» Real Estate « ADO Properties S.A. (Adler Real …...2020/04/22 · ADO Properties S.A. (Adler Real Estate Group) Page 6 of 62 Stock impact amid the corona crisis Source: Factset,

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» Real Estate «

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ADO Properties S.A. (Adler Real Estate Group)

WKN: A14U78 | ISIN: LU1250154413 | Bloomberg: ADJ GY

Eagles (Adler) are going to fly

We initiate coverage of ADO Properties S.A. (ADLER Real Estate Group) with a BUY

recommendation and a target price of EUR 35.00 (=~50% upside). Our TP is based

on our EPRA NAV valuation (EUR 35.54) for ADO on a stand-alone basis.

New real estate group is created: The integration of ADLER and renaming to ADLER

Real Estate Group creates one of the largest German real estate companies with a

current gross asset value (GAV) of EUR 8.5bn. For comparison: ADO Standalone had

a GAV of EUR 3.6bn at the end of 2019, while ADLER will integrate a value of EUR

4.9bn. Together, the two companies currently own 75,721 units, with 58,000 units

coming from ADLER. ADO previously operated exclusively in the Berlin region. The

acquisition of ADLER reduces this regional concentration to 25% of the total

portfolio. Overall, ADO/ADLER will become a serious German player in the

residential real estate sector.

Option to consolidate Consus offers opportunity for sustainable growth:

Currently, the new ADLER holds about 25% of Consus - with an option for additional

51% until the end of June 2021. With this step, the new ADLER would also include

the fast-growing project developer Consus into the group, which speaks for a clear

fundamental strength and promising strategic orientation. Since ADO and Consus

have already agreed on a strategic cooperation agreement in which both parties

agree to work together on current and future projects, and ADO also has a right to

follow up on offers, ADO can already benefit from Consus' market strength (at-

equity result) without having rating problems or even having to pay higher interest

rates. Investors have always seen Consus as "the weakest link", but ADO/ADLER

have taken a strategically valuable path with the cooperation plus option, without

having to make direct changes in LTV or net debt.

Impact of COVID-19: As a residential player, ADO assumes only a minor impact

from COVID-19. Which will have an impact, however, is the rent cap in Berlin.

Published: 22.04.2020

BUY Before: -

Price target EUR 35.00 (-)

Share price* EUR 23.88 (47%)

*last XETRA closing price

Initial 2020e 2021e 2022e

Rental income 131.7 138.0 143.6

EBIT 162.0 165.1 168.6

NAV per share 63.24 65.20 67.21

Key share data

Number of shares (million) 44.2:

Free Float (in %) 80%

Market Cap (in EURm) 1055:

Trading volume (Ø) 290k

High (EUR, 52 weeks) 49.84

Low (EUR, 52 weeks) 13.00

Shareholder structure

ADO Group 20,4%

Free Float 79,6%

Corporate calendar

Q1 2020 report 20.05.2020

Analysts

Mariya Lazarova

Analyst

[email protected]

+49 (0) 69 – 920 389 10

Robel Tesfeom

Analyst

[email protected]

+49 (0) 69 – 920 389 10

xxx

xx

[email protected]

+49 (0) 69 - 920 389 12

Contakt

FMR Frankfurt Main Research AG

Schillerstrasse 16

60313 Frankfurt am Main

Germany

+49 (0) 69 - 920 389 10

www.fmr-research.de

Source: Factset

May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20

10

15

20

25

30

35

40

45

50

55

ADO Properties S.A. Germany SDAX Germany CDAX

FY end: 31.12.; in EURm CAGR (19-22e) 2017 2018 2019 2020e 2021e 2022e

Net rental income -5.4% 103.3 128.0 134.1 105.6 109.5 113.6

EBITDA -3.1% 81.0 96.3 93.8 78.8 82.1 85.2

EBIT -35.0% 463.6 499.3 613.9 162.0 165.1 168.6

Net income before minorities -42.0% 356.0 386.9 601.9 112.2 114.7 117.4

EPS (EUR) -46.3% 8.07 8.77 13.63 2.02 2.07 2.11

FFO 1 -7.5% 54.3 66.8 63.2 46.9 48.5 50.0

FFO 1 per share (EUR) 1.23 1.51 1.43 0.84 0.87 0.90

EPRA NAV 8.7% 1,988.8 2,429.5 2,905.7 3,510.5 3,619.7 3,731.0

EPRA NAV per share (EUR) 45.10 55.05 65.79 63.24 65.20 67.21

DPS (EUR) 0.60 0.75 0.75 0.42 0.44 0.45

Market cap/sqm (EUR) 1,749.1 1,526.2 927.1 1,178.0 1,259.1 1,199.1

EV/sqm (EUR) 3,331.4 2,808.6 2,038.0 3,107.5 2,979.7 2,842.9

FFO 1 Yield (%) 2.91% 3.33% 4.46% 3.53% 3.26% 3.36%

Source: ADO, FMR


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Inhalt Investment Thesis .............................................................................................................................................. 4

SWOT ................................................................................................................................................................. 7

The ADO/ADLER/Consus takeover process ....................................................................................................... 9

Current Group structure .............................................................................................................................. 12

Valuation .......................................................................................................................................................... 13

Summary ...................................................................................................................................................... 13

ADO: stand-alone valuation ......................................................................................................................... 14

ADLER: stand-alone valuation...................................................................................................................... 15

Consus: stand-alone valuation ..................................................................................................................... 16

Peer group valuation ................................................................................................................................... 17

ADO + ADLER: combined valuation ............................................................................................................. 18

ADO’s company profile .................................................................................................................................... 20

Group structure ........................................................................................................................................... 20

Management/supervisory board ................................................................................................................. 21

Shareholder structure .................................................................................................................................. 22

ADLER’s company profile ................................................................................................................................. 23

Company history .......................................................................................................................................... 23

Group structure ........................................................................................................................................... 24

Management ............................................................................................................................................... 24


Consus’s company profile ................................................................................................................................ 25

Group structure ........................................................................................................................................... 26

Management ............................................................................................................................................... 26


ADO’s business model ..................................................................................................................................... 28

ADLER’s business model .............................................................................................................................. 29

The residential portfolio .............................................................................................................................. 29

Acquisition strategy ..................................................................................................................................... 29

Financing strategy ........................................................................................................................................ 30

Key management metrics ............................................................................................................................ 30

Employees .................................................................................................................................................... 30

Research and development ......................................................................................................................... 30

Consus’s business model ................................................................................................................................. 31


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Real estate project development for institutional buyers........................................................................... 31

Real estate development for private buyers ............................................................................................... 32

Development of income properties............................................................................................................. 32

Cost advantages from digitalisation and prefabrication ............................................................................. 32

Portfolio ....................................................................................................................................................... 33

Market environment ........................................................................................................................................ 36

Supply of residential real estate .................................................................................................................. 36

Demand for residential properties .............................................................................................................. 37

The residential market ................................................................................................................................. 38

North Rhine-Westphalia & Lower Saxony ................................................................................................... 40

The Big 8 ...................................................................................................................................................... 42

Forecast ....................................................................................................................................................... 45

Financials ......................................................................................................................................................... 47

ADO FY 2019 ................................................................................................................................................ 47

Adler FY 2019 ............................................................................................................................................... 48

Guidance for 2020 ....................................................................................................................................... 48

Balance sheet structure ............................................................................................................................... 51

Appendix .......................................................................................................................................................... 53


Page 4 of 62

Investment Thesis ADO Properties is a listed residential real estate company active solely in the Berlin

market. The lion’s share of its portfolio consists of centrally located properties or

properties located in interesting areas on the city’s outskirts.

The ADO Properties Group, with the help of its subsidiaries, covers the entire

property asset management value chain, from screening to acquisitions to the

administration of suitable properties. ADO Properties’ strategic focus is to increase

the value of the real estate portfolios. By investing in the modernisation of its

portfolios it can achieve higher rents and lower vacancies. ADO Properties has

roughly 18,000 units. Another business is the privatisation business, which was

launched in 2014.

After ADLER took over ADO Group (a listed holding in Israel), ADO Properties’ major

shareholder, ADO Properties then announced on 15 December 2019 a voluntary

public takeover bid for ADLER. According to its announcement dated 30 March,

ADO now owns 91.93% of ADLER. The deal was settled and the shares were

delivered on 09 April.

The integration of ADLER and rebranding as ADLER Real Estate Group will result in

one of the largest German real estate companies, with a gross asset value (GAV) of

currently EUR 8.5bn. For the sake of comparison, ADO’s stand-alone GAV stood at

EUR 3.6bn at the end of 2019, while ADLER will contribute GAV of EUR 4.9bn.

Together, the two companies currently own 75,721 units, with ADLER accounting

for 58k.

In order to simplify the group structure somewhat, ADO submitted a public bid a

few days ago for the remaining 3% of WESTGRUND (market value of roughly EUR

25m). The majority of WESTGRUND’s shares were bought by ADLER in 2015. We

consider this a step towards a more simplified company structure for ADLER Real

Estate Group.

ADO expects to achieve net rental (NRI) income post ADLER merger of around

EUR 280-300m in 2020. On an annualised basis management sees NRI of EUR 340-

360m. In 2019 ADLER generated NRI of EUR 248.7m, while ADO achieved

EUR 134.1m. On a combined basis, their NRI in 2019 stood at EUR 382.8m. As ADO

sold the Carlos portfolio (5,900 units) at the end of 2019 for EUR 920m,

management estimates its 2020 net rental income (stand-alone) at just under

EUR 106m. We estimate ADO’s NRI in 2020e at EUR 105.6m, and ADLER’s at

EUR 256.7m.

Assuming ADLER is consolidated for just under 8 months in 2020, its contribution

to consolidated NRI in 2020e would be ~EUR 180m. Adding to this ADO’s EUR

105.6m, we currently estimate NRI for 2020e at EUR 286m, which puts us within

management’s range. On an annualised basis we estimate NRI of EUR 360m.

For combined FFO 1 (ADO+ADLER), management expects a range of EUR 105-125m

for 2020. In 2019 ADO and ADLER achieved FFO 1 of EUR 63m and ~EUR 84m

respectively or EUR 147m combined. For 2020e, the company targets annualised

ADO Properties is a listed

residential real estate

company

ADO Properties covers the

entire property asset

management value chain

ADO Properties’ takeover bid

for ADLER

Renaming to ADLER Real

Estate Group with GAV of EUR

8.5bn

Public bid by ADO Properties

for the remaining 3% of

WESTGRUND

ADLER Real Estate Group

expects net rental income of

EUR 280-300m in 2020e

Assuming ADLER is

consolidated for just under

8 months in 2020

Estimations in line with

management expectations


Page 5 of 62

FFO 1 of EUR 120-140m. We estimate 2020e FFO 1 of EUR 46.9m for ADO and

EUR 96.6m for ADLER. On an annualised basis we estimate combined FFO 1 of EUR

143m in 2020e but assume FFO 1 of EUR 111.3m (ADLER will be consolidated for 8

months in 2020e) in our valuation model. Thus, our estimates are in line with

management’s NRI and FFO 1 targets both for ADO and ADLER individually and on

a combined basis.

With regard to EPRA NAV, for 2019 ADLER Real Estate Group reported combined

EPRA NAV of EUR 4.9bn (2018: EUR 4.1bn), with ADO contributing EUR 2.9bn and

ADLER EUR 2.0bn.

Our current estimate for combined 2020e EPRA NAV – i.e. EUR 4.9bn – matches the

2019 numbers. For 2021e we estimate EPRA NAV to increase to EUR 5.3bn and for

2022e to EUR 5.7bn. On a per-share basis we expect EPRA NAV to exceed the

EUR 100 mark for the first time in 2022e (FMRe: EUR 103.35).

As per 31.12.2019 ADO Properties has a stable financial structure and a strong

liquidity position of EUR 500m in directly accessible cash (ADO cash stand-alone:

EUR 387m; ADLER stand-alone: EUR 237m). The company has no major refinancing

scheduled until the end of 2021 – a 2017 ADLER bond of EUR 500m is due in

December 2021.

ADO Properties’ LTV stands at 27% (end of 2019) and its average interest rate is

1.6%. The average term to maturity of its debt obligations is ~4.2 years. Virtually all

of its debt is either fixed interest or interest-rate hedged. ADO Properties intends

to continue this sustainable financing strategy and targets an LTV of no more than

50%. For ADO stand-alone we expect its LTV below 25% for the next few years.

Although ADO’s and ADLER’s fundamental data look strong, both stand-alone and

combined, the shares’ performance over the past few weeks has been clearly

negative. Many investors are afraid of having difficulties with the tenants due to

the Covid-19 crisis. Nonetheless, so far we have not noticed any significant effects

on the residential rental market. Residential property companies have stated that

currently they are not experiencing payment issues or have problems with only a

limited number of tenants. Furthermore, the rent prices remain stable despite the

pandemic and as per end of March there were no fluctuations in prices that were

caused by the current health situation. ADLER appears to be more protected

against the pandemic as a large portion of its portfolio is rented to people with low

to medium income, which have either already received government support or are

going to be protected in this phase. Although the risk for commercial real estate is

larger, the new ADLER Group has only a limited risk exposure.

