Adler Plans $1.1 Billion Asset Sale to Help Cut Debt Pile
Adler Reaches Deal to Sell Real Estate Assets for $1.1 Billion
(Bloomberg) --
Adler Group SA reached a deal to sell assets valued at more than 1 billion euros ($1.1 billion), as the embattled German real-estate developer seeks to reduce a debt pile that’s drawn scrutiny from short-sellers and weighed on its stock price.
Adler didn’t name the buyer, saying only that the purchase is being made by “a leading alternative investment firm.” The assets are mostly located in eastern Germany, the company said in a statement.
“The sale may lead to a significant reduction in Adler’s leverage and return capital to its bondholders,” said the company, which has more than 8 billion euros of debt. Net proceeds should be about 600 million euros after repayment of secured loans, leading to a loan-to-value ratio of less than 50%, the firm said in a separate release.
Adler’s longer-term bonds jumped, with its notes due April 2029 rising 1.1 cents on the euro to 85.5 cents, the highest level since Oct. 8, according to Bloomberg prices. The shares rose as much as 5.7% on the Frankfurt Stock Exchange before erasing most of the gains.
The German firm linked to financier Cevdet Caner has been defending itself from allegations published by Fraser Perring’s Viceroy Research earlier this month, which called Adler a “hotbed of fraud, deception and financial misrepresentation designed to hide its true financial position.”
Soon after rejecting the accusations, Adler entered an exclusivity period with rival LEG Immobilien SE for the sale of a majority stake in two holding companies owning assets worth 1.5 billion euros, which should give Adler proceeds of about 800 million euros. The company’s largest shareholder, Aggregate Holdings, has also signed a deal with Germany’s biggest landlord, Vonovia SE, to help repay bank margin loans in exchange for a call option on half of its stake.
Tuesday’s deal includes 14,368 real estate units, valued at a higher price than the book value appraised by CBRE Group Inc. in June, Adler said. The closing of the transaction is expected in the first quarter of 2022. Adler Real Estate has 19,000 units in eastern Germany, excluding Berlin, with the largest proportion located in the federal state of Saxony, according to a company presentation.
Adler said the sale announced on Tuesday is its final strategic asset disposal. If that deal and the LEG transaction go ahead, the group would cut its portfolio by about 40% to roughly 40,000 units. Adler will now focus on divesting development projects to cut its loan-to-value ratio.
“The further transaction in such a short time frame is clearly good news for the company,” said David Shnaps, an analyst at CreditSights. “We are still surprised that more information was not forthcoming as to who the counter party to the sale was, the exact value agreed upon and at which group entity the properties currently sit.”
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