property portfolio, portfolio management and optimising and trading in residential property throughout Germany. With a portfolio of around 50,000 residential and commercial units at the end of March 2016, ADLER was one of the five largest listed Germany residential property companies. Shares in the company are listed in the SDAX, the small cap index of the German Stock Exchange in Frankfurt.
ADLER primarily invests in residential property portfolios in B locations and on the edges of large conurbations which generate positive cash flows after all running costs. The company is also consistently acquiring residential properties in so-called A cities, especially Berlin. This is to boost holdings at its subsidiary ACCENTRO Real Estate AG, which operates successfully in the socially responsible privatisation of residential properties. ADLER also aims to selectively expand its property holdings in other A cities for its Rental portfolio and thus benefit from the sharp appreciation in value of these units.
As a fast-growing property company, ADLER offers residential properties in selected regions in Germany. The apartments in ADLER's portfolio have an average size of around 60 m² and have two or three main rooms. This means that they are ideally sized for the strongest demand groups in the market, namely young or elderly people living alone, single parents with one or two children, immigrants and tenants from income groups that can only afford smaller apartments given the development in rental prices.
ADLER is a top-performing portfolio manager that, as well as rapidly expanding its portfolio, is based on an organisation that manages its core business – letting affordable living space. As a residential property owner, ADLER operates in a market shaped by the following major trends:
ADLER divides its activities into two business segments: Rental and Trading.
In its Rental segment, ADLER concentrates on establishing and expanding a residential property portfolio in select regions of Germany. ADLER primarily acquires investments in portfolios in B locations of German conurbations. It preferably aims to acquire majority shareholdings to enable it to sustainably exploit value appreciation potential and exercise sufficient influence to ensure optimal management of the portfolios. The aim is to enhance occupancy rates at the residential portfolios, i.e. to reduce existing vacancy rates with a range of optimisation measures. To this end, ADLER plans investment programmes that enable the apartments to be more easily let in the competition for tenants and thus continually increase existing rental income. Value appreciation potential is also tapped by using any free land, empty building lots or expansion reserves with a range of construction measures or by implementing energy-efficient refurbishment measures. Rental
| Trading | The Trading segment of the Adler Group is primarily covered by the majority interest in the listed company ACC ENTRO Real Estate AG. This encompasses trading in residential properties and individual apartments. ACC ENTRO mar kets suitable residential properties and individual apartments from the AD LER Group and also on behalf of third parties in a targeted manner to own er-occupiers and capital investors in Germany and abroad. According to its own assessment, ACC ENTRO is Germany's largest privatiser of residential property. |
|---|---|
| Targets and strategies | The targets and associated strategies of ADLER Real Estate AG chiefly relate to the active fields of: ' Portfolio management ' Trading ' Financing |
| ' Acquisition |
|
| Portfolio management business strategy |
In its portfolio management, ADLER aims to achieve optimal performance and core productivity. Within the company's transparent, comprehensive and closely integrated organisational structure, this should facilitate optimal let ting and management of its residential property portfolios. Active portfolio management means that measures are continually taken to reduce vacancy rates, exploit potential for rental income growth and maintain existing portfo lios in good condition by systematically implementing maintenance meas ures while ensuring a favourable cost/benefit ratio. Building modernisation programmes, particularly energy-efficient refurbishment, enable significant value-enhancing measures to be implemented. This way, it is possible on the one hand to increase rents and on the other hand to reduce operating costs, which may account for up to a quarter of total rent, and here especially heat ing costs, to the benefit of tenants. |
| Renovation and housing modernisation measures make vacant apartments more attractive, also in competition with other providers, and thus enable the apartments to be let quickly and on good terms. Furthermore, portfolio opti misation also involves identifying properties with high vacancy rates and sub optimal links to administrative centres and then selling these on suitable mar ket terms. These measures produce the desired efficiency enhancements in terms of portfolio management and higher average occupancy rates in the overall portfolio. |
|
| Trading business strategy |
Trading with residential properties and individual apartments at the ADLER Group is primarily covered by the majority interest in the listed company AC |
CENTRO Real Estate AG. ACCENTRO markets suitable residential properties
and individual apartments from the ADLER Group and also on behalf of third parties in a targeted manner to owner-occupiers and capital investors in Germany and abroad. Based on a well-considered approach, suitable portfolios are acquired and brought to market. According to its own assessment, AC-CENTRO is Germany's largest privatiser of residential property. Low interest rates have created lively demand in the market for residential property, a development from which the privatisation business can substantially profit. Given current levels of interest rates, privatisation is also increasingly interesting for existing tenants aiming to boost their provision for retirement and avoid future rent increases by acquiring a residential property.
Financing strategy ADLER's financing plans comprise well-balanced financing structures with long-term maturities and also aim to optimise the average interest charge. These key business interests are achieved both by enhancing and optimising existing portfolios and by acquiring further value-enhancing properties. The measures taken also include refinancing existing facilities on more favourable terms. By rapidly taking up equity and debt capital, ADLER aims to be able to acquire properties at any time and also at short notice.
As well as exploiting potential for organic growth, ADLER is maintaining its acquisition policy aimed at strengthening the company's position in the market as a major property portfolio manager in the market. Given its nationwide presence and growing reputation, ADLER has access to numerous opportunities to acquire further residential property portfolios.
ADLER is able to react quickly and flexibly to any interesting acquisition opportunities and can offer sellers a high degree of transaction security. Here, the company naturally complies with the acquisition criteria it has defined to optimise the overall portfolio.
ADLER manages its property and facility management companies via a group management company. Essential to this is ADLER's central asset management, which directs the respective property management companies on site. These are generally bound by service contracts. In addition, the Group also has its own property companies that perform property and facility management for residential portfolios using in-house capacities.
Based on a real estate software that forms an integral component of the Group's IT, asset and property managers are kept permanently informed of the performance of the property portfolios. This software provides an overview at all times of the overall situation across the various portfolios, of the development in letting and rental income, and of the potential offered by de-
Financial performance indicators
velopments in rents. This way, the necessary investments can also be managed. The Asset Controlling department is responsible for controlling, analysis and reporting.
The transparent and seamless administration of the residential property portfolios and the respective management options form the basis for professionally managing resources. Not only that, they provide the foundation for integrating further portfolios. The key performance indicator in the Rental segment is cash flow on portfolio level. This is influenced by occupancy rates, termination and new letting rates, basic net rents, management and debt servicing costs. This is also reflected in the FFO I key figure.
In the Trading segment, EBIT is used as the financial performance indicator for business management purposes. EBIT is primarily determined by the proceeds from the sale of properties, which depend on factors such as the number of reservations of owner-occupied apartments by potential buyers and the actual selling prices realised. The latter is recorded in terms of both the number of apartments and sales volumes.