Obviously, COVID-19 has rattled the entire equity market, but all three individual

shares (ADO, ADLER, Consus) have fallen more strongly – in some cases far more

strongly – than their peers. It seems the market has either reacted completely

negatively to the merger, or the timing of the deal proved to be bad due to the

Corona crisis, thus leading to the shares’ strong negative reactions.


reported EPRA NAV of EUR

4.9bn

…2020e EUR 4.9bn

2021e: EUR 5.3bn

2022e: EUR 5.7bn

ADO has a stable financial

structure and a strong

liquidity position

2019 LTV stands at 27% and its

average interest rate is 1.6%

Negative share performance

over the past few weeks


Page 6 of 62

Stock impact amid the corona crisis

Source: Factset, FMR

All three shares are currently trading at discounts to EPRA NAV of >60% whereas

most peers are trading at discounts of around 30%. We see no reason why the

ADLER Real Estate Group should trade at a deeper discount than the peers. We see

a structural deficit only in the Company's lack of institutional investors to date, but

this also offers a considerable opportunity for the new ADLER to attract larger

investors as partners.

Several points clearly indicate fundamental strength and a promising strategic

outlook: a GAV of EUR 8.5bn, a free float of 80% after the transaction is closed, and

an option to bring Consus – Germany’s most successful project developer – on

board in the next few months (option expires in mid-2021). Admittedly, the

integration of Consus would increase LTV somewhat (1.9% for ADO + ADLER), but

on the other hand ADO and ADLER would gain an advantage in terms of new

projects. We see this trade-off as positive for the business model, and this is also

reflected in our valuation.

On a stand-alone basis we value ADO at EUR 35.00, ADLER at EUR 17.50 and Consus

at EUR 10.50 per share. Each of these valuations suggest significant undervaluation.

While it may take a while for normalcy and calm to return to the equity market, all

three shares still look very interesting in the long term. An important assumption

here is that the current health crisis does not lead to a deep economic crisis.

Combining ADO and ADLER, we derive a fair value per share (FVpS) of EUR 46.58,

which in Corona times should probably be viewed as a best-case scenario (current

upside: almost 100%). Nonetheless, we believe that going forward, especially in H2

2020e and in 2021e as well, the merged entity will achieve significant synergies that

should further increase the attractiveness of the share. One should not forget that

prior to the announcement of the deal and prior to COVID-19, the ADO share was

already trading above EUR 30.

We initiate coverage with a BUY recommendation and a target price of EUR 35.00

(based solely on our stand-alone valuation of ADO Properties), which nonetheless

suggests upside of currently around 50%.

CompanyStock at start of Corona-

crisisLowest price Current stock price

21.02.2020 21.04.2020

ADO Properties 31.38 13.00 -58.6% 23.88

ADLER Real Estate 13.00 5.57 -57.2% 12.50

Consus 7.08 3.74 -47.2% 5.00

Vonovia SE 53.66 36.71 -31.6% 44.45

Deutsche Wohnen SE 38.91 27.66 -28.9% 35.11

Grand City Properties SA 23.94 13.82 -42.3% 18.58

LEG Immobilien AG 117.80 75.12 -36.2% 103.24

TAG Immobilien AG 25.04 14.16 -43.5% 18.52

Aroundtown SA 8.78 2.88 -67.1% 4.73

CORESTATE Capital Holding SA 42.05 21.20 -49.6% 26.16

PATRIZIA AG 23.34 16.08 -31.1% 19.60

Stock decline

amid corona-crisis

All three shares are currently

trading at discounts to EPRA

NAV of >60%

GAV of EUR 8.5bn, a free float

of 80% and Consus-option→

promising strategic outlook

ADO at EUR 35.00, ADLER at

EUR 17.50 and Consus at EUR

10.50

Fair value for ADO and ADLER

combined: EUR 46.58 (Best-

Case Scenario)

We initiate coverage with a

BUY recommendation and a

target price of EUR 35.00


Page 7 of 62

SWOT

Strengths

• Strong and experienced management team: Co-CEOs from ADO and ADLER

• Improved corporate governance; 5 out of 7 board members are fully

independent

• Higher liquidity in the stock (around 80% free-float post-merger) and

potential MDAX-candidate according to the criteria set by the German

stock exchange (Deutsche Börse)

• Combination of FFO 1 from ADO and ADLER increases the value for ADO’s

shareholders

• One of the largest European residential real estate companies

• Owning properties across Germany decreases the regional risks (ADO

focuses on Berlin’s real estate market)

• ADO has a strong liquidity position of EUR 500m with directly accessible

cash as a result of the Carlos portfolio sale in 2019

• No large refinancing until end of 2021 (maturing bond of EUR 500m)

• ADLER has a strong and traceable M&A track-record since 2011; ADLER

made the first steps on the merger with ADO by acquiring ADO Group

Weaknesses

• Around 25% of the portfolio is exposed to the regulated market of Berlin

• Increased interest rates for ADO after the takeover of ADLER (from 1.6% to

1.9% in 2019), which is likely to further increase once Consus is acquired

• Lacking institutional investors in the scale of larger investment companies


Page 8 of 62

Opportunities

• Starting a more simplified company structure through the takeover bid to

Westgrund

• Further simplification of the company structure by overall takeover of the

old ADLER Real Estate

• 25% stake in Consus with an option to acquire 51% in order to transition

into a “build-to-hold” strategy

• Project development strategies with the help of Consus to tackle the

housing shortage in the Top 7 cities

• The merger between ADO/ADLER/Consus has the potential to lead to

significant synergy effects and market advantages given that an efficient

strategic objective is pursued

Treats

• Increased risk due to the takeover bid to Consus could lead to higher

interest rates

• Effects of Covid-19 pandemic on the overall economic stability; at first

effects on rental income from the commercial real estate could be noticed,

followed by residential real estate in the mid-term as well as on the

purchasing of properties and on project developers.


Page 9 of 62

The ADO/ADLER/Consus takeover process On 30 March 2020 ADO Properties S.A. announced the final results of its voluntary

public takeover bid for ADLER Real Estate AG, which will lead to the creation one of

the largest listed real estate groups in Europe. In response to ADO’s voluntary public

takeover bid, ADLER shareholders tendered a total of 66,404,915 shares, equating

to ~91.93% of ADLER’s nominal capital. The free-float is capitalised at EUR 810m.

The merged group is to be registered under the name ADLER Real Estate Group and

its operating headquarters will remain in Berlin. The merged entity will be led by an

experienced management team with Maximilian Rienecker and Thierry

Beaudemoulin as co-CEOs and Sven-Christian Frank as chief operating officer, a

line-up which unites the competencies of ADLER and ADO.

The new ADLER Real Estate Group will have a high-quality portfolio with a GAV of

~EUR 8.5bn, diversified across key German cities with attractive growth potential.

Through its strategic partnership with real estate developer Consus Real Estate AG,

the new group has access to a market-leading development platform with a

pipeline of more than 15.000 rental dwellings. Once the fully integrated business

model is established, the group will be able to manage and develop high-quality

housing facilities in Germany’s key markets and thus enter a value-enhancing

growth path.

The settlement and closing of the deal took place on 9 April 2020.

The takeover bid consists of two phases: Phase I includes the purchase of ADLER

(completed), and Phase II refers to the voluntary takeover arrangement between

ADO and Consus.

Overview of the takeover offer

1

Adler takes over

Ado Group

Takeover bid of

ADO Properties

1. Acceptance

period

2. Acceptance

periodOffer will be settled

Announcement

15.12.2019 06.02.2020

09.04.202023.09.2019

Settlement of the offer

11.03.202010.12.2019

Announcement

Approval of

the BaFin

07.02.2020

Start of the 1st

acceptance

period

Publication of

the result

06.03.2020

End of the 1st

acceptance

period

12.03.2020

Start of the 2nd

acceptance

period

Q2 – Q3

Publication of

the result

25.03.2020

End of the 2nd

acceptance

period

Expiration of the

option agreement

16.06.2021

Delivery of the

shares

30.03.2020

Capital increase

up to EUR 500m

Source: Documents from ADO Properties’ bid, FMR

Phase I: ADO and ADLER (completed)

On 23 September 2019 ADLER announced the takeover of ADO Group, ADO

Properties’ major shareholder. As part of this deal, ADO Properties repurchased its

own shares from ADO Group, reducing ADO Group’s stake in ADO Properties to

4.91% (this was a condition for the merger). The reason for the share buybacks was

to avoid exceeding the key control threshold of 33-1/3 % under Luxembourg law.

ADLER shareholders tendered

a total of 66,404,915 shares

(~91.93% of ADLER’s nominal

capital)

Merged group is to be

registered under the name


ADLER Real Estate Group with

GAV of ~EUR 8.5bn; through

Consus access to development

platform with pipeline of over

15,000 rental dwellings

Deal closing: 9 April 2020

The takeover bid consists of

two phases

Through the acquisition of

ADO Group, ADLER received

33.25% of ADO Properties


Page 10 of 62

On 10 December 2019 this deal was completed, and as a result ADLER held 33.25%

of the voting rights in ADO Properties. ADLER financed the takeover with new

shares, internally available funding, and debt.

On 15 December 2019 it was announced that ADO Properties had made a voluntary

takeover bid for ADLER at EUR 11.10 per ADLER share. This price corresponds to the

3-month average share price prior to the announcement of the takeover. Under a

business combination agreement, a share ratio was set at 0.4164 ADO shares = 1

ADLER share. The share ratio was agreed on the basis of each company’s diluted

EPRA NAV per share (as per end of September 2019). The NAV p/s calculation

assumes the conversion of ADLER’s outstanding convertible bonds. The business

combination agreement is valid for two years from its signing and can be

terminated by either party if one of the parties fails to adhere to its terms or the

deal is not consummated by the end of June 2020.

The takeover was secured by irrevocable acceptance commitments representing a

total of 52.2% of the shares. These include the shares of ADLER Co-CEO Tomas de

Vargas Machuca. On 14 February ADO announced that these shareholders have

already submitted declarations that they have accepted the deal to their custodian

banks. The shares held by ADO Group will be deemed non-voting treasury stock

(own shares) once the takeover is successfully completed. On 6 January Germany’s

federal financial supervisory authority BaFin examined the offer documentation

and permitted its publication.

On 6 March 2020 the first acceptance period ended. The results were published on

11 March. One day later the second acceptance period began, which ended on 25

March. On 9 April 2020 the offer was settled and the shares (91.93% of total) were

delivered. The combined entity will bear the name ADLER Real Estate Group

The new company owns 75.721 rental units in its portfolio. Since the shares of the

new company will have more trading volume (market cap of ~EUR 1.8bn), it will be

a candidate for inclusion in the MDAX index. Considering the criteria of market

value (ADO standalone: rank 119) and turnover (ADO standalone: rank 109), ADO

is likely to be included in the index soon from technical perspective.

The free float should be around 80%. 33% of the ADLER shares in ADO will become

treasury stock post takeover, so these shares are not included in shareholder

structure calculation. Existing and new shareholders in ADO will be entitled to

dividends for 2019. Since ADLER stand-alone has not distributed any dividends so

far, dividend payments are unlikely to be made in the short or medium term.

Once the takeover is done, a capital increase of EUR 500m is planned in order to

further strengthen the balance sheet structure. This capital increase has already

been discussed with banks and the new shares’ issue is expected in Q2 or Q3 2020.

The exact date depends on the market situation.

ADO can secure the share-financed part of the offer through capital increases from

authorised capital (EUR 750m). On 06 Feb 2020 ADO Properties had cash totalling

EUR 500m, which it can use to cover the offer costs (EUR 20m).

ADO Properties had made a

voluntary takeover bid for

ADLER at EUR 11.10 per

ADLER share

The takeover was secured by

irrevocable acceptance

commitments

On 6 March 2020 the first and

on 25 March 2020 the second

acceptance period ended

Market cap of ~EUR 1.8bn →

ADLER Real Estate Group will

be a candidate for inclusion in

the MDAX index

Capital increase of EUR 500m

is planned


Page 11 of 62

To refinance ADLER’s financial obligations in the case of a change of control, a

bridge financing facility was agreed with J. P. Morgan with a face value of up to

EUR 2.963bn. This facility can also be used for bonds issued via the ADO Group.

On 25 March 2020 ADO had announced a voluntary, public takeover bid to

Westgrund shareholders. ADLER had acquired the majority of Westgrund in 2015.

By taking over ADLER, ADO acquired an indirect stake of 96.9% in Westgrund. ADO

will finance the acquisition with cash and the full acquisition of Westgrund will

serve to simplify the structure of the new group. The current market capitalisation

of Westgrund is over EUR 825m and hence, a takeover of 3% of the stocks will cost

roughly EUR 25m. We consider the offered purchase price of EUR 11.71 per

Westgrund share to be fair and see only minor risks that are financially negligible

for the new group as part of the upcoming review of the takeover offer.

Phase II: ADO and Consus

On 15 December 2019 ADO Properties acquired 22.18% of Consus’s shares for an

average price of EUR 9.72, paying a total of EUR 294m. This purchase was paid in

cash which basically came from the sale of the Carlos portfolio. ADO closed the sale

of the Carlos portfolio (rental residential properties) on 29 November 2019. The

price for the transaction was EUR 920m (less net debt of the sold companies

totalling EUR 340m). Hence, the proceeds after the sale of Carlos portfolio and the

purchase of Consus should amount to EUR 580m.

Together with the shares that ADLER Real Estate already has, this amounts to a

stake of ~25% in Consus. Additionally, ADO and Consus have signed a strategic

cooperation agreement under which the two parties agree to collaborate on

current and future projects. In the case of projects where both parties have already

collaborated, ADO has the right to match the bid of a third party in order to be able

to acquire capital assets that pertain to the project. In addition, ADO and Consus’

main shareholder Aggregate Holdings Luxemburg have entered the following

option agreements:

Call option for ADO: If ADO exercises this option, it will acquire a 50.97%

stake in Consus at a share ratio of 0.2390 ADO share = 1 Consus share.

