Good morning, ladies and gentlemen, and welcome to the Adler Group Investor Call on Q1 Report 2025 live webcast. I am Youssef, the course call operator. I would like to remind you that all participants will be in listen-only mode and that this conference is being recorded. After the presentation, a Q&A session will follow. To register into the question queue, you may press star and one on your telephone at any time. If you require assistance from an operator, please press star and zero. The conference must not be recorded for any publication or broadcast. At this time, it's my pleasure to hand over to Julian Mahlert, Head of Investor Relations and Communications at Adler Group. Please go ahead.
Thanks, Youssef. Good morning, everyone, and thank you for joining us for the Adler Group Q1 2025 results call. Speakers today are our CEO, Dr. Karlheinz Reinhard, and our CFO, Torsten Colen. Both will lead through today's presentation and then answer your questions. Please note that this call is being recorded and will be made available on our website, where you can also find today's presentation. With that, I'll hand it over to Karl.
Thank you, Julian. Welcome to all of you, and particularly to those who have joined us for our annual results just four weeks ago. I can already tell you there are no big surprises. We are very much in line with the strategy and the expected progress we shared with you in April. Let's have a quick look at the status of our recent disposals on page four. As communicated with the annual results, the BCP transaction was fully completed with the transfer of the remaining 10.1% stake in April 2025. From the EUR 219 million of total cash proceeds, we used EUR 120 million for repayment of our first lien new money facility, while the remainder was added to our disposal holdback basket. In our Q1 reporting, you see BCP no longer fully consolidated.
No further update on the sale of the North Rhine-Westphalia portfolio, where we expect to transfer the remaining 10.1% minority stake in the course of this summer. The discussions with potential investors for our development project are progressing well, but today there is nothing to announce beyond what we said four weeks ago. In terms of smaller yielding asset sales, as usual, we had the commercial opportunity to dispose of some units in Berlin, including a multi-family house with 15 units at book value. As of now, with EUR 245 million, our disposal holdback basket of up to EUR 250 million is almost fully filled. Moving on to page six. Now, first, into the financial highlights. Compared to the prior year period, net rental income in the first quarter is decreased due to our disposals. We lack the rental income generated by BCP, which was sold at the beginning of January 2025.
Also, the Q1 earnings include only two months of rental income from the North Rhine-Westphalia portfolio, which was sold as per end of February. Both transactions resulted in around EUR 15 million of lower rental income. This decrease was partly compensated by rent increases realized on the remaining assets. The adjusted EBITDA from rental activities amounted to EUR 21 million. The adjusted EBITDA total was negative as the development segment did not contribute material earnings in this quarter. Let me mention, in this context, that we have launched a comprehensive cost-cutting program in the first quarter, with a total cash effect of approximately EUR 30 million in 2025. We have reduced our headcount by 150 in February, with 60 thereof relating to our sale of the North Rhine-Westphalia portfolio. With these measures becoming effective over time, we expect our profitability to improve considerably in Q2 and beyond.
Following the deconsolidation of BCP, the related non-controlling interest position of EUR 166 million was deducted from the group's total equity position, now amounting to EUR 1.2 billion. On the contrary, the deconsolidation of BCP had a positive impact on our LTV, now ranging at 67.9%. Our cash position increased to EUR 293 million following the before-mentioned transactions and after corresponding debt repayments. Torsten will provide more color on financials later in the presentation. Let's skip the portfolio performance figures on the right and instead have a closer look at these KPIs on the following slides. Now, as of March 2025, our total number of rental units stands at 17,908, hardly unchanged to the prior quarter. More than 99% of our portfolio is centered in Berlin. The remaining 200 units outside Berlin are located in eastern Germany. We work hard to sell these units within the coming quarters.
Compared to December 2024, the value of our yielding portfolio remained constant at EUR 3.5 billion, given there were no major disposals and no portfolio revaluation in the first quarter. The value per square meter, therefore, remains almost unchanged at EUR 2,821. Let's now move on to page nine to discuss our further operational KPIs. Our average rent increased from EUR 7.60 to EUR 8.31 per square meter per month by March 2025. This increase is largely the result of the sale of the North Rhine-Westphalia portfolio, with structurally lower rents compared to our Berlin portfolio. If we adjust for this, the comparable rent in the previous year's period would have been EUR 8.14 per square meter per month. Turning to vacancy, our operational vacancy remained at a very low level of 1.5%, confirming the high demand of tenants for our offer of apartments for rent.