Furthermore, ADLER also refers to typical sector key figures, such as net asset value, funds from operations and loan-to-value as key financial management figures.
The key prerequisites for ADLER's business performance are the specialist expertise and motivation of its employees and managers, as well as customer satisfaction and thus also constitute indicators of a non-financial performance. Non-financial performance indicators
In addition, this also applies to the occupancy rate in the Rental segment, which proves stably with unchanged 88.8 per cent at the end of the first quarter 2016 across the entire portfolio (90 per cent occupancy for the core portfolio).
As a non-financial performance indicator can be highlighted the company's reputation in the Trading segment. ACCENTRO has successfully operated in the privatisation business since 1999 and based on our assessment is the market leader.
ADLER Real Estate Aktiengesellschaft does not itself have any employees. The office organisation and processing of operational tasks at Group level are largely performed via the wholly owned subsidiary ADLER Real Estate Service GmbH, for which 67 employees worked at the end of March 2016. These employees are flexibly deployed in the respective subsidiaries in line with their areas of specialism. Together with the employees at its property companies and other subsidiaries, ADLER had a total of 309 full-time and part-time employees at the end of the reporting period. Employees
Global stock markets, including the German capital market, posted a weak start to the new year. The DAX, Germany's lead index, fell by more than seven per cent in the first quarter of 2016, while the Euro Stoxx 50 index even lost eight per cent of its value. More positive developments were seen on the US stock market, which began its race to make up lost ground in March 2016 already. By the end of the quarter, the S&P 500 posted a small quarterly increase of just under one per cent.
Two factors in particular placed the European stock markets under pressure – the falling crude oil price and the great uncertainty surrounding global economic developments. Market players were concerned above all by developments in the People's Republic of China, where gross domestic product grew by just 6.7 per cent in the first quarter of 2016. This represented the lowest figure since 2009, the year after the financial crisis. The falling crude oil price, on the other hand, placed pressure on all producer countries, leading to fears that the German economy would suffer a downturn in its exports to numerous emerging economies. Terrorist attacks in Europe (Paris and Brussels) and in Istanbul, the Brexit debate and the European refuges crisis – all these factors increased insecurity among capital market players. Not only that, the financial policy situation in Greece, where gross domestic product contracted by 1.9 per cent in the first quarter of 2016, has yet to stabilise.
Having reached a low at 8,750 points in mid-February, the DAX then benefited from a turnaround that was supported once again by the central banks. While the US Federal Reserve is apparently in no hurry to press further ahead with the turnaround in interest rate policy, the European Central Bank (ECB) yet again boosted market liquidity by raising the volume of government bonds purchased each month from up to Euro 60 billion to Euro 80 billion, reducing
the base rate to zero and increasing the penalty interest charged to banks storing cash at the ECB (from 0.3 per cent to 0.4 per cent). At the same time, the concerns about the weak performance of the global economy eased, with investors now pleased about low commodity prices and greater opportunities for consumption.
Widespread insecurity among market players given weak developments on stock markets only had a temporary impact on the performance of real estate stocks. After a slight dip in February, the DIMAX ended the first quarter of 2016 at a new all-time high. Real estate stocks benefited overall from strong demand from investors on the lookout for a safe haven and a better return on their capital. Investors see residential properties in particular as standing to benefit in the medium and long term from the increase in demand resulting from immigration.
ADLER Real Estate AG and E&G DIMAX since January 2015 | January 2015 = 100
In the first quarter of 2016, ADLER's share price was unable to maintain the level reached during 2015. In parallel with the SDAX and many other indices, the share price fell consistently until the end of February. Towards the end of the first quarter of 2016, ADLER's share price stabilised slightly but no longer regained the level seen at the end of 2015.
The shareholder structure of ADLER Real Estate AG changed only slightly in the first quarter of the 2016 financial year. Asset Value Investors Ltd. increased its shareholding from 3.0 per cent to 4.7 per cent, leading to a corresponding reduction in the free float to around 43.9 per cent.
The German economy posted a good start to the new year in 2016. This is the conclusion reached by the German Bundesbank in its monthly report in April 2016. Growth was driven above all by the domestic economy, while German export growth turned out lower than in the previous year. Low energy prices and income growth accompanied by very low rates of inflation have boosted consumer confidence and consumer spending. According to the Bundesbank report, the boom also continued in the construction business, which benefited from unusual mild weather conditions.
Exports have suffered from the weakening in the global economy, a factor that has been influenced by problems in emerging economies and countries rich in natural resources, and by the slowdown in growth in the Chinese economy. This is also reflected in the subdued development in new orders at industrial companies and in the noticeable deterioration in confidence among managers at German companies. In view of this, the central bank expects Germany's rate of economic growth to slow in the second quarter of 2016. The Federal Government has nevertheless upheld its German GDP growth forecast of 1.7 per cent for the current year, but has reduced its forecast for 2017 to 1.5 per cent, down from 1.8 per cent previously.
German housing markets are characterised by unrelentingly high demand. Ongoing demand for housing in conurbations and in German A-cities is reflected above all in the marked rise in prices and rents. According to the index on the Immobilienscout24 property platform, between March 2015 and March 2016 the prices offered for newly built apartments rose by 11.9 percentage points, those for existing apartments by 17.2 percentage points and those for rental accommodation by 4.4 percentage points. Prices for existing properties in Hamburg, Frankfurt am Main and Berlin showed double-digit percentage growth, and even rose by more than 20 percentage points in Berlin and Frankfurt am Main.
Trading volumes with residential property portfolios did not rise any further in the first quarter of 2016. On the contrary, transaction volumes fell around 80 per cent short of those in the previous year's quarter, which was dominated by the takeover of the housing company Gagfah by its competitor Vonovia. According to analysis compiled by the consultancy NAI apollo group, residential property portfolio transactions with a total volume of EUR 2.2 billion were executed (previous year's quarter: EUR 10.8 billion), with no single transaction worth more than 500 million.
Based on a study compiled by the estate agents CBRE, an average price of EUR 89,000 per unit was paid for apartments in the period from January to March 2016, 45 per cent more than in the first quarter of 2015. However, this sharp increase is largely due to the fact that the previous year's quarter was dominated by large-scale transactions with comparatively inexpensive apartments, whereas the market in the first quarter of 2016 was characterised by sales of projects and smaller-scale packages of apartments.
The first quarter of the 2016 financial year was largely characterised by the ongoing consolidation and optimisation of the numerous residential property portfolios taken over in previous years. At the same time, the company did not lose sight of opportunities for further growth. Consistent with its aim of adding residential properties with especially high potential for value growth, in March 2016 ADLER Real Estate AG agreed the addition of a smaller-scale portfolio of 138 residential units in high-quality residential areas in Berlin (Moabit, Dahlem, Lichterfelde, Buckow, Schöneberg and Waidmannslust) with a total investment volume of around EUR 20 million. The transfer of Risks and Rewards will take place in the second quarter of the year. The residential properties were acquired by taking over shares in property holding companies and by direct acquisition.