Aggregate Holdings currently holds 50.97% of Consus. The exercise of this

option will also trigger a voluntary bid by ADO to the minority shareholders

at the same share ratio of 0.2390 (obligatory).

Put option for Aggregate Holdings: This option agreement is contingent on

a change of control at ADO. By exercising this put option, Aggregate would

sell its stake in Consus Real Estate to ADO at a price of either i) EUR 8.35

per share in cash or ii) at a share ratio of 1 newly issued ADO share = 0.2390

Consus share, whichever ADO chooses.

The option agreements expire on 16 June 2021.

A bridge financing facility was

agreed with J. P. Morgan

Public takeover bid by ADO

Properties for the remaining

3% of Westgrund

ADO Properties acquired

22.18% of Consus’s shares

plus call option for further

50.97%


Page 12 of 62

Through its cooperation agreement with Consus, ADO aims to implement a “build-

to-hold” strategy and expand it in the future. This should serve to reduce its

marketing and distribution costs and ultimately make it more cost-efficient.

On 17 January 2020 ADO signed a letter of intent with Consus Swiss Finance AG to

acquire 89.90% of all companies belonging to the Holsten Quartier development

project. The preliminary purchase price for 100% of the shares stands at EUR 350m.

Part of the bridge financing facility agreed with J. P. Morgan – namely EUR 1.428bn

– can also be used for the debt of Consus Real Estate if ADO acquires a majority of

Consus.

Current Group structure Chart of the current group structure

Ado Group

ADO Properties

ADLER Real Estate

BCP Accentro Westgrund

Consus

CG GroupConsus Swiss

Finance

25,0% (incl. 3% shares of ADLER)94,2% (incl. Treasury stocks)

75% 93%96,9%69,8%

33,3%

3,1%

Holding Takeover bid

100%

4,8%

Source: ADO, ADLER, Consus, FMR

Through its cooperation

agreement with Consus, ADO

aims to implement a “build-

to-hold” strategy

LOI to acquire the Holsten

Quartier development project

Part of the bridge financing

facility can also be used for

the debt of Consus Real Estate


Page 13 of 62

Valuation Note regarding the merger:

Since there is still no joint income statement, balance sheet and cash flow

statement, it is more difficult to come to an overall outlook (especially as a result of

the fair value adjustments of the properties and assets). Therefore, our income

statement, balance sheet and cash flow estimates in the appendix are limited to

ADO Properties Standalone. At this point in time, we also did not include Consus in

the group, as the option had not yet been executed and it is therefore not possible

to make a more detailed assessment of the new planned group. In particular, no

reliable statements can be made about the interest-bearing liabilities (net debt,

interest rate and LTV). Currently no reliable statements about the market situation

can be made either because of the distortions caused by Covid-19 and planned

capital increase and the execution of the option on Consus need to be carried out.

For the valuation of ADO we have considered solely the current situation as of 2019

as well as the already completed points from phase 1.

Summary To derive the fair value of the individual companies and of the new ADLER Real

Estate Group, we applied one valuation approach, EPRA NAV. We focused on the

multiples for the year 2022e, as this would be the first year in which ADO, ADLER

and Consus would be fully integrated.

EPRA NAV is a good model for real estate companies, because it incorporates net

asset value based on the attributable market values of the property assets.

Since the takeover process is still in progress, we have decided to conduct both

stand-alone valuations for all companies and a combined valuation. With regard to

our combined valuation, we would point out that we do not include any potential

synergy effects given that certain data points are missing due to the integration of

ADO and ADLER which is still to follow.

In the following sections we have valued all companies both individually and on a

combined basis. Our target price for ADO stand-alone works out to EUR 35.00; for

ADO + ADLER, i.e. the new ADLER Real Estate Group, we derive a fair value per share

of EUR 46.58. Under normal circumstances we would base our target price on a

combined entity valuation, since this is corresponding to the new group. But these

are not normal circumstances. The ADO share continues to trade at ~EUR 24, and

even we assume that COVID-19 has no negative operating impact on the group, the

equity market at large remains in negative territory compared to pre-Corona levels.

And since there is currently no way of knowing how long the lockdown, the worries,

fears, and panic will continue to dominate the market, we have cautiously decided

to use ADO’s stand-alone fair value as our TP, as we assume that in least in H2 2020e

the equity markets will “normalise” and investors will no longer be purely risk-off

on mid-cap shares but will return to the segment with a view to its fundamental

strength. In the current period of market uncertainty, we consider our stand-alone

FVpS for ADO of EUR 35.54, which still suggests upside of around 50%, a more

EPRA NAV valuation approach

applied to derive the fair

value

EPRA NAV is a good model for

real estate companies

We have decided to conduct

stand-alone valuations for all

companies and a combined

valuation

Our target price for ADO

stand-alone: EUR 35.00;

ADLER Real Estate Group:

EUR 46.58

Cautiously decided to use

ADO’s stand-alone fair value

as our TP


Page 14 of 62

realistic price target than our fair value per share for the “new group”. In view of

this upside, we initiate coverage with a clear BUY recommendation. Our price target

stands at EUR 35. Nonetheless, we would point out that the share could outperform

strongly once the markets have fully freed themselves from COVID-19.

ADO: stand-alone valuation ADO: EPRA NAV valuation


ADO sold its largest portfolio, the Carlos portfolio, in 2019, and so we expect its NRI

to be lower in 2020e. The core of ADO’s business model is modernisation. That is

why we assume that despite the Berlin rent cap ADO will achieve slight rent

increases in its portfolio in the coming years. ADO itself projects a decrease in its

2020 NRI of not quite EUR 1m, which will be largely offset going forward by positive

modernisation effects.

ADO KPIs

Source: ADO, Factset, FMR *Share prices for 2020-2022e are the current Factset’s Consensus for the target share price

We continue to estimate no major impact from the Berlin rent cap either on fair

values of the real estate assets or on the current large gap between market values

and rent prices. Consequently, we estimate a diluted EPRA NAV p/s of EUR 47.82

for 2022e. Discounting this value back to present at ROE, we derive an absolute

value per share of EUR 35.54, which corresponds to upside of more than 50%.

kEUR 2017 2018 2019 2020 (currently) 2020e 2021e 2022e

Share price 42,28 45,52 32,10 24,32 26,80 26,80 26,80

Market cap 1.864.548 2.007.478 1.417.247 1.350.116 1.487.792 1.487.792 1.487.792

Lettable area in sqm 1.066.014 1.315.357 1.528.613 1.125.391 1.181.660 1.240.743 1.240.743

Market cap/sqm 1,75 1,53 0,93 1,20 1,32 1,26 1,20

Enterprise Value 3.551.318 3.694.248 3.115.267 3.359.524 3.497.200 3.521.028 3.527.362

EV/sqm 3,33 2,81 2,04 3,11 3,11 2,98 2,84

EPRA NAV 1.988.757 2.429.544 2.905.699 3.510.518 3.510.518 3.619.658 3.731.043

EPRA NAV per share 45,10 55,05 65,79 63,24 63,24 65,20 67,21

Book value per share 40,71 48,73 59,93 58,30 58,30 59,96 61,64

Lower NRI expected for 2020e

No major impact on market

values expected


Page 15 of 62

The reason for this high upside is that ADO is currently trading at a discount to EPRA

NAV of more than 60%, while peers are trading at discounts of around 30%. While

the share prices of many companies have been hit by COVID-19, ADO’s share price

has plunged by as much as 60% in the last 2 months. In our opinion, investors in

this current phase have perceived the uncertainty related to the ongoing takeover

process for ADLER as a negative signal, and this is probably what drove the sell-off.

But now, as the deal is closed, we see no reason why ADO should not return to a

normal discount level of 30%. For even without synergies and excluding ADLER’s

NAV, ADO is currently favourably valued and thus a clear BUY.

ADLER: stand-alone valuation ADLER: EPRA NAV valuation


Our stand-alone valuation of Adler renders a fair value per share of EUR 23.90

based on diluted EPRA NAV per share in 2022e. After discounting this value back to

present value at ROE, we derive an absolute value per share of EUR 17.77.

Despite a good underlying business performance in 2019, the share is trading at a

discount to EPRA NAV of more than 60%. We see this discount as exaggerated, even

on a stand-alone basis, since ADLER should continue to generate growth in 2020e,

2021e, and 2022e, according to our estimates.

Upside exists, as ADO is

currently trading at a discount

to EPRA NAV of more than

60%, while peers are trading

at discounts of around 30%

ADLER stand-alone -

EUR 17.77 per share

Positive outlook for

the next years


Page 16 of 62

ADLER KPIs

Source: ADLER, Factset, FMR * Share prices for 2020-2022e are the current Factset’s Consensus for the target share price

Consus: stand-alone valuation Consus: NAV valuation


Consus has announced that by 2022 it should begin construction on projects worth

more than EUR 4bn, and complete properties with a GDV (gross development

value) of more than EUR 2bn. Currently, it is cannot be reliably assessed the extent

to which the current market situation will affect these plans, even it is only from

the perspective of timeline. With the base case scenario, we expect growing income

from project development and growth in the projected-related inventory. We

assume that material and personnel costs will increase, also due to the bigger

pipeline. In calculating NAV we have also included goodwill, since Consus’

subsidiaries CG Gruppe and SSN Group have been tasked with constructing the

projects.

Our stand-alone valuation of Consus renders a fair value per share of EUR 14.71

based on diluted NAV per share in 2022e. After discounting this value back to

present value at ROE, our model renders an absolute value per share of EUR 10.94.

Since the shares are currently trading at EUR 5, this equates to upside to our FVpS

of ~ 100%. Similar to ADO and ADLER, Consus is also currently trading at a discount

to NAV of 60%, which in our view does not adequately reflect the company’s growth

EURm 2017 2018 2019 2020 (currently) 2020e 2021e 2022e

Stock price 13,29 13,02 13,68 12,90 14,55 14,55 14,55

Market cap 901,36 891,61 950,22 896,04 1.010,65 1.010,65 1.010,65

Lettable area in sqm 3,10 4,09 4,02 4,02 4,02 4,02 4,02

Market cap/sqm 290,31 217,93 236,38 222,90 251,41 251,41 251,41

Enterprise Value 3.642,00 5.168,12 6.256,62 3.389,64 3.504,25 3.504,42 3.504,59

EV/sqm 1.173,02 1.263,18 1.556,41 843,21 871,72 871,76 871,81

EPRA NAV 1.207,18 1.692,23 1.972,57 2.215,84 2.215,84 2.470,93 2.733,22

EPRA NAV per share 17,80 24,71 28,40 31,90 31,90 35,57 39,35

Book Value per share 14,16 17,78 20,82 24,33 24,33 28,01 31,78

Increasing income from

project development expected

due to Consus pipeline

Consus stand-alone -

EUR 10.94 per share

Upside to our FVpS

of nearly 100%


Page 17 of 62

opportunities. Even if the discount to NAV should “only” shrink to 30%, the shares

could double in value. Questionable is whether the investors are willing to grant

project developers like Consus a low discount on the NAV.

Project developers, for example in UK, the Netherlands or Austria, are traded on

average at a discount of 30% to the NAV, which also reflects the increased risk

appetite among investors there. In Germany, real estate project developers have

had difficulties in all of the pervious real estate stock cycles.

Consus KPIs

Source: Consus, Factset, FMR * Share prices for 2020-2022e are the current Factset’s Consensus for the target share price

Peer group valuation To incorporate a market-based approach into our valuation, we have introduced a

peer multiple. The peer group consists of other real estate companies which rent

flats throughout Germany. Most of the peer group companies focus on residential

properties and as such are comparable to ADO and ADLER. PATRIZIA should be

viewed with caution, however, since it has a very broad business mix with

residential properties making up only a fourth of its total real estate portfolio.

Our peer group includes 30 companies. Having said that, a large share of peers

either have no consensus estimates available or only stale ones, which means it

makes little sense to use these companies for comparison purposes.

Peer group overview


EURm 2017 2018 2019e 2020 (currently) 2020e 2021e 2022e

Stock price 8,07 7,60 7,32 5,00 7,00 7,00 7,00

Market cap 263,5 649,9 984,9 672,8 941,9 941,9 941,9

Project volume (GDV) 4,5 9,6 10,3 10,3 10,3 10,3 10,3

Market cap/project volume 58,0 67,7 95,6 65,3 91,4 91,4 91,4

Enterprise Value 2.073,5 3.232,4 5.531,6 5.167,2 5.436,3 5.648,4 6.183,7

EV/project volumes 456,1 336,7 537,0 501,7 527,8 548,4 600,4

NAV incl. Goodwill 749,8 1.125,3 2.247,7 2.333,3 2.333,3 2.515,3 2.782,8

NAV per share 22,97 13,16 16,70 17,34 17,34 18,69 20,68

Book value per share 19,79 11,82 7,54 8,02 8,02 8,02 8,02

Peer group includes

companies with a focus on

renting properties

Reduced peer group due to

database


Page 18 of 62

ADO + ADLER: combined valuation ADO + ADLER: EPRA NAV valuation


Our valuation of ADO and ADLER combined renders a fair value per share of

EUR 65.79 based on diluted EPRA NAV per share in 2022e. Discounting this back to

present value at ROE, our model renders an absolute value per share of EUR 46.58.