It's not a secret that the continued population growth and the very limited new build supply keep increasing the market pressure in Berlin. Our like-for-like rental growth amounted to 1.9% over the last 12 months, as in Q4 2024. The growth figure is significantly lower than one year before, which had been unusually high, to a big part driven by inflation in the previous years. As explained in our last call, the largest driver of our rental growth comes from Mietspiegel-regulated rents of existing contracts that make up around two-thirds of our leases. From that source of growth, we had a concentration of rent increases, particularly in the fourth quarter of 2023. The time between two rent increases is 15 months by law, so this did not allow us to touch a large part of our rental contracts before early 2025.
We have sent out now close to 3,000 Mietspiegel rent increases in Q1 2025. This compares to less than 2,000 Mietspiegel rent increases for the full year 2024. The sent increases from Q1 will become effective in Q2. I mentioned already last time that we target an annual rental growth of 3%. We are quite confident that we can report a like-for-like rental growth in that range for our portfolio with our Q2 results. Now, I'd like to hand over to Torsten, who will walk you through the financials, starting on page 11.
Thank you, Karl, and also warm welcome from my side. There is not much movement in our reported portfolio value in Q1, so just a couple of points to mention here. We sold a few condominium units and closed the sale of a multi-family property in Berlin. This reduced the GAV by just roughly EUR 4 million in the first quarter. The sale of the development project EuroHaus in Frankfurt was notarized in Q1 and reduced the GAV accordingly. At the end of 2025, we had a portfolio of yielding assets with a GAV of around EUR 3.5 billion and development projects with a GAV of around EUR 1 billion. This adds up to a total GAV of EUR 4.5 billion, according to the latest externally appraised values per year end 2024. Now, let's move to the next page, page 12.
We already reported with our annual results a few weeks ago the successful refinancing of our first and 1.5-fin facilities in Q1 2025. With that, we expect to generate interest savings of approximately EUR 134 million over the remaining lifetime of both instruments according to our business plan. Also, the update on debt repayments and prolongations is the same as reported in our last call, with the exception that we have repaid another EUR 29 million of our First Lien New Money Facility in May 2025, including disposal proceeds from the second closing of BCP and smaller asset sales. This brings the total redemption of the First Lien New Money Facility to EUR 265 million in 2025. Looking ahead at our upcoming maturities in 2026, as announced last week, we have launched a cash tender offer to repurchase our EUR 300 million Adler Real Estate bond, which is ruling in April 2026.
The bond will be refinanced with a TEP under the First Lien New Money Facility. At the launch of the tender offer, we had obtained commitments in the amount of around EUR 240 million from the Adler Real Estate bondholders. We expect to complete the process in the course of June. Following that, we would carry no more unsecured debt maturing before December 2028 in our structure. Separately, we have initiated discussions with the lenders of our remaining 2026 bank maturity, which amounts to EUR 49 million. Here as well, we are confident to resolve these maturities in the coming months. Let's now move on page 13 and take a look at our current debt KPIs.
As per March 2025, our total nominal interest-bearing debt stood at EUR 3.8 billion and net reduction of around EUR 340 million compared to December 2024, reflecting the refinancing of the first and 1.5-fin facilities and the debt repayments following our completed disposals. The LTV reduced to 67.9%, considering an extraordinary positive effect from the deconsolidation of BCP. The weighted average cost of debt stood at 6.4% at the end of March, which is 200 basis points below what we reported for December 2024. Obviously, this is the result of the refinancing of the first and 1.5-fin facilities at better terms. Also, our cost bank debt reduced significantly after the repayment of the secured financings associated with the disposed NRW portfolio. The average maturity of our debt is approximately four years, with most of our debt falling due in 2028.
