ADLER share recovers by the end of trading: ADLER Group sees “solid development” at the beginning of the year May 31, 2022

news-teaser">According to its own estimates, the ailing real estate group ADLER Group performed solidly in day-to-day business in the first quarter.

Net rental income fell by almost 16 percent to 71.1 million euros compared to the same period last year, as the company announced on Monday evening based on preliminary figures. The operating result (FFO I) was EUR 29.7 million, eight percent lower than a year earlier. ADLER attributed the declines primarily to the sale of a real estate portfolio. Like-for-like, the average rent increased by 2.1 percent to EUR 7.46 per square meter.

According to UBS analyst Charles Boissier, the real estate group was stable in day-to-day business in the first quarter. Retailers also rated the confirmed annual targets positively. A week ago, the share price was still at a record low of EUR 3.80, since then the recovery gains have totaled a quarter.

A trader analyzed that income from rents and real estate sales had fallen somewhat more than expected. However, he mentioned the fact that the operating result (FFO I), which was close to expectations, was positive, even if it was lower than a year earlier.

Thanks to real estate sales, liquidity increased by more than EUR 200 million to EUR 760 million at the end of the quarter. The bottom line, however, was that the figures in the first quarter were still in the red due to high other expenses: The net loss attributable to the owners was EUR 2 million after a profit of EUR 83.2 million a year ago. The company initially did not comment on an inquiry as to what “other expenses” meant.

Management confirmed the forecast for the year. The net rental income should be between 203 and 212 million euros, the operating result in a range of 73 to 76 million euros.

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The company has meanwhile reversed the sale of a real estate package due to non-payment. According to the company, the contract with Partners Immobilien Capital Management was terminated because the company still owed the group money for a EUR 313 million deal from May 2020.

Partners had acquired seven development projects from ADLER subsidiary Consus. Consus only received part of the purchase price by the end of 2021 and it was questionable when and in what amount the payments would be made, it said. Therefore, the best solution for Consus was to reverse the contract and thus avoid lengthy court proceedings against the buyer.

That’s why the leverage (LTV) continued to rise in the first quarter, CEO Thierry Beaudemoulin said in an analyst conference call. The loan-to-value ratio was 52 percent at the end of the quarter, up from 50.9 percent at the end of December.

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According to the manager, ADLER Group intends to significantly reduce its level of indebtedness with the planned sale of the remaining stake in the subsidiary Brack Capital Properties (BCP). The real estate group LEG Immobilien has a purchase option on the ADLER stake of 63 percent. In a first step, the Düsseldorf-based company had already acquired a 31 percent stake in BCP for EUR 328 million.

The financial supervisory authority Bafin is currently examining ADLER’s books. The agency got involved after the real estate company came under pressure from short seller Fraser Perring for the first time in October. He and his research service Viceroy had raised serious allegations against ADLER, including the valuation of real estate projects. The company has always denied the allegations.

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ADLER presented figures for 2021 at the end of April despite the refusal of the attestation by the auditors from KPMG – a loss of billions had been incurred due to high depreciation. KPMG is no longer available as auditor for the 2022 annual and consolidated financial statements. Due to the lack of a test certificate, almost all members of the Board of Directors had resigned. However, the head of the board of directors, Stefan Kirsten, had only accepted four of them.

Currently the most important ADLER shareholder is Germany’s largest residential real estate group Vonovia, which holds around 20.5 percent of ADLER shares. The ADLER Group owns around 27,400 apartments, almost 20,000 of which are in Berlin.

ADLER Group shares continue to recover after quarterly figures

Shares in the troubled real estate investor continued their recovery from record lows on Tuesday. Meanwhile, price fluctuations continue. Nothing came of a pre-market jump in Tradegate trading above the EUR 5 mark: XETRA trading closed at EUR 4.76. Most recently there was a plus of 2.22 percent to 4.60 euros on the price board.

Quarterly figures from the previous evening supported the course somewhat. According to UBS analyst Charles Boissier, the ADLER Group performed well in day-to-day business in the first quarter. The confirmed outlook was also rated positively by traders. A week ago there was still a record low of EUR 3.80 on the course board, since then the recovery gains have totaled a quarter.

According to UBS expert Boissier, the company is “on the way to its annual targets after the first quarter”. A trader analyzed that income from rents and real estate sales had fallen somewhat more than expected. However, he mentioned the fact that the operating result (FFO I), which was close to expectations, was positive, even if it was eight percent lower than a year earlier.

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The ADLER Group has been under pressure from the short seller Fraser Perring since the fall, and the company hasn’t calmed down since then. Its research service Viceroy raised serious allegations, among other things, because of the valuation of real estate projects. The company had always rejected these, but the price turbulence continued – also due to investigations by the financial regulator Bafin and setbacks with the auditors.

In March and April, around 14 euros were paid for the shares at times, in January 2021 almost 30 euros and in 2018 a record high of 55.75 euros. In the past few weeks, however, the turbulence has continued to intensify, at its peak it had lost more than 70 percent in value within a few weeks. It is now clear that the auditing company KPMG is not available for the 2022 annual and consolidated financial statements.

According to a media report, the public prosecutor’s office in Frankfurt has now started investigations. According to UBS expert Boissier, the company is currently in the process of appointing a new auditor. A strategy update on future prospects is promised with the results of the third quarter. LUXEMBOURG / FRANKFURT (dpa-AFX)

Image source: ADLER Group

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