Release Date: November 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adler Group SA (ADPPF, Financial) successfully disposed of a 62.8% stake in Brack Capital Properties, generating approximately EUR219 million in net cash proceeds, which is ahead of their business plan.
- The company reported a strong like-for-like rental growth of 4.1% year-on-year, driven by indexation of current rental contracts and reletting activities.
- Operational vacancy rate remained low at 1.7%, indicating high demand for their rental properties.
- The group's total equity was significantly strengthened to approximately EUR2.2 billion following a comprehensive recapitalization.
- Adler Group SA (ADPPF) extended all bank maturities due in 2024, leaving no outstanding maturities for the year, and is securing approvals for extending 2025 and 2026 loans.
Negative Points
- Net rental income decreased by 3% to EUR155 million in the first nine months of 2024, primarily due to past portfolio sales.
- FFO 1 from rental activities was negative at minus EUR88 million, driven by a substantial increase in interest expenses.
- The weighted average cost of debt increased to 7.9% from 6.4% in the previous quarter, reflecting higher interest rates on new debt.
- Despite the recapitalization, the company remains highly leveraged with an LTV of 62.6%, which is high compared to industry peers.
- The financial performance was impacted by EUR147 million of non-cash effective PIK interest in the first nine months of 2024.
Q & A Highlights
Q: Can you break down the EUR100 million interest paid in the quarter, which seems high given the EUR1.6 billion bank debt?
A: Thorsten Arsan, CFO, acknowledged the concern and suggested setting up a separate call to provide a detailed breakdown of the interest payments, as he needed to verify the numbers before providing a comprehensive response.
Q: Does the Upper Nord transaction include the tower, and what was the payable to the buyer?
A: Thorsten Arsan, CFO, clarified that the Upper Nord transaction excludes the tower and declined to comment further on the specifics of the payables involved with the potential investor.
Q: Could you provide an update on the three development assets: Offenbach, Grand Central, and Cologne?
A: Thorsten Arsan, CFO, stated that negotiations for Grand Central and Cologne are well advanced, with potential signings expected this year. Offenbach is also in discussions, but the likelihood of a signing this year is lower compared to the other two projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
