Adler - comment

Details of the refinancing are emerging. As management had previously indicated, the NRW portfolio has now been sold to OneIM and Orange Capital Partners, expected to be effective in stages from 31st of January. The transaction value is significantly below our expectations, either due to a lower GAV valuation than BV suggested or a higher than proportionate allocation of deferred tax. Per November, the 7,262 units outside Berlin were valued at GAV of €607m. Almost all of that is now concentrated in the “Cosmopolitan” Portfolio which now sold for €422.5m, net of deferred tax. Adler never allocated its Deferred Tax liabilities across the two yielding segments, but assuming they are somewhat proportionate, we arrive at a transaction value of only €76% of BV. We have been aware that the NRW portfolio was the “ugly ducking” compared to ADO, but that price seems too low. So we assume that Adler will have reduced its Deferred Tax liabilities disproportionately in this transaction. After subtracting structurally sr. debt, the company hopes to receive €215m, which should also go towards the pay-down of the 1L in Q125. We continue to hold the barbell of 1L and 3L in our book but are still looking forward to seeing the 3L benefit from the reduction of the expensive 1L. Perhaps in the new year...