Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adler Group SA (WBO:ADJ, Financial) achieved a strong like-for-like rental growth of 4.6% year-on-year.
- Operational vacancy rates remained low at 1.8%, indicating high occupancy levels.
- The company successfully extended bank loans totaling EUR261 million, eliminating 2024 maturities.
- Net cash of EUR26 million was generated from the disposal of the Leipzig development project.
- Received overwhelming support from bondholders and shareholders for the comprehensive recapitalization plan.
Negative Points
- Group net rental income decreased by 4% to EUR103 million in H1 2024.
- Portfolio value decreased by 2.1% in the first half of 2024.
- Development portfolio value decreased by 5.9% due to rising construction costs and low transaction levels.
- FFO 1 from rental activity was negative at minus EUR54 million, driven by increased interest expenses.
- EPRA LTV increased to 105.7%, reflecting negative development of group equity.
Q & A Highlights
Q: Can you provide an update on the progress of the comprehensive recapitalization plan?
A: Thierry Beaudemoulin, CEO: We have made significant progress, with over 90% of bondholders approving the amendments to the senior secured notes. Additionally, our shareholders approved the proposed amendments to the Articles of Association, allowing us to issue voting securities. We expect to complete the recapitalization by the end of September 2024.
Q: What is the current status of your rental portfolio and operational performance?
A: Thierry Beaudemoulin, CEO: Our rental portfolio showed strong like-for-like rental growth of 4.6% year-on-year, driven by contract indexation and lower leasing activity. The operational vacancy rate remains low at 1.8%, and the average in-place rent is EUR7.65 per square meter per month.
Q: How has the valuation of your portfolio changed in H1 2024?
A: Thierry Beaudemoulin, CEO: The portfolio value decreased by 2.1% in H1 2024, compared to a larger decline in previous periods. The development portfolio saw a 5.9% decrease in value, mainly due to rising construction costs and low transaction activity.
Q: Can you elaborate on the financial performance for H1 2024?
A: Thomas Echelmeyer, CFO: Net rental income decreased slightly by 4% to EUR103 million, mainly due to asset sales. Adjusted rental EBITDA was EUR60 million, and adjusted total EBITDA was EUR42 million. FFO 1 from rental activity was negative at minus EUR54 million, driven by increased interest expenses.
Q: What is the current status of your debt and financing activities?
A: Thomas Echelmeyer, CFO: We successfully extended loans totaling EUR261 million until 2028, leaving no maturities in 2024. Our weighted average cost of debt increased slightly to 6.4%. We are in constructive discussions for extending 2025 maturities and expect to complete the recapitalization by September 2024.
Q: What are your expectations for asset valuations in the second half of 2024?
A: Thierry Beaudemoulin, CEO: We expect asset values to stabilize in the second half of 2024, particularly for our yielding portfolio. However, we anticipate some further negative valuation adjustments due to limited transaction market activity.
Q: Can you provide details on your recent disposal activities?
A: Thierry Beaudemoulin, CEO: We finalized sales of condominium units and received EUR26 million in net proceeds from the sale of our Leipzig FourLiving development project. We are in advanced discussions for additional sizable transactions despite the challenging environment.
Q: What is the current cash position and how has it changed?
A: Thomas Echelmeyer, CFO: Our cash position stood at EUR334 million at the end of Q2 2024, a decrease of EUR19 million from the previous quarter. This does not include EUR74 million held at the BCP level. We received partial repayments and proceeds from asset disposals, but also had significant cash outflows for development projects and interest payments.
Q: What are your future plans for the BCP portfolio?
A: Thomas Echelmeyer, CFO: We continue to actively pursue the sale of our 63% stake in BCP, which is held by our subsidiaries. The sales process is ongoing, and we aim to complete it in the near future.
Q: How do you see the overall market environment affecting your operations?
A: Thierry Beaudemoulin, CEO: The market environment remains challenging, particularly with rising construction costs and limited transaction activity. However, we are confident in our strategy and believe that our comprehensive recapitalization plan will stabilize the group and provide long-term benefits to all stakeholders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