This would be almost 31% above our stand-alone fair value for ADO.

In this calculation we have include no potential takeover synergies since the

integration has not provided many data points yet. Management assumes there

will be significant synergy effects from the integration – an assumption we also

consider realistic – but at present we cannot reliably quantify such effects. In

contrast to our stand-alone valuation of ADO, we have stripped ADLER’s value back

out of ADO in 2019, which we had factored in for 2019, since here we include ADLER

as a separate entity.

This valuation shows that this deal is a clear BUY, and that as soon as the equity

market and the company return to a certain “normalcy” post COVID-19 and the

shares are analysed again based on underlying fundamentals, the new ADLER Real

Estate Group will be one of the most interesting shares in the real estate space. Not

only will the new group be a direct MDAX candidate, but it will also have massive

catch-up potential given that the shares of all three constituent companies (ADO,

ADLER, Consus) have fallen drastically.

For investors who wish to position themselves for the long term now, the new

ADLER Real Estate is well worth looking at. Because these elevated discounts

compared to most other peers will only be temporary – of that we are very

confident.

Fair value per share of ADLER

Real Estate Group: EUR 46.58

Scenario without consi-

deration of synergy effects

Valuation shows that this deal

is a clear BUY

For investors who wish to

position themselves for the

long term now, the new

ADLER Real Estate is well

worth looking at


Page 19 of 62

EPRA NAV valuation including all three companies


Assuming the group acquires, as planned, a majority interest in Consus by mid-

2021, we estimate the fair value of the new group (all three companies, 2022e

estimates), at EUR 52.58, which is another nearly 14% on top of our calculated fair

value for ADO+ADLER.


Page 20 of 62

ADO’s company profile ADO Properties is a listed residential real estate company active solely in the Berlin

market. The lion’s share of the ADO Properties portfolio consists of centrally

located properties or properties in interesting peripheral locations.

The ADO Properties Group, with the help of its subsidiaries, covers the entire

property asset management value chain, from screening to acquisitions to the

administration of suitable properties. The strategic focus of the ADO Properties

Group is increasing the value of its real estate portfolios. By investing in the

modernisation of its portfolios, it can achieve higher rents and lower vacancies.

ADO Properties has about 18,000 units (source: Fact Sheet dated 20 February

2020). Another business, launched by ADO Properties in 2014, is the privatisation

business.

After ADLER acquired the ADO Group (a listed holding from Israel), ADO Properties’

main shareholder, ADO Properties, publicly announced on 15 December 2019 a

voluntary public takeover bid for ADLER. According to its announcement dated 30

March, ADO now owns 91.93% of ADLER. On 09 April the deal was settled and the

shares were delivered.

With the cooperation agreement that it signed on 15 December 2019 with project

developer Consus Real Estate, ADO Properties intends to pursue a “build-to-hold”

strategy. Options agreed with the Consus’s main shareholder, Aggregate Holding,

could, if exercised, make ADO the main shareholder in Consus.

ADO Properties was founded in 2007, first as a limited liability company (GmbH)

under the name of “Swallowbird Trading & Investments Limited“ with domicile in

Cypress. In 2015 the company moved its domicile to Luxembourg and changed its

legal form to that of a limited liability company under Luxembourg law. After that

it became a public company limited by shares (Aktiengesellschaft) and changed its

name to “ADO Properties.”

Group structure ADO Properties is a holding company of the ADO Properties group. Its operating

activities are generally carried out by its 197 subsidiaries (date of information: 30

September 2019). ADO Properties provides management and administrative

functions. The organisational chart below shows the group’s key subsidiaries.

ADO Properties covers the

entire property management

value chain

ADO Properties’ takeover bid

for ADLER

Cooperation agreement with

Consus Real Estate

Founded in 2007, listed since

2015

The holding company of the

ADO Properties Group


Page 21 of 62

Group structure

ADO Properties S.A.(Luxembourg)

ADO Lux-EEME S.a.r.l.

(Luxembourg)

ADO FC Management Unlimited Company

(Ireland)

ADO Lux FinanceS.a.r.l.

(Luxembourg)

ADO Malta Limited (Malta)

ADO Properties GmbHADO Immobilien Management GmbHCCM City Construction Management

Central Facility ManagementADO Treasury GmbH

ADO Living GmH(Germany)

31SPVs (GmbH) Plus 2 BV and 2 ApS

(Germany/NL/DK)

30 SPV s (29 GmbH and1 S.a.r.l.) Plus 1 BV

(Germany/LU/NL)

4 SPVs (BV) (Netherlands)

50 SPVs (GmbH) Plus 1 BV

(Germany/NL)

EPF Acqusition Co 86 S.a.r.l.

(Luxembourg)

ADO SBI Holdings S.A. & Co. KG (Germany)

Consus Real Estate AG (Germany)

59 SPVs (GmbH) (Germany)

Residential properties

Berlin


Berlin


Berlin


Berlin


Berlin

6% Kommanditist

94%

94%

6%

100% 100%94,9% 93,7% - 94,9% 60%

100%100%

100%100%

22,18%

Source: ADO Properties, FMR (date of information: 07 Feb 2020)

Management/supervisory board Thierry Beaudemoulin has been CEO at ADO Properties since 10 December 2019.

After earning his master’s degree in real estate and urban planning, Thierry

Beaudemoulin’s positions included special advisor to the chief executive officer

(Batigere), head of property management (Foncia), asset manager (ING REIM) and

managing director France (ING REIM). His last position before he became CEO at

ADO Properties was that of executive board member from 2006 to 2019 at Covivio

and CEO of Covivio Deutschland. He will be Co-CEO at the newly created ADLER Real

Estate Group (which will integrate ADLER and change its name from ADO to ADLER

Real Estate Group).

At present ADO Properties’ supervisory board has seven members. The supervisory

board chairman is Dr Peter Maser. Dr Maser received his doctorate from the

University of Tübingen. He is admitted to the German bar. Prior to partnerships at

a law firm in Freiburg im Breisgau and at Deloitte Legal Rechtsanwaltsgesellschaft

mbH, he was employed at various auditing firms, trust firms, and the Ebner Media

Group. Dr. Maser is also currently deputy chairman of the supervisory board at

Volksbank Stuttgart eG, and supervisory board chairman at both BF direkt AG and

EURAM Bank AG.

Dr. Ben Irle, after his academic training at a partnership, founded a law firm in

Berlin (2005-2011). In the ensuing years he was a managing partner at Irle

Kalckreuth LLP (2012-2013) and Irle Moser Rechtsanwälte PartG (since 2014). Dr.

Ben Irle currently holds additional positions at ADO Group Ltd. (member of

supervisory board) and Focus Hören AG (chairman of supervisory board).

Florian Sitta successfully completed his legal studies in 2002. The following year he

was admitted to the German bar. He began his professional career as a legal counsel

and head of the legal department at Beate Uhse AG (2004-2015). He has been the

head of the legal department at Adler Real Estate AG in Hamburg and Berlin since

Thierry Beaudemoulin - CEO

Dr. Peter Maser - Chairman of

Supervisory Board

Dr. Ben Irle -

Supervisory board member

Florian Sitta -

Supervisory board member


Page 22 of 62

2016. He also currently holds positions at ADO Group Ltd. (member of supervisory

board) and Sitta & Partner Gesellschaft für Logistik mbH (managing director).

Arzu Akkemik began her career as an analyst at Barings Securities in London after

completing her studies of international finance and accounting. Besides her

activities as an analyst, she was active in the company areas of corporate finance

and fund management. From 2005 to 2013 she was employed in London at Rexiter

Capital as a director/senior fund manager. In 2013 she founded Cornucopia

Advisors Limited and Cornucopia Asset Management Limited.

Dr. Michel Bütter has a doctorate in law. He is admitted to the German bar and has

gathered experience at various law firms (2001-2008). He has also held numerous

other positions in corporate management bodies. Currently Dr. Bütter holds

positions at ASSMANN BERATEN+ PLANEN AG (deputy chairman of supervisory

board), RCIS (member of board of management), Realconnext.com (chairman of

advisory council) and Bots4YouGmbH (member of advisory council and

shareholder).

Jörn Stobbe began his professional career in 1995 after completing his law studies

and passing his second state law examination. His first employer was

Landgesellschaft Schleswig-Holstein mbH. In the years thereafter we worked at the

law firm Clifford Chance (2000-2013) and RREEF Management GmbH (2013-2017).

Mr Stobbe currently holds additional positions at Union Investment Real Estate

GmbH (executive board member), Union Investment Institutional Properties GmbH

(management member) and at 1. FC Köln KGaA (chairman of supervisory board).

Shareholder structure The shareholder structure of the company includes a substantial free float

component of 80%. ADLER Real Estate holds 20.45% of the shares. Further

shareholders are Klaus Rudolf Wecken (5.74%), Mirabella Malta Ltd. (5.52%),

Mezzanine IX Investors S.A. (5.31%) and Union Investment Privatfonds GmbH

(4.37%).

Current shareholder structure

Source: ADO Properties, FMR (date of information: 31 March 2020)

20,45%

5,74%

5,52%

5,31%

4,37%

58,61%

ADO Group Ltd. Klaus Rudolf Wecken Mirabella

Mezzanine IX Union Investment Freefloat

Arzu Akkemik -

independent member of

supervisory board

Dr. Michael Bütter -

independent member of

supervisory board

Jörn Stobbe -

Independent member of

supervisory board

Shareholder structure: free

float of about 80%


Page 23 of 62

ADLER’s company profile ADLER Real Estate has been active in the real estate industry for more than 20

years. Its focus lies on buying residential properties and managing permanently

held properties. At present ADLER manages more than 58,000 rental units

throughout Germany. ADLER’s business model also includes the purchase of real

estate portfolios and interests in other real estate companies.

Since the end of 2018 ADLER has invested in development projects in A-locations,

which constitute ~14% of its GAV (gross asset value). It pursues a “build-and-hold”

strategy, which will lead to growth in the existing residential portfolio. The

acquisition of 70% of the Brack Capital Properties N.V. (BCP) in 2018 brought new

development projects into the portfolio.

Since the group has a strict residential focus, it is selling BCP’s commercial portfolio.

67% of the commercial properties have already been sold, and the remaining assets

will follow as soon as possible. The disposal proceeds will be used mainly to pay

down bank debt, leading to a lower LTV ratio.

ADLER invests primarily in peripheral locations and growing metropolitan areas in

northern western, and eastern Germany. The idea here is to benefit from the

favourable real estate growth in B cities. The company’s geographic focus is on

Lower Saxony and North Rhine-Westphalia. Most of the properties are acquired in

a finished state with initially higher vacancies. The company endeavours to reduce

vacancies through active asset management. Its facility and property management

services are provided by the group’s subsidiaries.

Company history In 1880, Adlerwerke vorm. H. Kleyer AG was founded in Frankfurt and

manufactured automobiles, motor cycles, bicycles and typewriters.

In 1993 the company was sold to the real estate investor Roland Ernst and the

Philipp Holzmann construction group.

In 1998 typewriter production was discontinued and the company’s main business

became property rental. The company had already discontinued its other product

areas long ago: cars in 1945, motorcycles in 1958, and bicycles in 1945.

In 2002 the company’s name was changed to ADLER Real Estate, and its corporate

domicile was relocated to Berlin. ADLER’s real estate portfolio has grown strongly

in the last five years through the acquisition of real estate companies:

2014: Takeover of 92.7% of Accentro Real Estate (at the time: ESTAVIS AG) for

EUR 23.2m

2015: Acquired Mountain Peak Trading Ltd. (an investment holding company).

This acquisition gave ADLER a minority (24.79%) interest in Conwert

Immobilien Invest SE.

Acquired Treuhaus Hausbetreuungs-GmbH, which oversees the property

management activities for south-western Germany.

ADLER Real Estate focuses on

the management of properties

held on a long-term basis

2018 ADLER has invested in

development projects, which

constitute ~14% of its GAV;

ADLER pursues a “build-and-

hold” strategy

BCP’s commercial portfolio

will be sold

ADLER invests primarily in

peripheral locations and

growing metropolitan areas in

northern western, and eastern

Germany

1880 the Adlerwerke was

founded

1993 the company was sold

1998 the company’s main

business became property

rental

2002 the name was changed

and 2016 its corporate domi-

cile was relocated to Berlin

2014 Takeover of Accentro

2015 Takeover of Mountain

Peak Trading Ltd.

2015 Takeover of Treuhaus

Hausbetreuungs-GmbH


Page 24 of 62

Acquired ~95% of Wohnungsbaugesellschaft JADE with a portfolio of 6,750

residential units. Wohnungsbaugesellschaft JADE’s subsidiary JADE

Immobilien Management is the property manager for properties in north-

western Germany.

Acquired the vast majority of WESTGRUND AG. At the end of 2016 ADLER’s

interest in WESTGRUND exceeded 95%, and so it acquired the remaining

shares in a squeeze-out. WESTGRUND focuses on acquiring, managing, and

servicing German residential properties.

2017: Sold Accentro Real Estate AG to Vestigo Capital Advisors.

2018: Acquired ~70% of Brack Capital Properties NV. (BCP) BCP is a private equity

company focusing on properties in Germany. This acquisition added

~12,000 residential units to ADLER’s portfolio.

