Adler Group's H1 profit drops as rising rates choke real estate (updated)

Adler SA

29/08/2023 06:48

(Adds CEO comment, context, and details on results)
       Aug 29 (Reuters) - Adler Group  ADJ.DE  on Tuesday
posted a drop in operating profit for the first half of 2023,
citing the shrinking of its real estate portfolio and higher
financing costs. 
    Adler, one of Germany's biggest landlords, is fighting a
liquidity crisis, triggered by a downturn in the domestic
property market, rising energy and building prices caused by
Russia's invasion of Ukraine and the fallout from the COVID-19
pandemic.   
    "We are experiencing value losses as everyone else in the
market due to a significantly changed interest rate
environment," CEO Thierry Beaudemoulin said. 
    Funds from operations (FFO 1), a measure of recurring free
cash flow and a key indicator for operational strength, fell to
8 million euros ($8.66 million) during January-June from 50
million euros in the same period last year, the company said.
    The company also faces legal woes after offices of its
subsidiary, Adler Real Estate  ADLG.DE , were searched by
prosecutors as part of an accounting investigation in June.
Adler Group said it stands behind its legal executive
Sven-Christian Frank, who is listed as a defendant in the case. 
  
    The group's rental income fell to 108 million euros in the
first six months of the year, compared with 131 million euros in
the year-ago period. 
    The real estate group said its portfolio devaluated by 1
billion euros, as of June 30, compared with 2022-end, mainly due
to rising interest rates.
    
    ($1 = 0.9239 euros)

 (Reporting by Andrey Sychev, Editing by Friederike Heine and
Sherry Jacob-Phillips)
 ((Andrey.Sychev2@thomsonreuters.com; Twitter: https://twitter.com/sich_11
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