There have been no changes to our credit ratings as per end of March. Let's turn to debt maturity schedule on page 14. As you can see, there is no debt maturing this year. Looking ahead to 2026, we have around EUR 349 million debt falling due. The majority of this, the EUR 300 million, relates to the Adler Real Estate bond. As discussed, this is currently being addressed with our tender offer. The remaining EUR 49 million of 2026 maturities are under discussions with the respective lenders. We are confident that these will be resolved in the coming months as well. Let's turn to LTV on page 15. As stated before, our LTV improved compared to the previous quarter. With the deconsolidation of BCP and the NRW portfolio holding entities, our balance sheet has reduced quite significantly, which typically has a positive impact on the LTV ratio.
Important to notice that this reflects an extraordinary effect, which is not expected to recur in the coming quarters. Instead, we would expect the LTV to marginally increase quarter by quarter, particularly due to the interest expenses. As always, a reminder, kindly notice that our bond LTV with a threshold of 90% is calculated differently, leading to a lower figure than stated here. Let's continue with cash on the next page, page 16. At the end of the first quarter, our cash position stood at EUR 293 million, almost EUR 50 million higher than per year-end. Our cash holdings are usually invested in money market funds and call money in order to generate interest income. You see the development of the cash position is in the usual format on the slide.
The biggest drivers in Q1 were obviously the cash proceeds received from the first closing of the NRW portfolio transaction and the disposal of BCP. The proceeds from the Cosmopolitan transaction are presented on a net basis with the yielding asset disposal buckets, i.e., after repayment of associated secured debt. As stated at the beginning, from these proceeds received, we repaid EUR 236 million of our first lien new money facility within the first quarter. Restructuring costs refer to the refinancing of the first lien and 1.5-fin facilities and are not expected to recur in the future quarters. With that, back to you, Karl.
Thank you, Torsten. Let me now conclude this presentation with some final remarks. We confirm our full year guidance for a net rental income between EUR 127 million and EUR 135 million. The rental business developed positively in the first quarter. We saw 1.9% like-for-like rental growth compared to the previous year. The rental growth, as stated, will pick up in the second quarter based on measures that we have initiated over the last couple of months. Our vacancy rate remains structurally low at just 1.5%. With that, we confirm our net rental income guidance for 2025. Following the successful disposals of our 62.8% stake in BCP and the North Rhine-Westphalia-based Cosmopolitan portfolio, our focus is now fully on the residential rental portfolio, especially the 17,900 units concentrated in Berlin. This market remains highly attractive, offering strong fundamentals and significant embedded potential.
To support this strategic focus, our key priority remains the disposal of all upfront sale development projects and the completion of a small number of remaining forward sale projects, all until the end of 2026. In the current market, this obviously remains a challenge, but we are making good progress. We also now operate with a significantly improved capital structure, not least thanks to the successful refinancing of the first lien and the EUR 1.5 billion facilities in early 2025. Importantly, we now have no remaining debt maturities in 2025, following the prolongations and repayments made earlier this year. Looking to 2026, we are now in the process to refinance our EUR 300 million Adler Real Estate bond through a TEP under the first lien new money facility, with the completion expected for June.
Thank you for dialing in, and we are now looking forward to your questions. Julian, back to you for the Q&A.
Thank you, Karl and Torsten, and I hand it over to Operator Youssef to start the Q&A.
Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star one at this time. The first question comes from Pierre Borski, HKB. Please go ahead.
Hey, good morning, and thanks for taking my question. Just quickly on the Adler Real Estate box, once you've completed the tender and so on and given the now significantly reduced asset value, is there any plan to collapse this structure and sort of have everything under the Adler Group entity? If so, are there any meaningful costs associated with that?
Yeah, thank you, Peter, for your question. I mean, you're fully right with, I mean, after the disposal of BCP and NRW portfolio, which were both under the Adler Real Estate subgroup, the group structure within for Adler Real Estate, let's say, simplified significantly. Once we refinanced the Adler Real Estate bond on group SA level, yes, on an ongoing basis, we tried to further or continue to further simplify the structure. As of today, there is no plan to fully collapse the Adler Real Estate subgroup. I mean, there are still roughly EUR 500 million value of Berlin portfolio within the Adler Real Estate group. The aim is, as we already did over the last year, to further simplify the structure, but for the time being, not fully collapsed.