2019: Acquired ADO Group, which gave ADLER Real Estate a minority (33.25%)

interest in ADO Properties

Group structure The ADLER Group encompasses nearly 230 individual companies and contribute to

a high level of complexity, also due to the many acquisitions made. Most of these

subsidiaries are property companies whose portfolios represent the entirety of

ADLER Real Estate’s property assets. The acquired companies Westgrund and BCP

still exist as sub-groups. Property management of the residential units is carried out

primarily by ADLER Wohnen Service. ADLER Gebäude Service performs facility

management functions at nearly all locations. Heating and energy supply is

concentrated at ALDER Energie Service.

ADLER reports on two main segments: Portfolio and Other. The Portfolio segment

includes existing properties from which rental income is generated. This also

includes the asset and property management activities. This segment also includes

the BCP properties earmarked for disposal as well as project developments. The

“Other” segment includes older development projects or other group activities that

cannot be formed into a separate segment.

Management Tomas de Vargas Machuca (1974) has been the chairman of the executive

committee since 2013 and Co-CEO since the end of 2017. He completed his studies

of business and economics at Bocconi University in Milan (Italy) and has more than

15 years’ experience in the real estate industry. Tomas de Vargas Machuca has 10

years of experience in executive positions. His areas of activity have included

banking, private equity, finance and investment.

Maximilian Rienecker (1985) has been head of corporate finance & strategy since

February 2017 and Co-CEO since December. He completed his management studies

at the University of Nottingham. Rienecker has been employed in the areas of sales

& marketing, corporate strategy and M&A. He has four years of experience in the

real estate industry. On 9 April 2020 he was appointed as Co-CEO of the newly

created ADLER Real Estate Group.

2015 Acquired JADE

2015 Acquired WESTGRUND

2017 Sold Accentro

2018 Acquired BCP

2019 Acquired ADO Group

Tomas de Vargas Machuca –

Co-CEO

Maximilian Rienecker –

Co-CEO

Two segments: Portfolio and

Other

The ADLER Group encompasses

nearly 230 individual companies


Page 25 of 62

Sven-Christian Frank (1965) has been COO since June 2016. He has been with the

company since 2015 and had previously served in management positions at real

estate companies such as Gestrim Deutschland AG and Deutsche Real Estate AG.

Sven-Christian Frank completed his law studies at Ludwig Maximilian University of

Munich.

Shareholder structure The shareholder structure of the company includes a substantial free float

component of 43.11%. The company’s anchor shareholders are Mezzanine IX,

Wecken and Fairwater, which together hold 42.95% of its shares. ADLER Real Estate

holds 2.3% of its own shares, Thomas Bergander has another 6.7%, and the

investment management company Fil Investments International holds a stake of

5% of shares in issue.


Source: ADLER Real Estate, FMR (date of information: 31 Dec 2019)

Consus’s company profile Consus Real Estate AG is the fastest growing real estate developer and has a

pipeline of more than 15,000 residential units (a total of 67 projects) in Germany’s

Top 9 cities (Berlin, Munich, Frankfurt, Düsseldorf, Cologne, Hamburg, Stuttgart,

Leipzig and Dresden). These locations represent Germany’s most important cities

for the real estate economy.

One of Consus’s key points of focus is the development of quartiers (entire

neighbourhoods or districts) and standardised multi-story flat blocks. The company

develops mixed-use development projects that incorporate commercial and retail

space. Additionally, Consus develops residential properties by repurposing and

reconstructing former commercial and industrial properties. Most of these

properties are sold forward to institutional clients. Such forward sales are intended

to minimise project development risks.

Free Float; 43,11%

Wecken; 14,97%

Mezzanine IX; 14,44%

Fairwater; 13,54%

Thomas Bergander;

6,66%

FIL; 5,02%Treasury

Shares; 2,26%

Sven-Christian Frank –

COO

Shareholder structure of the

company includes a

substantial free float

component of 43.11%

Consus Real Estate AG is the

leading real estate developer

and has a pipeline of more

than 15,000 residential units

Consus: focus on development

of quartiers and standardised

multi-story flat blocks


Page 26 of 62

Thanks to the process of digitalisation in the construction industry and the

company’s own construction expertise, Consus covers the entire real estate

development value chain. The individual steps along the value chain are performed

by subsidiaries CG Gruppe AG and Consus Swiss Finance AG.

Group structure Consus Real Estate had already acquired 50.0% of the project developer CG Gruppe

in 2017. The following year, in 2018, it increased its holding to 71.0%. The company

founder Christoph Gröner (“CG”) is still committed with 25.0%

In December 2018 Consus Real Estate acquired 93.4% of the small project

developer SSN for EUR 245m. After it was acquired, SSN became a segment at

Consus Real Estate. In 2019 SSN Group was renamed “Consus Swiss Finance“.

Group structure

Source: Consus, FMR

The group generates its revenue from the following five segments:

property rental, changing portfolio assets, property sales, project development as

well as service, maintenance and management activities.

The company is organised into three segments:

1. Consus Real Estate: The focus of this segment is to support the subsidiaries

by performing centralised functions and in letting out properties mainly for

commercial use.

2. CG Gruppe: This includes the development of residential and commercial

properties. CG also lets out properties and provides the services that this

entails.

3. Consus Swiss Finance: This segment is involved in project development,

planning, construction and building technology. It also operates in the area

of letting out residential and commercial properties.

Management Andreas Steyer has been Consus’s CEO since May 2018 and has more than 30 years

of experience in the real estate industry. Prior to joining Consus he was the

Consus covers the entire real

estate development value

chain

Acquisition of CG Gruppe and

SSN Gruppe

Revenues from five segments

Three segments

Andreas Steyer – CEO


Page 27 of 62

managing director of the listed real estate company DEMIRE, CEO of Deka

Immobilien Invest and a partner at Ernst & Young Real Estate. Prior to becoming

CEO, Steyer was COO at Consus.

Benjamin Lee has been CFO at Consus since April 2018. Lee has 25 years of

experience in the financial industry including 14 years in investment banking at

UBS. Before joining Consus he was the investment director at Aggregate Holdings,

Consus’s main shareholder. Lee already has experience as a CFO at a listed

company.

Theo Gorens has been the CRO and deputy CFO since May of 2019. Since 2012 he

has sat on the supervisory board and is responsible for risk management and

corporate development of Consus subsidiary SSN Group. Prior to that he held

executive positions in the financial services industry including CFO at Fortis ABN

AMRO and he was a member of Bethmann Bank’s expanded executive board

responsible for structured finance.

Shareholder structure The shares of Consus Real Estate AG are listed in the Scale Segment of Frankfurter

Börse. As shown in the chart below, Aggregate Group owns 51% of the shares. ADO

Properties (22.18%) and ADLER Real Estate (~3.00%) hold another 25%. Christoph

Gröner, CEO of CG Gruppe, holds 6%. The free float is 18% of shares in issue.


Source: Consus, FMR (date of information: 01 Feb 2020)

Aggregate Group; 51%

ADO Properties& ADLER Real Estate; 25%

Christoph Gröner; 6%

Free Float; 18%

Benjamin Lee – CFO

Theo Gorens – CRO and

Deputy CFO


Page 28 of 62

ADO’s business model ADO Properties is focused solely on the Berlin residential real estate market. It

specialises in letting out residential properties within Berlin’s city limits. Although

residential units account for just under 95% of the ADO’s portfolio, it also has some

commercial properties. In the past 5 years the number of commercial properties in

the portfolio has doubled and commercial rents have increased by more than 10%.

Thus, the company does not plan to sell any of its commercial portfolio in the

foreseeable future.

ADO also offers a broad spectrum of services. It not only lets out properties, but

also offers property and asset management services. Through active portfolio

management, ADO achieves stable rental growth and declining vacancies.

The company focuses on modernising and renovating its existing portfolio. As a

result, such properties are repositioned and generate higher rental income. Be

letting freshly modernised properties to new tenants, rents increased in 2019 by

2.6%. This strategy could prove to be especially successful in light of the new rent

cap in Berlin. The new regulation in Berlin allows rents to be increased by up to

EUR 1 per sqm. if the property has been renovated. Thus, by modernising the older

flats in its portfolio ADO can increase its rental income despite the new legislation.

ADO is currently investing more than EUR 40 per square meter for modernisation

and repairs, but it intends to lower this figure.

Its vacancy rate stands at 2.5% for residential and 4.6% for commercial properties.

In most cases, the vacant units are under construction, and some are for sale. As a

result, the vacancy rate for rental units is only 0.8%, which is in line with the city of

Berlin’s overall average vacancy rate.

ADO has also been in the privatisation business since 2014. The sale of individual

flats permits higher earnings compared to the sale of portfolios.

At the end of 2019 ADO sold its largest portfolio, the Carlos portfolio, to Gewobag

Wohnungsbau - a company owned by the city of Berlin - for EUR 920m. It had

acquired this portfolio in 2015 for EUR 375m. The Carlos portfolio includes just

under 6,000 residential units and 70 commercial units located in Berlin’s peripheral

districts. With this disposal ADO financed its takeover of ADLER. The ADLER

acquisition increases ADO’s portfolio to ~70,000 rental units Germany-wide, with a

Berlin exposure of more than 25%.

At the end of 2019 ADO made a voluntary offer to Consus’s main shareholder. If the

acquisition is realised, ADO plans to become active in project development. It plans

to build not only in Berlin, but in other large German cities as well. Germany’s

metropolitan markets are characterised by very strong demand and steadily rising

rent prices. As a result, ADO sees this investment as a huge opportunity.

ADO invests mainly in central locations within Berlin’s city limits. Most of its

residential units are located in the Berlin districts of Mitte, Charlottenburg and

Friedrichshain-Kreuzberg. It also has rental properties in the Innenstadtring (city

centre ring). Many of the portfolio properties up for sale are located north of the

ADO is active solely on the

residential real estate market

in Berlin

… and offers Property- and

Asset-Management

Focus on modernisation and

renovation

Vacancy rate of residential

units (0.8%) is comparable to

Berlin’s average vacancy rate

Privatisation business since

2014

Sale of Carlos portfolio in 2019

for 920 million Euro

Project development as new

potential strategy

ADO invests primary in central

location


Page 29 of 62

Berlin Tegel airport. This is to say that the portfolio’s focus is on the centre of Berlin,

because that is where housing demand is especially high and where, through

renovation, it will be possible to achieve higher rental income.

ADLER’s business model ADLER is real estate company with focus on residential properties. The lion’s share

of its portfolio is in locations in northern, eastern, and western Germany, largely in

metropolitan areas and their peripheral districts. More than 30% of the units are in

Lower Saxony and around 24% are located in North Rhine-Westphalia. Peripheral

locations in particular offer enormous potential for value enhancement by

measures such as reducing vacancies or raising rents. In past years ADLER was able

to benefit from the positive trends in the real estate market and steadily expand its

property portfolio.

ADLER aims to generate sustainable rental income with long-term leases in its

residential portfolio. In addition, it expects to achieve positive cash flows from

project developments. Its project development focus, however, lies on the real

estate market in A-cities. Moreover, ADLER may, given the opportunity, alter its

residential portfolio through acquisitions and disposals in order to preserve and to

further expand the economic viability of its business model.

The properties it acquires offer in many cases valuation appreciation potential

achievable through active portfolio management. Property, facility and energy

management services are provided by the subsidiaries ADLER Wohnen Service

GmbH, ADLER Gebäude Service GmbH and ADLER Energie Service GmbH. The BCP

portfolio, however, has so far been managed by RT Facility Management GmbH

since the merger of BCP and ADLER is not yet fully completed.

The residential portfolio ADLER’s target customer group is tenants with medium to low income. This limits

risk since tenants who earn too little income receive state support to pay their rent.

Thus, ADLER is well equipped for these Corona virus times. Landlords of commercial

space can expect considerably higher revenue declines. ADLER is also aligning its

residential portfolio to the growing trend toward one-person households. For

example, its flats are about 60 sqm on average, which conforms to the

aforementioned trend and the preferences of its target tenant group.

ADLER enhances the quality of its portfolio through investment, maintenance and

renovation. This should also serve to reduce vacancies and lift rent levels. BCP’s

commercial portfolio does not fit with ADLER’s business model, and so the

remaining BCP properties will be sold as soon as possible. Roughly two-thirds of

these properties have already been sold.

Acquisition strategy ADLER intends to expand its residential portfolio going forward. The focus of that

expansion will be on core properties, although core-plus properties will also be

considered given their higher value-enhancement potential. Properties must be

already income-positive when they are purchased. Additionally, ADLER aims to

ADLER owns property across

Germany

… and focuses on peripheral

locations with potential for

value growth

Project developments in A-

cities

Offers asset, property, facility

and energy management

services

Target group: tenants with

medium to low income

Aligning its portfolio toward

one-person households

Sale of the commercial

portfolio

Investment in properties with

core and core-plus market

quality


Page 30 of 62

expand its portfolio in the future through developments and infill (rededication of

land in an urban environment, usually open space, to new construction).

ADLER has authorised and contingent capital that can be used for acquisition

currency. Treasury stock acquired under share buyback programmes can also be

used as acquisition currency.

In 2015 ADLER took over 94,9% of Westgrund shares as part of its acquisition

strategy. At the end of 2019 ADLER increased its position to 96,88%. The market

cap of Westgrund is currently over EUR 825m (remaining 3% hence EUR 25m) and

the focus of the company lies in property management, improving administrative

cost efficiency and reducing vacancies. It takes care of the residential units in

northern and eastern Germany and hence, it represents the interests of ADLER’s

“non-core” portfolio. Westgrund also owns 731 residential units, but those

represent only 4% of the total portfolio it supervises.