The value creation strategy also involves promoting the development of conwert Immobilien Invest SE, in which ADLER acquired its current share of 22.37 per cent via its subsidiary MountainPeak Trading Ltd. in August 2015.
Dr. Dirk Hoffmann, Supervisory Board Chairman of ADLER Real Estate AG, was elected to the Administrative Board of conwert Immobilien Invest SE at the extraordinary shareholders' meeting held by that company on 17 March 2016. This offers the opportunity to contribute ideas concerning potential synergies between the companies, implementation of which may result in positive developments for both companies.
In its operating business, ADLER chiefly focused on the positive development of its residential property portfolios. The aim is to further raise occupancy rates and adjust rents in line with the market climate for the respective portfolios. Moreover, vacant properties are gradually being renovated, modernised and thus prepared to be let on attractive market terms. A corresponding investment budget of EUR 15 million in total is available for 2016.
Furthermore, the company is also integrating portfolios newly taken over, especially those contributed to the Group as a result of the takeover of Westgrund AG. To make better use of economies of scale, around 3,800 residential units were allocated to proprietary property management companies in the second half of 2015. This will enable them to be profitably managed these in 2016.
At the end of the first quarter, the occupancy rate for the total of 48,055 rental units in the ADLER Group's portfolios remained unchanged at 88.8 per cent. However the core property portfolio showed an occupancy of 90 per cent. The average rent per square metre of rental area remained stable at EUR 4.94.
To optimise its holdings, ADLER is still pursuing the objective of streamlining its portfolios to exclude non-core assets. These include apartments with loss-making management costs and excessively high spending on central property management, as well as residential units whose value development has peaked or that are awaiting privatisation. In the first quarter of 2016, ADLER parted company with 193 residential units.
ACCENTRO, ADLER's privatisation-focused subsidiary, benefited from continuing high demand for properties as a capital investment and for apartments for own use, as well as from the positive overall market climate. In the first quarter of 2016, ACCENTRO privatised 160 apartments, and thus significantly more units than in the previous year's comparative quarter (36 units). Income from privatisation-related sales surged by 581 per cent from EUR 2.7 million in the first quarter of 2015 to EUR 18.4 million in the quarter under report. The gross margin for the same period improved to 41.1 per cent (previous year's quarter: 19.6 per cent). Driven by this very promising performance, operating earnings at ACCENTRO grew to EUR 6.4 million (previous year's quarter: EUR 0.5 million). Alongside these sales, ACCENTRO also acquired 53 residential properties in the preferred Berlin districts of Dahlem, Tegel, Wedding and Spandau in the first quarter and thus increased its holdings.
No material changes have arisen in opportunities and risks compared with those presented in the management report for the 2015 financial year. There are no risks to the Group's continued existence, neither are any such risks currently discernible for the future.
No significant events requiring disclosure here occurred between the end of the period under report and the editorial deadline for this report.
Macroeconomic developments and the economic framework in Germany are expected to remain positive for the remainder of 2016 as well. Regardless of uncertainties in the global economy, which could adversely affect German exports, domestic demand and consumer behaviour are stable from ADLER's perspective. These factors are currently benefiting from low energy costs and from growing incomes that could turn out even higher in real terms given the low level of inflation. Not only that, no material change is currently foreseeable in the favourable capital market interest rate climate for refinancing property portfolios or making further acquisitions.
Against this background, ADLER expects its gross rental income to benefit from a stable to slight upward trend in the 2016 financial year as a whole. What's more, the acquisitions made in 2015 impacted on the figures for the first quarter of 2016 and will continue to do so in the overall 2016 financial year. ADLER expects to benefit both from synergies and from ongoing improvements in its operating business driven by its asset management. ADLER has budgeted an increase in its occupancy rate by two percentage points to 90.8 per cent by the end of the year accompanied by a slight increase in average rents by two per cent to EUR 5.04/m² (end of 2015: EUR 4.93/m²). Overall, gross rental income is expected to rise by approximately 20 per cent to around EUR 260 million (previous year: EUR 216.6 million).
All in all, ongoing operating improvements, average rents, occupancy rates and synergies should generate substantial growth in FFO I by around 55 per cent to around EUR 25 million in 2016. Based on current expectations and uninfluenced by any major portfolio sales, FFO II should more or less match the previous year's figure and come to EUR 45 million. A further increase may result from the strong growth in the market for apartment privatisation, particularly in Berlin, where around 90 per cent of the residential property held by ACCENTRO, AD-LER's privatisation subsidiary, is located.
ADLER will exploit the advantageous conditions on the capital markets to reduce its borrowing costs. As a result of refinancing measures, ADLER expects the average interest charge on all group liabilities (WACD) to decrease further to 3.75 per cent, or even lower, having already fallen from 4.70 per cent to 3.99 per cent in 2015. Based on ADLER's expectations, the loan-to-value (LTV) figure will reduce further to around 65 per cent (end of 2015: 67.96 per cent; end of 2014: 68.7 per cent). The company value is also set to improve, with the EPRA NAV figure expected to increase by more than 10 per cent from EUR 879 million in 2015 to around EUR 1.0 billion by the end of 2016. Overall, ADLER expects the 2016 financial year to be very solid indeed.
Gross rental income amounted to EUR 65.5 million and thus grew significantly compared with the first quarter of 2015 (+ EUR 25.3 million; + 63.0 per cent). This key figure benefited above all from the income received from the WESTGRUND portfolio, which has been included in the scope of consolidation since mid-2015. Furthermore, income from JADE, which was acquired at the end of January 2015, is also fully included for the period under report.
The most important key figures in the income statement developed as follows:
| In EUR million | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Gross rental income | 65.5 | 40.2 |
| – of which net rental income | 42.0 | 25.2 |
| Earnings from property lettings | 30.7 | 17.5 |
| Income from the sale of properties | 21.6 | 8.2 |
| Earnings from the sale of properties | 5.5 | 0.3 |
| Other operating income | 1.5 | 44.1 |
| Income from measurement of investment properties | 4.8 | 5.6 |
| Personnel expenses | 4.3 | 2.3 |
| Earnings before interest and taxes (EBIT) | 33.0 | 60.4 |
| Adjusted EBITDA | 31.0 | 13.9 |
| Financial result | 24.9 | 14.4 |
| Earnings before taxes (EBT) | 8.7 | 46.0 |
| Consolidated net profit after taxes | 4.5 | 42.9 |
| Occupancy rate in % | 88.81 | 88.13 |
| Monthly in-place rent 1) (EUR/m2) | 4.94 | 4.92 |
| Property portfolio (number of rental units) | 48,055 | 30,840 |
1) in-place rent at respective balance sheet date
Alongside the sharp increase in gross rental income to EUR 65.5 million (EUR 40.2 million)*, the expansion in the property portfolio was also reflected in a corresponding increase in expenses to EUR 34.8 million (EUR 22.7 million). As a result, earnings from property lettings grew to EUR 30.7 million (EUR 17.5 million). The strong performance at ACCENTRO contributed substantially to the growth in earnings from the sale of properties to EUR 5.5 million (EUR 0.3 million).