Okay, thank you. Understood. Yeah, just a quick follow-up on that. Is there, from a cost perspective, a meaningful difference in having these two boxes run separately, or does that, in practice, not really matter?
No, I mean, there is no material impact on the cost structure.
Great. Thank you very much.
Yeah.
The next question comes from Nour Sehur, Morgan Stanley. Please go ahead.
Hi, quick question from my side. On the Adler first lien repayment, EUR 265 million, how much of that EUR 265 million was repaid before the refinancing versus after the refinancing?
I mean, that's something we need to follow up. I can't give you the exact number right now, but it has partially been refinanced before the refinancing with the first disposal proceeds from BCP and partially after the refinancing. That's something where we will follow up to you bilaterally.
Okay, thank you.
As a reminder, if you wish to ask a question, please press star followed by one. The next question comes from Felix Wolfgang Sarria. Please go ahead.
Yes, good morning. Also, just one question for me. If you sort of fast forward towards the end of 2026, beginning of 2027, you'll have sold all your, hopefully, your development projects. Maybe you'll have fully reduced your exposure to Berlin. The debt stack is, at that point, very expensive. You've said it yourself, the LTV should be growing quarter by quarter. What would be your sort of ideal scenario then? What sort of ratios? How do you see your future capital structure then? Is that the right time to look at it? I suppose it is. How would you like to refile? I mean, obviously, if not sell the company, but yeah, what would be your ideal structure there? Thank you.
As you might be aware, there are no maturities until the end of 2028. Our structure will overall remain untouched for the time going forward. Let's say we keep all our options open with regard to asset disposals and closely follow the opportunities in the market.
Okay, thank you.
The next question comes from Niki Kuzmanov, Jefferies. Please go ahead.
Hi, good morning. Good morning, gentlemen. Thank you for the call and for taking my questions. I just had a question on the developments, and obviously, you've put in the Holstein Quartier and the Wilhelm in the exclusivity stage. Is there any sort of timing that we can expect on how any of these negotiations and sales would proceed from sort of agreeing a deal to completion? Obviously, you've mentioned the part 55 in Köln being completed now, and I guess that's what triggered the first lien paydown, the partial paydown earlier this month. I just wanted to kind of understand that in the context as well of the holdback basket now being completely full, well, almost completely full. Shall we expect any sort of further development proceeds once the deal is complete to enable further first lien partial paydowns? Thank you.
Yes, thanks. We do not disclose any information on individual sales process and disposals of assets. What I can say is that we have quite a number of assets in different stages of sales process, and we definitely target some signings and closings over the coming months. Overall, we are not too worried about our basket as there is only EUR 5 million open at this point in time, so that is a very low priority.
Got it. Okay, so if we think about sort of the only EUR 480 million left, which are not sales agreed on in exclusivity, that would imply probably quite a significant amount across the other eight projects of proceeds that could come in over the coming months. Would that effectively be used to pay down the first lien? And going back to the earlier question around a different capital structure, even if you do not refinance anything, just naturally, that LTV would actually going to go down with development proceeds and paying down some of that, I'll say, expensive first lien debt?
Yeah, now it is, of course, our objective to repay the debt as quick as possible. So whenever we will have incoming funds from the disposal of our assets, we'll be very quick to then repay the first lien.
Okay, great. Thank you. Which kind of explains what happened early in May, I think it was like 9th to 14th of May for that EUR 30 million first lien paydown.
Yeah, that was the disposal proceeds from the Köln 55 project.
Yes, yeah. Okay, cool. Thanks for confirming that. Thank you.
Ladies and gentlemen, for any further questions, please press star and one on your telephone. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Dr. Karlheinz Reinhard for any closing remarks.
Thanks, everyone, for joining today. I may alert you to our upcoming AGM, the annual general meeting being held in Luxembourg on June 25. By the end of summer, we'll publish our Q2 report on August 28, and the respective results presentation will take place on the same day. Torsten and I look forward to speaking to you then. All the best for everyone. We close the call.
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