Soaring Adler Real Estate buys further 6,750 units

Publicly-listed German residential investor Adler Real Estate boosted its holdings by buying a portfolio of 6,750 housing units, bringing its total property holdings now to over 32,000 units. The properties are in Wilhemshaven in Lower Saxony, while the deal represents the majority interest in the housing association Jade GmbH. The portfolio is valued above €200m.

According to Jade, the portfolio comprises specifically 6,641 residential and 31 commercial units as well as 74 student apartments. They are described as well-maintained, with almost no deferred maintenenace or capex backlog and located in good parts of Wilhelmshaven, Germany’s largest naval port. The properties were mainly built in the 1930s and 1940s and generate rental income of about €20.5m. The occupancy rate is 93%.

Adler said the portfolio had good upside value with further upward rent potential and positive local economic outlook, underpinned by the construction of a new deep sea water port in Wilhelmshaven.

Adler’s stock has soared 1000 % over the last three years as the company, which has its roots in the old Frankurter Adlerwerke manufacturing business, has become an active investor and trader in real estate. Last year it streamlined its hotch-potch of recently-acquired properties, and raised €70.5m by selling assets, raising €28.3m in extra cash and booking a profit of €4.9m. It also sold 56 building sites in Munich and Berlin, a 10,000 sqm site in Offenbach, and selling a housing project in Texas in the USA. It also bought housing portfolios which saw its holdings leap from 7,800 to about 25,000 units.

Investors have been liking the Adler story, buying up the company’s bonds. Adler recently increased the volume of a five-year bond issue from April 2014 from €100m to €130m in a private placement to institutional investors. The bond was placed at an issue price of 102% and is paying a 6% coupon. Otto Seydler bank managed the placement as global bookrunner.

“We have advanced our realignment towards becoming a major residential real estate company. This began roughly two and a half years ago, and since then all acquisitions and disposals have gone according to plan,” commented Adler’s CEO Axel Harloff. “For 2015 we are targeting strong and profitable growth.”