Financing strategy ADLER targets an investment grade credit rating. To achieve it, the company needs

a healthy ratio of equity to debt. Hence, the company targets a ratio that is

commensurate with an investment grade rating.

ADLER targets a long-term time frame for the repayment of its debt obligations. It

aims to reduce its interest expense either by prepaying or refinancing existing debt

at more favourable rates.

ADLER can raise capital via secured bank loans and unsecured instruments.

Key management metrics ADLER uses both financial and non-financial metrics to keep itself on track. The

financial metrics are EPRA net asset value (EPRA NAV), funds from operations I (FFO

I) and loan to value (LTV).

Non-financial metrics are important in property management. If actual values

deviate from target values, measures are taken to correct the disparity. Examples

of non-financial metrics include the percentage of rented units and the number of

lease terminations. A number of metrics are also applied to acquisitions that

influence the decision whether to buy or not to buy. Such metrics include

demographic or labour market forecasts.

Employees Most employees are not employed at the holding company ADLER Real Estate AG,

but at the subsidiaries ADLER Real Estate Service, ADLER Wohnen Service GmbH,

ADLER Gebäude Service GmbH, ADLER Energie Service GmbH and BCP. The number

of employees increased significantly in 2019 due to the in-sourcing of property

portfolio services (Q3 2018: 815 employees, Q3 2019: 904 employees).

Research and development To be ready for the coming years ADLER needs to be able to realistically assess

future developments in the real estate market. For this purpose, ADLER makes use

Contingent capital for

acquisitions

2015: Acquisition of

Westgrund

Westgrund manages a large

portion of ADLER’s “non-core”

portfolio

Interest expenses are reduced

by prepaying and refinancing

existing debt

EPRA NAV, FFO I and LTV:

important metrics for ADLER

Increase in the employee

numbers


Page 31 of 62

of market analyses and expertise from external sources and also draws on its own

practical experience.

Consus’s business model Consus Real Estate AG's core business activity is project development. Here its

focus lies on the affordable housing market in Germany’s nine largest cities (Top 9).

Consus‘s project development volumes are relatively large, with a growing

exposure to urban quartiers (entire city districts or neighbourhoods). Its main

customers are institutional and private buyers. CONSUS has a gross development

value (GDV) of EUR 10.3bn (date of information: 20 Sep 2019).

Many of the functions of Consus Real Estate AG are carried out from its

headquarters in Berlin. The financing of the group is coordinated with the goal of

the optimal financial structure. The subsidiaries CG Gruppe and SSN Group AG are

responsible mainly for the operating activities. Individual branches are located in

Germany’s large cities and are responsible for carrying out developments in their

respective regions.

Real estate project development for institutional buyers Consus generates the largest share of its GDV with quartier developments. The

company has expertise in large-volume development projects. A quartier

encompasses more than 100 residential units of 50-70 sq.m. each. Besides

developments involving new construction, Consus also realises projects in which

commercial properties are renovated and repurposed or rededicated into

residential properties. For such rededication and renovation projects Consus

developed the concept of the “Vertical Village”. These are commercial properties

which are transformed into modern living and work space in downtown locations.

A key element of Consus’s business model here is forward sales, which means that

institutional customers can purchase real estate projects already before

construction begins so that Consus receives partial payments already during the

construction period. This arrangement significantly reduces financing risk and the

risk of investors exiting prematurely. The majority of forward sale customers are

institutions, which include e.g. pension funds and insurance companies. The

proceeds generated earlier from forward sales can finance the development and

free up funds invested by Consus for redeployment to other purposes. The forward-

sales model tends to focus on affordable housing units.

Consus: project development

in the top 9 German cities

… with GDV of EUR 10.3bn

Subsidiaries – CG Gruppe and

SSN Group are responsible for

the operating activities

Focus on development of

quartiers

… but development of

commercial units as well

Forward sales to institutional

clients


Page 32 of 62

Project development steps

I. Purchase

II. Development

Distinguishingcharacteristic

III. Forward-Sales

IV. Construktion

V. Delivery

CONSUSREAL ESTATE AG

Source: Consus

The above chart provides a systematic overview of the steps in a forward-sale

development. The first step is the purchase of land. The next step is to develop a

project concept. Next, Consus coordinates with building authorities and takes the

necessary steps to obtain a building permit. Forward sales to institutional investors

take place already before the start of construction. As the final step, after

construction is completed, the transaction is closed and the keys are handed over.

Consus’s broad business model puts it at an advantage over competitors in terms

of selection, development and completion of development projects.

Real estate development for private buyers Consus’s development projects also target private investors. Sales to private

persons usually provide higher yields than forward sales. Here we are talking about

individual projects or buildings which tend to be priced in the upper segment. The

aforementioned advantages associated with forward sales thus no longer apply.

roughly 20% of Consus’s developments can be purchased by private buyers.

Development of income properties Consus maintains a small portfolio of properties with a volume of EUR 390m (date

of information: 30 September 2019) from which it generates rental income. These

properties are located mainly in Berlin and Leipzig.

Cost advantages from digitalisation and prefabrication Consus applies building information modelling 6 (BIM 6) in order to drive the

digitalisation of project development processes. The goal is to make these

processes leaner without sacrificing quality. The result is cost and time savings.

Mitigating the financing risk

through forward sales

Ca. 20% of the projects can be

sold to private buyers

Rental of properties

Digitalisation of building

processes through BIM 6


Page 33 of 62

In addition, the company wants to build up production capacity for the

prefabrication of individual construction modules used in the construction of multi-

story flat blocks. For this purpose, Consus has entered a cooperation agreement

with European Modular Constructions GmbH.

Consus’s goal in applying BIM and its pursuit of batch production of construction

modules is to become the cost leader as a producer of affordable housing in the

medium to long term.

Portfolio There are 67 projects in portfolio of Consus as of 30.09.2019 (please see

attachment). The three largest projects are Vai Campus, Holsten Quartier and

Benrather Gardens. All three projects are still in the planning phase.

The VAI CAMPUS project is developing a city complex in Stuttgart-Vaihingen. In

addition to residential and commercial spaces, office units will be built as well. The

rental or sales area is around 185,000 sqm. Construction work is scheduled to begin

as early as 2021. The completion of the project is expected in 2026. The GDV for

the project is approximately EUR 981m and thus corresponds to about 10% of the

Consus’s total GDV.

The Holsten Quartier project is based on constructing residential and commercial

spaces in Hamburg. The developed area amounts to approximately 133,000 sqm.

Construction is planned to start next year. The Holsten Quarter is due to be

completed in 2026. The GDV amounts to approximately EUR 840m. This

corresponds to about 8% of the total GDV. On January 17, 2020, ADO signed a letter

of intent for the purchase of almost 90% of the Holsten Quartier project. The

provisional purchase price for the complete project is EUR 350m. A share purchase

agreement is to be signed after a due diligence has been successfully carried out.

The Benrather Gardens project is developing a city complex in Dusseldorf.

Residential, commercial and office units will be built that will total to approximately

159,000 sqm. Construction is scheduled to begin in 2022 and completion is

expected in 2029. The GDV amounts to roughly EUR 662m. and corresponds to

about 7% of the total GDV.

On February 13, 2019 we visited the sites of the following projects: NewFrankfurt

Towers VauVau and Wested Ensemble Grand Ouest. The completion of the

NewFrankfurt Towers VauVau is planned for the next year 2021. Construction

activities are not expected to end in the first months of the year, as the project is

currently still under construction. It can be assumed that if the construction is

carried out quickly, the projects could be completed in Q3 or Q4 2020. The

construction of the Westend Ensemble-Gran Ouest is scheduled for this year.

The table below represents the most important projects for Consus and their

current status:

Standardization and

prefabrication of construction

modules

Consus has 67 projects with

GDV of over EUR 10bn.

VAI Campus in Stuttgart-

Vaihingen

Holsten Quartier in Hamburg

Benrather Gardens in

Dusseldorf


Page 34 of 62

Source: Consus, FMR

Consus’ pipeline divided by cities

Source: Consus, FMR

Location Name Area GDV in k EUR % of total GDV Construction start Completion Status

Berlin The Wilhelm 15,912 439,530 4% 2019 2023 Running project

Hamburg Neuländer Quarree 81,315 356,917 3% 2020 2024 Running project

Berlin Forum Pankow 36,205 219,124 2% 2020 2025 Running project

Berlin Bundesalle Project 28,668 164,437 2% 2016 2020 Forward sold

Frankfurt New Frankfurt Towers VauVau 37,745 218,102 2% 2017 2021 Forward sold

Berlin Steglitzer Kreisel Tower 27,284 209,631 2% 2017 2021 Forward sold

Cologne Cologne I Part 1 54,321 241,415 2% 2017 2022 Forward sold

Frankfurt Westend Ensemble-Upper West 19,843 207,601 2% 2020 2022 Forward sold

Duesseldorf UpperNord Tower VauVau 25,066 175,000 2% 2019 2022 Forward sold

Frankfurt 2stay 27,600 359,311 4% 2021 2023 Building land

Munich Covent Garden 29,273 313,005 3% 2021 2023 Building land

Hamburg Billwerder Neuer Deich 44,475 231,457 2% 2021 2024 Building land

Hamburg New Yorker 45,374 219,066 2% 2021 2024 Building land

Cologne Cologneo II 71,583 350,779 3% 2022 2025 Building land

Frankfurt Ostend 42,700 300,790 3% 2023 2025 Building land

Stuttgart Otto Quartier 73,360 275,195 3% 2021 2025 Building land

Stuttgart Vai Campus Stuttgart-Vaihingen 185,415 1,127,400 11% 2021 2026 Building land

Hamburg Holsten Quartier 133,517 883,787 9% 2021 2026 Building land

Karlsruhe Quartier C 111,249 370,649 4% 2021 2026 Building land

Duesseldorf Benrather Gärten 158,989 661,786 6% 2025 2029 Building land

Stuttgart/Karlsruhe Berlin Munich

GDV in EURm: 2,139 GDV in EURm: 1,355 GDV in EURm: 483

Area in k m2: 545 Area in k m2: 207 Area in k m2: 67

Avg. Sales Price: 3.923 Avg. Sales Price: 6.534 Avg. Sales Price: 7.233

% of total GDV: 21% % of total GDV: 13% % of total GDV: 5%

Projects: 9 Projects: 9 Projects: 3

Hamburg Cologne Leipzig/Erfurt


Area in k m2: 359 Area in k m

2: 240 Area in k m

2: 321


% of total GDV: 19% % of total GDV 11% % of total GDV: 5%


Frankfurt/Offenbach Duesseldorf Dresden


Area in k m2: 182 Area in k m2: 218 Area in k m2: 72


% of total GDV: 13% % of total GDV: 10% % of total GDV: 3%



Page 35 of 62

Consus: Estimated completions in the coming years

1

2020 2021 2022 2023 2024 2025 2026 2027-2029

Completion of 413.000 sqm

with a GDV of EUR 2.0 bn


with a GDV of EUR 1.2 bnCompletion of 209.000 sqm












Source: Consus, FMR

By the end of 2022 around 43% (or EUR 4.4bn) of the pipeline is expected to be

completed.

Year 2020 2021 2022 2023 2024 2025 2026 2027-2029

Sellable area (sqm) 261.800 413.000 220.000 246.000 219.000 209.000 363.000 159.000

GDV (EURbn) 1,3 2,0 1,1 1,2 1,1 1,0 1,8 0,8

% of Total GDV 12,5% 19,8% 10,5% 11,8% 10,5% 10,0% 17,4% 7,6%


Page 36 of 62

Market environment Supply and demand, at least regionally, remain out of balance. A pan-German view

of the situation should be treated with caution since regional differences are very

pronounced. Nonetheless, a pan-German reading indicates a tendency that can be

reflected in the individual cites.

Demand for residential properties exceeds supply in many of Germany’s cities,

pushing up real estate prices. Residential property prices rose again in 2019

although the country’s economic performance fell short of expectations.

Germany’s gross domestic product (GDP) grew just 0.6% in 2019 and the consumer

price index (CPI) increased by 1.4%. The number of unemployed persons has

decreased continually over the past decade. The unemployment rate currently

stands at 5.3%. Forecasts for 2020 are more positive and the government expects

the economy to stabilise, which could strengthen the growth of the real estate

market.

After the pandemic was announced, economic forecasts have become more

negative and a deeper recession is now expected for 2020. According to the

International Monetary Fund (IMF), the German economy will shrink by 7% this

year due to the Covid-19 pandemic. Given that the coronavirus is contained by the

second half of 2020, the IMF expects that the German economy will grow by 5.2%

in 2021. The German institute of international economy (IfW) has considered two

possible scenarios for the pandemic development in Germany - the first with a

lockdown until the end of April and the second – until the end of July. Looking at

the more pessimistic case, the IfW anticipates a decrease of GDP in 2020 by 8.7%

vs. 2019. The negative economy outlooks imply that the willingness to purchase

real estate properties and to invest in them will decrease, which in turn will have

an impact on the whole sector.

Supply of residential real estate Residential real estate development volume in A locations increased yoy in 2019,

and the number of building permits Germany-wide was up not quite 4% yoy. That

makes 2019 the first year to show positive growth since the peak in 2016. As of the

end 2019 there were more than 693,000 dwellings in Germany that were approved

and waiting to be built. In 2018 about 250,000 dwellings were completed, which

suggests it will take at least another three years to work off the backlog as of end-

2019. Since 2016 the trend in permits for construction projects had been negative.

The yoy increase in permits in 2019 is a positive sign for the market, but rising

construction costs and the growing shortage of qualified workers in the

construction industry could impede the real estate sector.