At EUR 1.5 million, other operating income fell markedly short of the previous year's figure (EUR 44.1 million). This variance was due to goodwill arising upon the initial consolidation of JADE (EUR 42.3 million), which was recognized as a non-recurring item for the first time in the previous year's comparative period and reported under other operating income.
At EUR 4.8 million (EUR 5.6 million), income from the measurement of investment properties remained at a low level. This is because as extensive revaluations of properties are usually performed in the middle or towards the end of the year.
Consistent with the Group's growth and the substantial expansion in its workforce, personnel expenses rose to EUR 4.3 million (EUR 2.3 million). At EUR 5.0 million, other operating expenses were only slightly higher than in the comparative period.
Overall, earnings before interest and taxes (EBIT) came to EUR 33.0 million (EUR 60.4 million). Net of the financial result, including at-equity income of EUR 24.2 million (EUR 14.5 million), and taxes, consolidated net profit amounted to EUR 4.5 million (EUR 42.9 million).
*Figures in brackets refer to the previous year's comparative period.
The increase in gross rental income (excluding changes in the value of investment property) benefited both from the positive performance of the Trading segment and from developments in the Rental segment. Income and EBIT are broken down across the two segments as follows:
| Adler Group | Trading | Rental | Other | Group | ||||
|---|---|---|---|---|---|---|---|---|
| In EUR million | 3M 2016 |
3M 2015 |
3M 2016 |
3M 2015 |
3M 2016 |
3M 2015 |
3M 2016 |
3M 2015 |
| Gross rental income and income | ||||||||
| from the sale of properties | 20.5 | 4.4 | 66.0 | 43.6 | 0.6 | 0.4 | 87.1 | 48.4 |
| thereof: | ||||||||
| Gross rental income | 1.8 | 1.2 | 63.6 | 38.9 | 0.1 | 0.1 | 65.5 | 40.2 |
| Income from disposals | 18.5 | 2.7 | 2.4 | 4.7 | 0.5 | 0.3 | 21.3 | 7.7 |
| Income from brokerage | 0.3 | 0.6 | 0.0 | 0.0 | – | – | 0.3 | 0.6 |
| Change in the value of investment properties | – | – | 4.8 | 5.6 | – | – | 4.8 | 5.6 |
| EBIT | 6.2 | 0.0 | 26.7 | 60.4 | 0.0 | -0.1 | 33.0 | 60.4 |
| Income from investments accounted for using | ||||||||
| the equity method | – | – | 0.6 | -0.1 | – | – | 0.6 | -0.1 |
| Financial result | -0.9 | -0.6 | -24.0 | -13.7 | 0.0 | 0.0 | -24.9 | -14.4 |
| Earnings before taxes (EBT) | 5.3 | -0.6 | 3.4 | 46.6 | 0.0 | -0.1 | 8.7 | 46.0 |
The earnings before interest and taxes (EBIT) of EUR 26.7 million (previous year: EUR 60,4 million) in the Rental segment contributed 81 per cent to Group EBIT. At EUR 6.2 million (previous year: EUR 0 million), the Trading segment contributed around 19 per cent to Group EBIT. The EBIT growth in the Trading segment was due to the scheduled increase in income from disposals.
FFO (funds from operations) were structured as follows for the period under report:
| In EUR million | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Consolidated net profit | 4.5 | 42.9 |
| Financial result | 24.9 | 14.4 |
| Income taxes | 4.2 | 3.1 |
| Depreciation and amortisation | 0.3 | 0.2 |
| Income from measurement of investment properties | -4.8 | -5.6 |
| Income from associates accounted for using the equity method | -0.6 | 0.1 |
| EBITDA IFRS | 28.4 | 55.1 |
| Non-recurring and extraordinary items | 2.5 | -41.2 |
| Adjusted EBITDA | 31.0 | 13.9 |
| Interest expense FFO | -19.9 | -12.7 |
| Current income taxes | -0.2 | -0.2 |
| Capitalisable maintenance | 1.0 | 2.8 |
| Earnings before interest and taxes from the sale of properties | -6.2 | 0.0 |
| FFO I | 5.7 | 3.8 |
| Earnings after interest and taxes from the sale of properties | 3.4 | -0.7 |
| Interest from companies accounted for using the equity method | -0.8 | 0 |
| Income from associates accounted for using the equity method | 0.6 | -0.1 |
| FFO II | 8.9 | 3.0 |
At EUR 3,107.6 million, ADLER's total assets grew only slightly compared with the previous year's figure (+1.0 per cent). Current assets in particular increased from EUR 297.3 million to EUR 318.0 million (+ 7.1 per cent), while at EUR 2,279.8 million investment properties were only marginally higher than in the previous year. Net assets
Of the total equity of EUR 782.8 million, EUR 723.2 million was attributable to ADLER shareholders and EUR 59.7 million to minority shareholders in companies controlled by ADLER. Details can be found in the consolidated statement of changes in equity. At 25.2 per cent, the equity ratio was virtually unchanged (31 December 2015: 25.3 per cent).
ADLER has total debt capital of EUR 2,324.8 million (31 December 2015: EUR 2,298.3 million). Of this total, 85.8 per cent involve non-current debt capital, while 14.2 per cent comprises current debt capital. Loan to Value (LTV)
The ratio of net financial liabilities to assets adjusted for cash, excluding convertible bonds, decreased from 68.0 per cent to 67.2 per cent in the reporting period.
| In EUR million | 31.03.2016 | 31.12.2015 |
|---|---|---|
| Convertible bonds | 35.4 | 35.6 |
| Bonds | 505.2 | 489.9 |
| Liabilities to banks | 1,606.7 | 1,616.6 |
| Cash and cash equivalents | -67.7 | -49.5 |
| = Net financial liabilities | 2,079.6 | 2,092.6 |
| Assets adjusted for cash | 3,039.9 | 3,026.7 |
| LTV including convertible bonds | 68.4% | 69.1% |
| LTV excluding convertible bonds | 67.2% | 68.0% |
ADLER calculates its net asset value (NAV) in accordance with the guidelines is- Net Asset Value (NAV) sued by the EPRA (European Public Real Estate Association). ADLER bases its NAV calculation on the equity attributable to its shareholders. The EPRA NAV figure rose slightly from EUR 879.5 million to EUR 884.7 million.
