Monday, January 24, 2022

UPDATE 2 Germany’s Adler demands debt extension after selling thousands of homes

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January 13 () – Adler Group, one of Germany’s largest homeowners, is hoping to extend a 600 million-euro loan to German banks after selling about 30,000 apartments and other property, its co-founder said.

The two major sales this month represent the company’s last attempt to strengthen its position since its stock collapsed since it was targeted by short sellers critical of business transparency and finance last year.

Adler Group CEO Maximilian Rieneker said the sale of real estate means it has reduced its debt, but it will still try to extend bank loan repayments over the next two years.

“We have mostly local banks with which we have debts in the past,” Rieneker said of the € 600 million ($ 688 million) debt extension. “We’re in talks about that.”

In addition to the bank’s debt, he said, 1.1 billion euros in bonds would be repaid over the next two years and they could be settled by issuing new bonds or otherwise.

On Thursday morning, Adler announced the sale of about 14,400 homes and businesses, the second in many weeks.

In December, Standard & Poor’s credit rating agency was concerned that such sales would reduce the rental property portfolio and increase dependence on long-term development projects that are typically risky.

He then downgraded Adler’s rating outlook to negative, indicating an increased risk of downgrading because the company’s development projects were uncertain. It is unknown whether this position will change after the sale.

Moody’s revoked the company’s rating early last year, but did not say why.

Rienecker rejected criticism from Standard & Poor’s.

“We don’t have net rent, but on the other hand, we’re reducing our debt,” he said.

He said the group will still have 30,000 apartments, two-thirds of which are in Berlin, as well as property development projects.

Rieneker said he expects a special audit of the company’s operations by KPMG to be completed and announced in the first six months of this year following allegations of fraud by a short-term seller.

Adler Group said on Thursday it would receive 600 million euros ($ 686 million) in net cash from the sale, which was announced to the private equity firm KKR.

The company says the sale will help it achieve its goal of having a loan ratio of close to 45%, which is an important criterion of the debt burden.

Earlier this month, Adler announced a similar sale of more than 15,500 properties to LEG Immobilien.

1 dollar = 0.8740 euros written by John O’Donnell; Edited by Sherry Jacob-Phillips and Bernadette Baum

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