Increase in the demand for

residential real estate

Increase in GDP and decrease

in the unemployment rates

Negative economic outlook

for 2020

Increase in the building

permits by 4% in 2019


Page 37 of 62

Building permits and completed dwellings in Germany

Source: bulwiengesa, FMR

According project developer study 2020 from bulwiengesa, the residential segment

in the top 7 German cities is not as attractive to project developers as it used to be.

In the past two years, the area that is planned for project development has been

decreasing. The expectations are that this trend will become even more

pronounced in 2020 and that the housing market will decline by 2.9%. If so, this

would be the first negative development in over 10 years. Furthermore, a

stagnation of the total project development volumes in the seven largest German

cities is expected and the market growth would be only 1.1% in 2020 (2019: 7.2%).

All of these estimates were made without taking into account the economic impacts

that the pandemic might have. Thus, the market decline could be even more

pronounced in 2020 in case the pandemic is not contained soon.

Demand for residential properties On the one hand, Germany has a birth deficit and an ageing society. On the other

hand, the immigration is growing. Hence, the expectation for the short and medium

term is that the population will increase. Population growth can lead to increased

demand for housing units. Moreover, there is a trend toward ever-smaller

households. According to Germany’s Federal Statistical Office (Destatis), the

number of one-person households will increase to 44% by 2035. Urbanisation

remains the new megatrend, and causes regional clustering, especially in the

vicinity of A-locations.

Further, new regulations are being introduced that could impact demand for

residential real estate. The government has introduced climate change mitigation

legislation that relieves commuters. The legislation envisages an increase in the

standard deductions for commuters’ travel expenses and a VAT reduction on train

tickets. Combining the above with rising prices in A-locations, this could boost

demand for residential real estate outside the large cities.

Decrease in the project

development on the

residential market

Population growth despite the

aging society

Urbanisation and smaller

households – the current

megatrends

New legislation introduces

changes for the commuters


Page 38 of 62

Low financing costs are an additional factor that could increase demand. The yield

on 10-year bonds has been at 0% since 2016, and interest rates on real estate loans

are at a historical low. According to the Bundesbank, more than EUR 260bn housing

loans were issued to private households in 2019. The situation is different for

institutional borrowers. According to BF.Quartalsbarometer, institutional real

estate groups’ propensity to finance decreased in the Q1 2020 qoq. This was

attributed mainly to the large number of outstanding loan obligations.

Housing loans and its yearly change

Source: Bundesbank, FMR

The residential market Investors last year assessed the state of the real estate market positively.

Transaction volume in the residential market totalled EUR 91.3bn, representing a

15.4% yoy increase vs 2018. More than half (58%) of the transactions last year

occurred in Germany’s Top 7 cities.

Lower financing costs for

housing loans

Growth of the residential real

estate market by 15.4%


Page 39 of 62

Transaction volumes on the German real estate market

Source: JLL, FMR

A-locations also exhibit the lowest vacancy rates. In Munich just 0.2% of all existing

dwellings were vacant, and Frankfurt it was 0.3%. In 2018 Germany hit a new

national low (2.8%) in terms of its residential vacancy rate. The vacancy rates in

Germany’s various federal states have remained relative stable. The one exception

is Berlin, where the percentage of vacant flats plunged from ~50% in 2014 to 0.8%

in 2018.

Vacancy rate across Germany

Source: CBRE-empirica-Lerrstandsindex (vacancy index), FMR

That also leads to higher rent prices. Although the annual price inflation in

Germany’s Top 7 cities is similar to the national average, Top 7 rents are 40% above

the national average in the case of newly constructed properties, and nearly 60%

above it in the case of existing dwellings. This strong difference in rent prices

Housing shortage in the

A-cities

Housing shortage in the

A-cities


Page 40 of 62

illustrates the severe housing shortage in metropolitan areas. The depleted buffer

in the housing stock means that new dwellings must be built soon.

Rent prices for newly constructed properties and for existing dwellings

Source: Colliers, empirica-systema GmbH, FMR

Rising construction costs can explain the difference in rent prices between newly

constructed residential properties and existing dwellings. Over the last three years

construction costs have risen an average of 2.4% per quarter. The driver here is

rising labour costs.

North Rhine-Westphalia & Lower Saxony North Rhine-Westphalia, with a population of just under 18m, is Germany’s most

populous federal state. Its role in the real estate market is accordingly important.

ADLER Real Estate has a large number (13,811) of portfolio properties in NRW. Like

Germany in general, NRW exhibits strong regional differences in terms of economic

strength. The state’s population shrinkage in the wake of structural change in the

past seems to have halted. NRW’s inhabitant numbers are growing again. The

increases are mostly occurring in the large cities. The regional housing markets also

exhibit considerable differences. Lower Saxony presents a similar picture. Its

number of inhabitants has grown every year since 2011. This trend has been carried

by a few cities, but there are also regions that have seen their populations shrink.

The housing vacancy rates in both German states have been constant in recent

years. For Germany as a whole, the average vacancy rate in 2018 was 2.8%. Lower

Saxony’s vacancy rate in 2018 stood at 3.3%, and NRW’s at 3.0%

NRW’s unemployment rate stands at 6.6% (January 2020), sixth highest among all

states. All the states with higher unemployment rates are in eastern Germany,

however. Lower Saxony’s unemployment rate is 5.3%, i.e. lower than NRW’s. The

following figure provides an overview of the unemployment rates of all of Germany

federal states.

Construction costs make

newly build dwellings more

expensive

NRW: the largest federal state

with a population of roughly

18m

Vacancy rates in NRW (3.0%)

and in Lower Saxony (3.3%)

are above the national

average

Unemployment rate in NRW is

5.3% and in Lower Saxony –

6.6%


Page 41 of 62

Unemployment rates across Germany

Source: Statista, Bundesagentur für Arbeit, FMR

NRW’s per capital GDP has growth continually. The same can be said for Lower

Saxony. With the exception of 2015 Lower Saxony has seen yoy growth in GDP per

capita every year. Nonetheless, NRW and Lower Saxony have lagged the other

states in this metric. Their growth figures are below the national average.

GDP per capital in North Rhine-Westphalia and Lower Saxony

Source: Statista, Agentur für erneuerbare Energien (Agency for Renewable Energies), FMR

Despite its high unemployment rate and lower per-capital GDP growth, NRW’s

residential real estate market is following the national trend. Due to migration, the

supply of residential units has remained under pressure in some economically

prosperous locations such as Cologne or Düsseldorf. The construction of multi-story

NRW and Lower Saxony have

GDP per capital below the

national average

Increase in the dwellings’

purchase prices in NRW and

Lower Saxony


Page 42 of 62

flat blocks continues to lag despite accelerating residential construction activity and

has not been able to meet the growing demand. The gap between the growing

number of households and housing completions will lead to further rent and

purchase price increases in certain regions. The same goes for the large cities of

Lower Saxony (e.g. Wolfsburg, Hannover, Braunschweig). Here too, urbanisation is

leading to regional bottlenecks in the housing supply. For existing dwellings, rent

and purchase prices have increased in both states over the past five years. In Lower

Saxony the price increases have been roughly twice as high as in NRW.

Median purchasing prices of dwellings in NRW and Lower Saxon

Source: Statista, Agentur für erneuerbare Energien FMR

To meet future demand, housing construction activity must be increased in certain

regions.

The Big 8 In 2019 housing purchase and rent prices both increased again in Germany’s Big 8

cities. According to JLL, the purchase price of a dwelling in a Big 8 city increased by

10.2% This puts the 2019 housing purchase price inflation rate significantly above

the 5-year average (8.2% for 2014-18) The strongest purchase price inflation

occurred in Düsseldorf: 13.3% to EUR 4,270 per sq.m. The lowest rate of inflation

in housing purchase prices was in Berlin: +8.4%, rising to EUR 4,700 per sq.m. For

the Big 8 cities as a whole, the purchase price for a square meter of housing ranged

from EUR 2,260 (Leipzig) to EUR 8,130 (Munich).

Increase in purchase prises in

Top 8 cities


Page 43 of 62

Purchase prices in the Big 8 cities

Source: IDN Immodaten, empirica systeme, JLL, FMR

Big 8 rent prices, by contrast, increased at a rate of 4.1% in 2019, which was lower

than the 5-year average rate of increase (5.0%). The strongest increase in rent

prices among the Big 8 cities was in Cologne. Cologne’s rent prices increased by 8%

in 2019 to a monthly average of EUR 12.55 per sq.m. (5yr average rate of increase:

33%). Munich continues to have Germany’s highest rent prices, despite a smaller

yoy increase (3.8%) in 2019. Munich’s average monthly rent stands at EUR 20 per

sqm. The smallest rent price increase in 2019 was in Leipzig, where rent prices

increased by 1.4% yoy to EUR 7.25 per sqm per month vs a 5yr average rate of

increase of +6.2%. All other Big 8 cities in Germany showed rent price increases

somewhere between Cologne and Leipzig. For 2020 JLL forecasts a similar rent price

trend as in 2019, with rent prices increasing more slowly than their 5yr average. JLL

also expects considerable regional differences to persist in 2020 among the Big 8

cities.

… and increase of the rent

prices by more than 4% last

year


Page 44 of 62

Rent prices in the Big 8

Source: IDN Immodaten, empirica systeme, JLL, FMR

Both rents and housing purchase prices continue to trend upwards. With regard to

rents, a weakening of the upward momentum of recent years is observable. As for

purchase prices, however, the rate of increase is above its 5-year average, leading

to a widening disconnect between housing purchase prices and rent prices. Supply

and demand remain in disequilibrium. This applies both to purchases and rentals of

residential properties. And further increases in rents and purchase prices are to be

expected going forward.

Berlin

After ADO’s takeover of ADLER, Berlin will be the main market for the new merged

entity, Adler Real Estate Group. Consequently, the performance of Berlin’s real

estate market is especially important. In 2019, Berlin’s purchasing power per

inhabitant increased by more than 3% yoy to EUR 21,687, which is 8% below the

German average. The increase was attributable in part to a falling unemployment

rate. As of January 2020 Berlin’s unemployment rate stood at 8.2% These factors

are important prerequisites for the economic situation to improve in the future.

Berlin’s growing number of inhabitants has continued to drive up housing demand.

Its stock of residential units increased by ~3.5% from 2013 to 2018. This increase

was not sufficient to offset increased demand, however, and less than 1.0% of all

existing flats were vacant. The supply shortfall relative to demand caused rent and

purchase prices to rise. Since 2017 rent prices in Berlin have increased at an annual

rate of more than 6.5% across all market segments. Housing purchase prices

increased in the same period by 11.5% p.a. Hence, Berlin’s rent prices are above

the German average, but below levels in other A-locations such as Munich or

Frankfurt, where monthly rents are as much as EUR 27 per sq.m.

Difference between rent and

purchase prices in the largest

8 cities

Increase in Berlin’s purchasing

power

Disparity between demand

and supply on the residential

market

… has led to increase in rent

and purchase prices


Page 45 of 62

Development of rent and purchase prices in Berlin

Source: ZBI, Federal Statistical Office, State Statistical Offices, empirica-systeme market data base, apollo valuation & research GmbH, FRM (bars indicate: offered rent prices; lines indicate: offered purchase price)

Taking a closer look at the individual city districts of Berlin’s real estate market, we

notice differences in market trends. ADO invests primarily in Berlin’s central city

districts such as Mitte and Charlottenburg-Wilmersdorf. Since these are popular

districts, their housing purchase and rent prices lie above the Berlin average. The

Mitte district is characterised by several development projects, which account for

more than 20% of all new residential construction in Berlin. The location’s

attractiveness and its many new buildings have led to elevated rent prices of up to

EUR 18 per sq.m. per month for the middle market segment. Due to strongly

growing rent prices, the population of the areas surrounding Berlin has grown at a

rate of 6.4% since 2011.

Berlin’s rent cap, which came into force in February 2020, could alter the Berlin

market’s growth. This legislation diminishes the attractiveness of residential rental

properties as an investment. Kholodilin, Weber and Sebastian (2018) analysed the

impact of regulation on rental housing markets over a period of 100 years in 27

OECD countries. According to their findings, demand increases for condominiums

occupied housing and fewer flats are rented. Thus, we could expect to see more

investors opting for development projects in the medium term.

Forecast The rising number of households and positive demographic growth could lead to

increased demand for housing properties. Furthermore, the growing number of

building permits last year could be interpreted as a positive sign for the real estate

market. On the other hand, the Ifo Business Climate Index indicates that

companies’ scepticism regarding the year 2020 has increased and the Covid-19 has

started taking its toll on the economy. In particular, companies of the construction

industry assessed their current business situation very pessimistically.

The key determinants of future property prices are credit financing and the

performance of the economy. The ECB’s zero interest rate policy reduces the cost

of capital and impacts the profitability of real estate investments. Germany’s

Many development projects in

Mitte

Population growth in areas

surrounding Berlin due to the

increasing housing prices

Berlin’s rental cap came into

force in February 2020

… and it could lead to growth

in condominiums occupied

housing

Positive demographic growth

and increasing demand for

residential properties

Low cost of capital under the

zero-interest rate policy


Page 46 of 62

revised land tax could turn investors away from A-locations while the new rebates

and tax cuts for commuters provide an additional incentive for people to look for

dwellings in peripheral areas. As a result, demand could increase for hitherto risky

B- and C-locations.