| In EUR million | 31.03.2016 | 31.12.2015 |
|---|---|---|
| Equity1 | 782.8 | 777.9 |
| Non-controlling interests | -59.7 | -58.6 |
| Equity attributable to ADLER shareholders | 723.2 | 719.4 |
| Deferred tax liabilities | 116.9 | 114.8 |
| Differences between fair values and carrying amounts | ||
| of inventory properties | 36.8 | 40.6 |
| Fair value of derivative financial instruments | 8.6 | 7.0 |
| Deferred taxes for derivative financial instruments | -2.8 | -2.3 |
| EPRA NAV | 882.7 | 879.5 |
| Number of shares at reporting date (46,103,237 plus 10,606,060 shares from assumed conversion of mandatory |
||
| convertible bond) | 56,709,297 | 56,709,297 |
| EPRA NAV per share in EUR | 15.57 | 15.51 |
| Number of shares at reporting date (diluted)2 | 64,051,743 | 64,051,744 |
| EPRA NAV per share (diluted) in EUR | 14.10 | 14.05 |
1) Includes equity share of mandatory convertible bond (EUR 172.5 million)
2) Including conversion of mandatory convertible bonds into 10,606,060 shares and conversion of other convertible bonds at ADLER assumed as of reporting date.
| Key figures from the cash flow statement In EUR million | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Cash flow from operating activities | 18.8 | 4.9 |
| Cash flow from investing activities | 14.0 | -70.8 |
| Cash flow from financing activities | -14.6 | 60.6 |
| Cash-effective change in cash and cash equivalents | 18.2 | -5.4 |
| Cash and cash equivalents at beginning of period | 49.5 | 33.1 |
| Cash and cash equivalents at end of period | 67.7 | 27.7 |
Due to the growth in the property portfolios, the cash flow from operating activities increased to EUR 18.8 million, up from EUR 4.9 million in the previous year's comparative period. Investing activities resulted in a further inflow of funds amounting to EUR 14.0 million. These mainly result from the sale of investment properties. These factors were opposed by the outflow of funds of EUR 14.6 million for financing activities.
The Group was at all times able to meet its payment obligations.
In EUR '000 31.03.2016 31.12.2015 Assets 3,107,607 3,076,246 Non-current assets 2,769,386 2,758,878 Goodwill 130,552 130,552 Intangible assets 1,214 1,358 Property, plant and equipment 1,354 1,269 Investment Properties 2,279,757 2,270,187 Investments in associated companies 354,271 353,343 Other financial investments 1,338 1,230 Other non-current assets 472 473 Deferred tax claims 427 465 Current assets 317,995 297,252 Inventories 152,979 159,654 Trade receivables 22,274 16,309 Income tax claims 238 243 Other current assets 74,763 71,544 Cash and cash equivalents 67,741 49,502 Non-current assets held for sale 20,226 20,117
| In EUR '000 | 31.03.2016 | 31.12.2015 |
|---|---|---|
| Equity and liabilities | 3,107,607 | 3,076,246 |
| Shareholders' equity | 782,845 | 777,921 |
| Capital stock | 46,103 | 46,103 |
| Capital reserve | 449,360 | 449,360 |
| Retained earnings | 280 | -88 |
| Currency translation reserve | 89 | 92 |
| Net retained profit | 227,320 | 223,890 |
| Equity attributable to owners of the parent company | 723,152 | 719,357 |
| Non-controlling interests | 59,693 | 58,563 |
| Non-current liabilities | 1,994,738 | 1,980,375 |
| Pension reserves | 4,216 | 4,268 |
| Deferred tax liabilities | 72,295 | 70,139 |
| Other provisions | 970 | 756 |
| Liabilities from convertible bonds | 34,813 | 34,982 |
| Liabilities from bonds | 496,823 | 481,599 |
| Financial liabilities to banks | 1,363,450 | 1,368,125 |
| Other non-current liabilities | 22,173 | 20,507 |
| Current liabilities | 315,603 | 303,529 |
| Other provisions | 2,663 | 2,688 |
| Income tax liabilities | 7,343 | 5,406 |
| Liabilities from convertible bonds | 615 | 623 |
| Liabilities from bonds | 8,387 | 8,265 |
| Financial liabilities to banks | 243,250 | 248,524 |
| Trade payables | 25,295 | 20,174 |
| Other current liabilities | 28,050 | 17,849 |
| Assets and Liabilities held for sale | 14,421 | 14,421 |
| In EUR '000 | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Gross rental income | 65,479 | 40,178 |
| Expenses from property lettings | -34,749 | -22,659 |
| Earnings from property lettings | 30,730 | 17,520 |
| Income from the sale of properties | 21,633 | 8,234 |
| Expenses from the sale of properties | -16,125 | -7,959 |
| Earnings from the sale of properties | 5,508 | 275 |
| Personnel expenses | -4,315 | -2,315 |
| Other operating income | 1,545 | 44,070 |
| Other operating expenses | -5,037 | -4,491 |
| Income from fair value adjustments of investment properties | 4,811 | 5,569 |
| Depreciation and amortisation | -278 | -213 |
| Earnings before interest and tax (EBIT) | 32,964 | 60,415 |
| Financial income | 330 | 412 |
| Financial costs | -25,207 | -14,784 |
| Net income from at-equity valued investment associates | 640 | -86 |
| Earnings before taxes (EBT) | 8,727 | 45,957 |
| Income taxes | -4,247 | -3,053 |
| Consolidated net profit | 4,480 | 42,904 |
| OC I SWAP – reclassifiable – |
118 | 85 |
| Deferred taxes OC – reclassifiable – |
-38 | -27 |
| Gains/losses from currency translation | -4 | 74 |
| Change in value of interests in companies accounted | ||
| for using the equity method | 288 | 0 |
| OCI gains/losses not reclassifiable into profit or loss | 364 | 132 |
| Total comprehensive income | 4,844 | 43,036 |
| Profit attributable to: | ||
| Owners of the parent company | 3,429 | 42,761 |
| Non-controlling interests | 1,051 | 143 |
| Total comprehensive income attributable to: | ||
| Owners of the parent company | 3,793 | 42,893 |
| Non-controlling interests | 1,051 | 143 |
| Earnings per share, basic (EUR) | 0.06 | 1.34 |
| Earnings per share, diluted (EUR) | 0.06 | 1.10 |
In EUR '000 01.01.2016 – 31.03.2016 01.01.2015 – 31.03.2015 Earnings before interest and taxes (EBIT) 32,964 60,414 + Depreciation and amortisation 278 213 –/+ Net income from at-equity valued investment associates 640 0 –/+ Net income from fair value adjustments of investment properties -4,811 -5,569 –/+ Non-cash income/expenses 1,129 -42,291 –/+ Changes in provisions and accrued liabilities 137 -1,641 –/+ Increase/decrease in inventories, trade receivables and other assets not attributable to financing activities -5,953 -9,609 –/+ Decrease/increase in trade payables and other liabilities not attributable to investment or financing activity -11,492 3,557 + Interest received 2 -55 +/– Tax payments -83 -168 = Operating cash flow before de-/reinvestment into the trading portfolio 12,811 0 –/+ Íncrease/decrease in inventories (commercial properties) 6,000 0 = Net cash flow from operating activities 18,811 4,851 – Acquisition of subsidiaries, net of cash acquired 0 -66,943 + Disposal of subsidiaries, net of cash disposed 0 2,202 – Purchase of investment properties -7,459 -1,574 + Disposal of Investment Properties, net of cash disposed 21,641 0 – Purchase of property, plant and equipment -152 -79 – Payments into short-term deposits 0 -4,453 = Net cash flows from investing activities 14,030 -70,847 + Proceeds from issue of bonds 13,930 30,500 – Proceeds from issue of convertible bonds -14 -1,756 – Interest payments -15,400 -8,134 + Proceeds from bank loans 7,730 166,772 – Repayment of bank loans -20,848 -126,771 = Net cash flows from financing activities -14,602 60,611 Reconciliation to Consolidated Balance Sheet Cash and cash equivalents at beginning of periods 49,502 33,060 Net cash flow from operating activities 18,811 4,851 Net cash flow from investing activities 14,030 -70,847 Net cash flow from financing activities -14,602 60,611 = Cash and cash equivalents at end of periods 67,741 27,675
| In EUR '000 | Subscribed stock |
Capital reserves |
|---|---|---|
| As at 1 January 2015 | 31,877 | 108,078 |
| Net result | 0 | 0 |
| Other result – reclassifiable | 0 | 0 |
| Change in scope of consolidation | 0 | 0 |
| Conversion of convertible bond | 93 | 147 |
| As at 31 March 2015 | 31,970 | 108,225 |
| As at 1 January 2016 | 46,103 | 449,360 |
| Net result | 0 | 0 |
| Other result – reclassifiable | 0 | 0 |
| Change in scope of consolidation | 0 | 0 |
| Conversion of convertible bond | 0 | 0 |
| As at 31 March 2016 | 46,103 | 449,360 |
| Capital and reserves | |||||
|---|---|---|---|---|---|
| attributable to the | Currency | ||||
| Minority | shareholders of the | Net | translation | Retained | |
| interests | parent company | profit/loss | reserve | profit | |
| 311,211 | 19,810 | 291,401 | 151,775 | 20 | -349 |
| 143 | 42,760 | 42,760 | 0 | 0 | |
| 0 | 132 | 0 | 74 | 58 | |
| 6,479 | 0 | 0 | 0 | 0 | |
| 0 | 240 | 0 | 0 | 0 | |
| 360,965 | 26,432 | 334,533 | 194,535 | 94 | -291 |
| 777,921 | 58,562 | 719,358 | 223,891 | 92 | -88 |
| 1,051 | 3,429 | 3,429 | 0 | 0 | |
| 0 | 365 | 0 | -3 | 368 | |
| 0 | 0 | 0 | 0 | 0 | |
| 80 | 0 | 0 | 0 | 0 | |
| 782,846 | 59,693 | 723,152 | 227,320 | 89 | 280 |
ADLER Real Estate Aktiengesellschaft (hereinafter "ADLER") is the parent company of the Group and has its legal domicile at Herriotstrasse 5, Frankfurt am Main, Germany. The company is entered in the Commercial Register of Frankfurt am Main District Court under HRB 7287. Its financial year is the calendar year. The company's trading address is Gänsemarkt 50, Hamburg, Germany.
ADLER is a publicly listed property company focusing on establishing and expanding a substantial and profitable property portfolio. Its activities centre on the acquisition and management of residential properties throughout Germany.
ADLER's activities have the objective of investing in residential properties that offer sustainable potential for value appreciation and whose current income contributes to the company's overall success. The company's operating strategy also includes active value creation, i.e. improving its existing residential property portfolios by means of expansion, conversion or modernisation measures.
Furthermore, ADLER's core activities also include trading with residential properties and individual apartments. Within the ADLER Group, trading activities are largely covered by the Group's majority interest in the listed company AC-CENTRO Real Estate AG.
The interim consolidated financial statements as of 31 March 2016 have been prepared in accordance with International Financial Reporting Standards (IFRS) as requiring mandatory application in the European Union. The consolidated financial statements, comprising the consolidated balance sheet, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statements and selected note disclosures, also take particular account of the requirements of IAS 34 "Interim Financial Reporting".
In accordance with IAS 34.41, greater reference is made to estimates and assumptions when preparing the interim consolidated financial statements than is the case for annual reporting. No changes in estimates with material implications for the Group's net assets, financial position and results of operations arose in the interim reporting period.
The interim consolidated financial statements have been prepared in euros (EUR), the functional currency of the Group. Unless otherwise indicated, all figures presented in euros have been rounded up or down to the nearest thousand euros (EUR 000s). Statement of thousand euro amounts may resulting in discrepancies due to rounding up or down. Figures in brackets generally refer to the previous year.
Further information about the accounting policies can be found in the consolidated financial statements as of 31 December 2015, which form the basis for these interim consolidated financial statements.
The following amendments to standards required mandatory application for the first time in the 2016 financial year and have not had any material implications for ADLER's consolidated financial statements:
Furthermore, several other amendments were introduced to standards that are basically not relevant for ADLER's consolidated financial statements:
Subsidiaries are included in the consolidated financial statements in accordance with the requirements of IFRS 10. Subsidiaries are all entities that are controlled by the Group. The Group controls an entity when it has direct or indirect decision-making powers over the respective group company in the form of voting or other rights, participates in the positive and negative variable returns from the group company and can influence these returns due to its decision-making powers. These criteria have to be cumulatively fulfilled.
Subsidiaries are included in the consolidated financial statements (full consolidation) from the date on which the Group gains control. They are deconsolidated from the date on which control ceases.
Companies over which the Group can exercise significant influence are recognised as associates using the equity method in accordance with IAS 28. Significant influence is presumed when a Group company directly or indirectly holds no less than 20 per cent but no more than 50 per cent of the voting rights.
Further information about consolidation principles can be found in the comments in the "Basis of consolidation" section of the 2015 Annual Report (Page 77 onwards).
Including the parent company, the scope of consolidation includes a total of 124 companies (31 December 2015: 122) that are fully consolidated and a further six companies that are recognised at equity.
There were no material additions or disposals in the period under report.
Other Group activities that do not constitute standalone segments are pooled in the "Other" column.
Segment reporting based on the Rental and Trading segments is consistent with the internal reporting system to ADLER's Management Board, which is the top management body pursuant to IFRS (management approach).
Income and EBIT for the period from 1 January 2016 to 31 March 2016 is broken down across the segments as follows:
| Adler Group |
Trading | Rental | Other | Group |
|---|---|---|---|---|
| In EUR '000 1 January – 31 March 2016 | 3M 2016 | 3M 2016 | 3M 2016 | 3M 2016 |
| Gross rental income and income from | ||||
| the sale of properties | 20,520 | 66,015 | 577 | 87,112 |
| thereof: | ||||
| Gross rental income | 1,751 | 63,632 | 96 | 65,479 |
| Income from sales | 18,470 | 2,383 | 481 | 21,334 |
| Income from brokerage | 299 | 0 | 0 | 299 |
| Change in the value of investment property | 0 | 4,811 | 0 | 4,811 |
| EBIT | 6,203 | 26,731 | 30 | 32,964 |
| Income from investments accounted | ||||
| for using the equity method | 0 | 640 | 0 | 640 |
| Financial result | -897 | -23,971 | -9 | -24,877 |
| Earnings before taxes (EBIT) | 5,306 | 3,401 | 21 | 8,728 |
The Trading segment generated income of EUR 20,520k in the first three months, of which EUR 18,470k (EUR 2,712k) resulted from sales. EBIT in this segment amounted to EUR 6,203k (EUR 27k) and earnings before taxes came to EUR 5,306k (EUR -571k). The sharp increase in income and EBIT in the Trading segment was chiefly due to the scheduled growth in sales of inventory properties. Revenues in the Rental segment amounted to EUR 66,015k (EUR 43,588k) and benefited from the new business resulting from the acquisition of WESTGRUND in June 2015. Three-month EBIT in this segment amounted to EUR 26,731k (EUR 60,441k), while earnings before taxes came to EUR 3,401k (EUR 46,619k). Of the higher EBIT and earnings before taxes figures for the previous year's period, an amount of EUR 42,291k resulted from the one-off collection of goodwill upon the initial consolidation of JADE.
| Adler Group |
Trading | Rental | Other | Group |
|---|---|---|---|---|
| In EUR '000 1 January – 31 March 2015 | 3M 2015 | 3M 2015 | 3M 2015 | 3M 2015 |
| Gross rental income and income from | ||||
| the sale of properties | 4,440 | 43,588 | 385 | 48,413 |
| thereof: | ||||
| Gross rental income | 1,157 | 38,901 | 121 | 40,179 |
| Income from sales | 2,712 | 4,687 | 264 | 7,663 |
| Income from brokerage | 571 | 0 | 0 | 571 |
| Change in the value of investment property | 0 | 5,569 | 0 | 5,569 |
| EBIT | 27 | 60,441 | -54 | 60,414 |
| Income from investments accounted | ||||
| for using the equity method | 0 | -86 | 0 | -86 |
| Financial result | -598 | -13,738 | -36 | -14,372 |
| Earnings before taxes (EBIT) | -571 | 46,619 | -92 | 45,956 |
Income and EBIT for the previous year's period from 1 January 2015 to 31 March 2015 is broken down across the segments as follows:
Segment assets, segment liabilities and segment investments were structured as follows as of 31 March 2016:
| Adler Group |
Trading | Rental | Other | Consolidation | Group |
|---|---|---|---|---|---|
| In EUR '000 as of 31 March 2016 | |||||
| Segment assets | 193,588 | 2,561,577 | 12,132 | -13,961 | 2,753,336 |
| Investments accounted for using | |||||
| the equity method | 1,593 | 352,678 | 0 | 0 | 354,271 |
| Total segment assets | 195,181 | 2,914,255 | 12,132 | -13,961 | 3,107,607 |
| Segment liabilities | 113,480 | 2,213,570 | 11,673 | -13,961 | 2,324,762 |
| Segment investments | 6,800 | 7,444 | 0 | 0 | 14,244 |
Segment assets, segment liabilities and segment investments were structured as follows as of 31 December 2015:
| Adler Group |
Trading | Rental | Other | Consolidation | Group |
|---|---|---|---|---|---|
| In EUR '000 as of 31 December 2015 | |||||
| Segment assets | 197,689 | 2,527,020 | 12,148 | -13,954 | 2,722,903 |
| Investments accounted for using | |||||
| the equity method | 1,593 | 351,750 | 0 | 0 | 353,343 |
| Total segment assets | 199,282 | 2,878,770 | 12,148 | -13,954 | 3,076,246 |
| Segment liabilities | 126,811 | 2,173,810 | 11,658 | -13,954 | 2,298,325 |
| Segment investments | 102,409 | 1,441,253 | 0 | 0 | 1,543,662 |
The carrying amount of investment properties amounted to EUR 2,279,757k at the balance sheet date (31 December 2015: EUR 2,270,187k). There were no material additions or disposals in the period under report.
Cash and cash equivalents amounted to EUR 67,741k at the balance sheet date, as against EUR 49,502k at the end of the previous year. An amount of EUR 25,609k is subject to restraints on disposal (EUR 8,669k).
Non-current assets held for sale include apartments and apartment buildings for which notarial purchase contracts are available at the balance sheet date.
Non-current assets held for sale have already been measured at fair value, which corresponds to the sales price of the respective properties less costs to sell. There were no disposals with a material impact on earnings.
The capital stock of ADLER AG amounted to EUR 46,103k as of 31 March 2016 (previous year: EUR 46,103k) and is divided into 46,103,237 no-par ordinary shares (31 December 2015: 46,103,237 no-par ordinary shares) with one voting right per share.
Further details can be found in the consolidated statement of changes in equity.
Liabilities for convertible bonds were structured as follows at the balance sheet date:
| In EUR '000 | 31.03.2016 | 31.12.2015 |
|---|---|---|
| 2013/2017 convertible bond | 8,879 | 8,810 |
| 2013/2018 convertible bond | 9,216 | 9,138 |
| 2015/2018 mandatory convertible bond | 2,251 | 2,470 |
| ACC ENTRO AG 2014/2019 convertible bond |
14,467 | 14,584 |
| WESTGRUND AG 2014/2016 convertible bond | 615 | 604 |
| Total | 35,428 | 35,606 |
| – of which non-current | 34,813 | 34,983 |
| – of which current | 615 | 623 |
Liabilities for bonds were structured as follows at the balance sheet date:
| In TEUR | 31.03.2016 | 31.12.2015 |
|---|---|---|
| 2013/2018 bond | 33,265 | 35,447 |
| 2014/2019 bond | 117,846 | 105,421 |
| 2015/2020 bond | 343,289 | 338,366 |
| ACC ENTRO AG 2013/2018 bond |
10,809 | 10,628 |
| Total | 505,209 | 489,862 |
| – of which non-current | 496,823 | 481,599 |
| – of which current | 8,386 | 8,263 |
Gross rental income is structured as follows:
| In EUR '000 | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Net rental income | 42,036 | 25,208 |
| Income from recoverable expenses | 22,435 | 13,511 |
| Other income from property management | 1,008 | 1,459 |
| Total | 65,479 | 40,178 |
The development in net rental income and in income from recoverable expenses in the period under report is attributable to the impact of the new business acquired. Of the increase in net rental income, an amount of EUR 15,566k relates to WESTGRUND, which has only been included in the scope of consolidation since June 2015.
Expenses from property lettings are broken down as follows:
| In EUR '000 | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Apportionable and non-apportionable operating costs | 28,928 | 17,579 |
| Maintenance | 5,653 | 5,005 |
| Other property management expenses | 168 | 75 |
| Total | 34,749 | 22,659 |
Of the increase in operating costs, an amount of EUR 12,278k relates to WEST-GRUND, which has only been included in the scope of consolidation since June 2015.
Income from the sale of properties is structured as follows:
| In EUR '000 | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Income from the sale of inventory properties | 18,951 | 7,663 |
| Income from the sale of investment properties | 2,383 | 0 |
| Brokerage revenue | 299 | 571 |
| Total | 21,633 | 8,234 |
Of income from the sale of inventory properties, an amount of EUR 18,470k relates to sales at ACCENTRO AG (previous year: EUR 2,712k). This increase was chiefly due to the scheduled rise in sale results in the Trading segment.
Expenses from the sale of properties are structured as follows:
| In EUR '000 | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Retirement of inventory properties | 13,339 | 7,321 |
| Retirement of investment properties | 2,109 | 2 |
| Sale-related costs | 496 | 330 |
| Services procured for brokerage revenue | 181 | 306 |
| Total | 16,125 | 7,959 |
Of the retirement of inventory properties, an amount of EUR 12,864k relates to disposals at ACCENTRO AG (previous year: EUR 2,579k).
Other operating income amounted to EUR 1,545k (previous year: EUR 44,071k). In the previous year's period, negative goodwill from the initial consolidation of Wohnungsbaugesellschaft JADE was included as a non-recurring item of EUR 42,291k.
Income from the measurement of investment properties amounted to EUR 4,811k (EUR 5,569k) and comprises income of EUR 4,849k from fair value adjustments (EUR 8,841k) and expenses of EUR 38k for fair value adjustments (EUR 3,272k).
Financial costs are structured as follows:
| In EUR '000 | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Interest expenses for bank loans | 14,245 | 10,528 |
| Interest expenses for bonds | 7,822 | 3,467 |
| Interest expenses for convertible bonds | 429 | 453 |
| Other | 2,711 | 336 |
| Total | 25,207 | 14,784 |
Of the increase in interest expenses for bank loans, an amount of EUR 4,329k is attributable to the acquisition of WESTGRUND, which has only been included in the scope of consolidation since June 2015. The increase in interest expenses for bonds is mainly due to the 2015/2020 bond, of which EUR 300,000k was only issued in April 2015, and which was stocked up by a further EUR 50,000k in October 2015.
The classification of financial instruments required in accordance with IFRS 7 was unchanged compared with 31 December 2015. There were no reclassifications within the categories of financial instruments or the fair value hierarchy levels in the period under report.
The allocation of assets and liabilities measured at fair value in accordance with the input factors of the measurement method was unchanged compared with 31 December 2015. Investment properties are still allocated to Level 3 in the fair value hierarchy.
There were no material changes in related parties compared with the information provided as of 31 December 2015.
The material risks monitored and managed by the Group's financial risk management include interest rate, default, liquidity and financing risks. There have been no material changes in these risks since 31 December 2015. A detailed description of these risks can be found in the notes to the consolidated financial statements as of 31 December 2015.
No material events occurred after the balance sheet date.
Frankfurt a. M., 13 May 2016
This report contains future-oriented statements that reflect the current management views of ADLER Real Estate AG regarding future events. Every statement in this report that reflects intentions, assumptions, expectations or predictions, as well as the assumptions on which they are based, constitutes such a future-oriented statement. These statements are based on plans, estimates and forecasts currently available to the management of ADLER Real Estate AG. Therefore, they only apply to the day on which they are made. By their nature, future-oriented statements are subject to risks and uncertainty factors, and the actual developments can deviate considerably from the future-oriented statements or the events implicity expressed in them. ADLER Real Estate AG is not obligated, nor does it intend, to update such statements in view of new information or future events.
| Supervisory Board | |
|---|---|
| Dr. Dirk Hoffmann | Chairman, Rum/Österreich |
| Thomas Katzuba von Urbisch | Vice Chairman, Monte Carlo/Monaco |
| Thilo Schmid | Blotzheim/Frankreich |
| Management Board | |
| Axel Harloff | Hamburg/Germany |
| Arndt Krienen | Remscheid/Germany |
| Company Facts | |
| Registered Office Location | Frankfurt am Main/Germany, HRB 7287 |
| Business Address | ADLER Real Estate Aktiengesellschaft |
| Gänsemarkt 50 | |
| 20354 Hamburg/Germany | |
| Telephone: +49(0)40/29 81 30–0 | |
| E-Mail: [email protected] | |
| Website | www.adler-ag.com |
| Public Relations | german communications dbk ag |
| Milchstraße 6b | |
| 20148 Hamburg/Germany | |
| Telephone: +49(0)40/46 88 33–0 | |
| Telefax: +49(0)40/46 88 33–40 | |
| E-Mail: [email protected] | |
| Investor Relations | Hillermann Consulting |
| Poststraße 14–16 | |
| 20354 Hamburg/Germany | |
| Telephone: +49(0)40/32 02 79 10 | |
| Telefax: +49(0)40/32 02 79 114 | |
| E-Mail: [email protected] | |
| Subscribed Capital | EUR 46,103,2371) |
| Classification | 46,103,2371) non-par shares |
| Arithmetical Value | EUR 1 per share |
| Voting Detail | 1 vote per share |
| Stock Details | SIN 500 800 |
| ISIN DE0005008007 |
|
| Ticket Symbol ADL | |
| Reuters ADLG.DE |
|
| Designated Sponsor | Odd o Seydler Bank AG |
| HSBC Trinkaus & Burkhardt AG | |
| Stock Exchanges | Xetra, Frankfurt am Main |
| Indices | SDAX, CDAX, FTSE EPRA/NAREIT Global Real Estate Index, |
| GPR General Index, DIMAX | |
| Fiscal Year | Calendar year |
1) as at 31 March 2016
Aktiengesellschaft Frankfurt am Main
Verwaltungssitz Gänsemarkt 50 20354 Hamburg
Telefon: +49 (40) 29 81 30–0 Fax: +49 (40) 29 81 30–99 E-Mail: [email protected] www.adler-ag.com
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