As long as interest rates remain low, investors will probably continue to opt for

investments in the real estate industry. Nevertheless, the market has reached its

current limits and we expect lower growth rates in 2020e than in 2019. If the

interest rate environment should change, the growth of real estate market could

even become negative.

In the short term, however, real estate will probably remain attractive for investors

given that the pandemic does not cause a significant or permanent damage to the

economy. We tend to expect that there will be a demand for residential real estate,

leading to a slight increase in the prices, and not only in Germany’s large cities.

Nonetheless, we expect a stagnation in the real estate purchase and rent prices.

Expectations for 2020: lower

growth rates


Page 47 of 62

Financials

ADO FY 2019 The income from rental activities of ADO Properties increased by 5.2% in 2019 to

EUR 141.6m (2018: EUR 134.6m) due to strong like-for-like rental growth of 5.0%

as well as further reduced vacancy. The net rental income increased to EUR 134.1m

(2018: EUR 128.0m).

ADO Properties' EBITDA from rental activities fell by 2.5% to EUR 92m (2018: EUR

93.8m) in 2019. FFO 1 (from rental activities) decreased by 5.4% to EUR 63.2m

(2018: EUR 66.8m) equivalent to an FFO 1 of EUR 1.43 per share (2018: EUR 1.51

per share).

The average in-place rent of the residential portfolio increased to EUR 7.39 per sqm

per month at the end of the year 2019 (31 December 2018: EUR 6.73). The vacancy

rate for the residential portfolio decreased to 2.7% as of 31 December 2019 due to

active lettings, sales and modernisation activities (31 December 2018: 3.2%).

As at 31 December 2019, the fair value of ADO Properties' portfolio stood at EUR

3,664m (31 December 2018: EUR 4,092m). It comprised 17,637 units at the end of

the reporting period, of which are 16,255 residential units (31 December 2018:

22,238 residential units). The average fair value per sqm of the residential portfolio

increased to EUR 2,966 (31 December 2018: EUR 2,488). The EPRA Net Asset Value

of the portfolio amounted to EUR 2.9bn or EUR 65.80 per share as of 31 December

2019 (31 December 2018: EUR 55.05).

ADO Properties has an LTV of 27% by the end of the reporting period and an

average interest rate of 1.6%. The average maturity of the outstanding debts is

approximately 4.2 years. Almost all loans have fixed interest rates or are hedged.

ADO Properties will continue with this sustainable financing strategy and targets an

LTV of maximum 50%.

Transformational business combination with ADLER and Consus

On 15 December 2019, ADO Properties announced its business combination with

ADLER and a strategic cooperation agreement with Consus to create one of the

largest listed real estate companies in Europe. As announced on 30 March, ADO

Properties' offer received strong support from ADLER shareholders with 91.93% of

investors in the company tendering their shares. Together with the treasury shares

held by ADLER the offer has been accepted by 94.15% of ADLER's share capital. The

business combination with ADLER brings together two high-quality and

complimentary portfolios diversified across key German cities with attractive

growth potential. The combined company will have a larger free float market

capitalization and will be a potential MDAX candidate in near term, while investors

will benefit from enhanced liquidity. Through its strategic partnership with Consus,

the company will gain access to a market leading development platform with a

pipeline of over 15,000 residential rental units that will support the combined

group's efforts to reduce the current housing imbalance in Germany. In anticipation

of the new group structure, Maximilian Rienecker, Co-CEO of ADLER, was appointed

Increase of the rental income

by 5,2% to EUR 141.6m

FFO I decreased by 5.4% to

EUR 1.43 per share in 2019

Increase of the average in-

place rent of the residential

portfolio

EPRA NAV for 2019 amounted

to EUR 65.80 per share

ADO Properties has an LTV of

27% and an average interest

rate of 1.6%

ADO holds 94.15% of ADLER

shares (including treasury

stock)

The combined company will

be a potential MDAX

candidate


Page 48 of 62

Co-CEO of ADO Properties by ADO Properties' Board of Directors on 30 March 2020.

Mr. Rienecker's appointment became effective on 9 April 2020.

Through the business combination with ADLER and the strategic cooperation with

Consus, ADO will progress from a Berlin-focused property company into one of the

largest residential real estate groups in Europe, benefitting from greater scale and

enhanced growth prospects. By diversifying the group’s portfolio through the

combination, they are de-risking from a regulatory and operational perspective

while also generating easily attainable synergies.

Adler FY 2019 As of FY 2019, ADLER's portfolio comprised of 58,083 units. Net rental income

increased by 4.3% YoY to EUR 248.7m for the year 2019. This significant increase

was driven by operational improvements with all our main key performance

indicators improved. ADLER achieved l-f-l rental growth of 2.4%, and a 60bps YoY

decrease in vacancy rate to 5.4%. The average in-place rent increased to EUR 5.60

per sqm/month (FY 2018: EUR 5.49 sqm/month).

FFO I amounted to EUR 84.4m, representing 13.7% YoY increase (FY 2018: EUR

74.2m). Fully diluted FFO I per share amounted to EUR 1.06 (FY 2018: EUR 0.94).

The strong growth in FFO reflects our positive operational performance and

ongoing management to reduce our cost of debt.

Average rent was on target at EUR 5.60 per sqm per month and the vacancy rate

came to 5.4%, better than the target of 6%. LTV (excl. convertibles) as of 31

December 2019 stood at 51.4%, better than the 55% target.

As of 31 December 2019, EPRA NAV (excl. goodwill and fully diluted) amounted to

EUR 2,283.6m, a 39.3% increase compared to EUR 1,639.0m as of FY 2018. Diluted

EPRA NAV per share (excl. goodwill) was EUR 28.59 (FY 2018: EUR 20.77).

With the proceeds from the sale of the non-core portfolio and large parts of BCP's

commercial portfolio ADLER was able to reduce debt. Furthermore, consolidation

of ADO Properties had a positive impact on net financial liabilities and

correspondingly LTV, which has reduced by 10ppts to 51.4% as of Q4 2019.

Guidance for 2020 Note regarding the merger:

Since there is still no joint income statement, balance sheet and cash flow

statement, it is more difficult to come to an overall outlook (especially as a result of

the fair value adjustments of the properties and assets). Therefore, our income

statement, balance sheet and cash flow estimates in the appendix are limited to

ADO Properties Standalone. At this point in time, we also did not include Consus in

the group, as the option had not yet been executed and it is therefore not possible

to make a more detailed assessment of the new planned group. In particular, no

reliable statements can be made about the interest-bearing liabilities (net debt,

interest rate and LTV). Currently no reliable statements about the market situation

can be made either because of the distortions caused by Covid-19 and planned

capital increase and the execution of the option on Consus need to be carried out.

ADLER Real Estate Group will

progress into one of the

largest residential real estate

groups in Europe

Net rental income increased

to EUR 248.7m

Decrease of the vacancy rate

to 5.4%

Increase of the FFO I to EUR

84.4m

Decrease of the LTV to 51.4%

Increase of the EPRA NAV by

39.3% to EUR 28,59 per share

With the proceeds from the

sale of the commercial

portfolio ADLER was able to

reduce debt


Page 49 of 62

ADO expects to achieve NRI of ~EUR 280-300m in 2020 given its merger with

ADLER. On an annualized basis management sees NRI of EUR 340-360m. In 2019

ADLER generated NRI of EUR 248.7m, ADO EUR 134.1m. Thus, their combined NRI

in 2019 stood at EUR 382.8m Given that ADO sold the Carlos portfolio (5,900 units)

at the end of 2019, management estimates its 2020 (stand-alone) NRI at just under

EUR 106m. Based on our estimates we derive a NRI value for ADO of EUR 105.6m

For ADLER we estimate 2020e rental income of EUR 256.5m.

Assuming ADLER is consolidated for just under 8 months in 2020, its 2020e

contribution to consolidated net rental income would be ~EUR 180m. Including

ADO’s EUR 105.6m, we currently expect group NRI of EUR 286m, which puts us

within management’s range. On an annualised basis we estimate combined rental

income of EUR 360m.

Rental income

Source: ADO, Adler, FMR

Management expects a combined FFO 1 (ADO + ADLER) of EUR 105-125m for 2020.

In 2019 ADO and ADLER achieved FFO 1 of EUR 63m and ~EUR 84m respectively or

EUR 147m combined. For 2020 on an annualised basis the company targets FFO 1

of EUR 120-140m. We estimate 2020e FFO 1 of EUR 46.9m for ADO and EUR 96.6m

for ADLER. On an annualised basis we estimate combined FFO 1 of EUR 143m in

2020e, but assume FFO 1 of EUR 111.3m for the combined company when it comes

together. Thus, our estimates are in line with management’s rental income and

FFO 1 targets for ADO and ADLER, both on a stand-alone and a combined basis.

FFO 1


in m EUR 2018 2019 2020e 2021e 2022e

ADO 128.0 134.1 105.6 109.5 113.6

YoY grow th 23.9% 4.8% -21.3% 3.7% 3.8%

ADLER 238.4 248.7 256.5 263.2 270.0

YoY grow th 40.0% 4.3% 3.1% 2.6% 2.6%

ADLER Real Estate Group 382.9 362.1 372.7 383.6

YoY grow th -5.4% 3.0% 2.9%

in m EUR 2018 2019 2020e 2021e 2022e

ADO 66.8 63.2 46.9 48.5 50.0

YoY grow th 22.9% -5.4% -25.8% 3.5% 3.1%

ADLER 74.2 84.4 96.6 102.3 108.1

YoY grow th 83.2% 13.8% 14.4% 5.9% 5.6%

ADLER Real Estate Group 147.6 143.5 150.8 158.1

YoY grow th -2.8% 5.1% 4.8%

NRI guidance for 2020 is

EUR 280-300m for the

combined company

NRI according to our

estimation should be

~EUR 180m

Combined FFO 1 target for

EUR 105-125m


Page 50 of 62

With regard to EPRA NAV, ADLER Real Estate Group reported combined EPRA NAV

of EUR 4.9bn (2018: EUR 4.1bn), with ADO contributing EUR 2.9bn and ADLER

EUR 2.0bn.

For 2020e we also currently expect combined EPRA NAV of EUR 4.9bn. For 2021e

and 2022e we estimate further increases to EUR 5.3bn and EUR 5.7bn respectively.

On a per-share basis we estimate EPRA NAV to exceed EUR 100 for the first time in

2022e (EUR 103.35).

EPRA NAV


Berlin’s rent cap legislation came into force on 23 Feb 2020 and freezes rents at

their 18 June 2019 levels for a period of five years. ADO Properties maintains its

view that this legislation is not only unconstitutional but also unsuited to overcome

Germany’s current housing shortage. On a combined basis (ADO + ADLER), NRI of

EUR 119m or 35% of the company’s total NRI is exposed to the rent cap. The

company projects that due to the rent cap its FFO 1 will decrease by EUR 1m in 2020

and by EUR 9m in 2021. In our view, however, ADO should be able to offset most

of the negative rent cap effect in 2021e with modernisation, so that overall, the

adverse impact from the rent cap should be marginal.

ADO Properties is keeping a close eye on the spread of COVID-19 and is taking all

steps necessary to ensure the safety and health of all of its employees and tenants.

It has steady and reliable rental income and a lower tenant turnover is anticipated

in the coming months. Hence, the management is confident the pandemic will have

no significant impact on its 2020 FFO. ADO Properties’ financial structure is stable

and it has a strong liquidity position of EUR 500m in directly accessible cash. As a

result, ADO Properties does not expect the pandemic to have any significant impact

on the company, and it is confident that its rental income will continue to grow in

2020 outside of Berlin.

For 2019 ADO will propose a dividend per share of EUR 0.75 and its target dividend

for 2020 is 50% of FFO 1. This would imply a dividend per share for 2020e of

EUR 1.00 based on our current estimate for group’s (ADO+ADLER) FFO 1 per share

of EUR 2.00.

in EURm 2018 2019 2020e 2021e 2022e

ADO 2,429.5 2,905.7 2,747.5 2,856.7 2,968.0

YoY grow th 22.2% 19.6% -5.4% 4.0% 3.9%

ADLER 1,639.0 1,925.4 2,166.6 2,421.6 2,683.9

YoY grow th 23.1% 17.5% 12.5% 11.8% 10.8%

ADLER Real Estate Group 4,831.1 4,914.1 5,278.3 5,652.0

YoY grow th 1.7% 7.4% 7.1%

Combined EPRA NAV target

for 2020: EUR 105-125m

Berlin’s rental cap – an

important factor for the

decrease in FFO estimates by

EUR 1m in 2020 and by

EUR 9m in 2021

Reliable rental income despite

COVID-19

No significant effects of the

pandemic on FFO 1

Dividends: 50% of the FFO 1


Page 51 of 62

Dividend estimates


The combined portfolio’s GAV in 2019 stood at EUR 8.5bn. For 2022e we expect it

to increase to EUR 9.8bn. If Consus should be consolidated in 2020/2021e, GAV

could surpass EUR 10bn (FMRe: EUR 11.2bn)

GAV

Source: ADO, ADLER, FMR

As of the end of 2019 ADO and ADLER had combined 75,721 units net of the 5,900

units from the Carlos portfolio, which ADO sold. Given the strong geographic

diversification of the portfolio across all of Germany, we expect rental income

growth to remain stable in the coming years. Due to the integration of the ADLER

portfolio, the group’s Berlin exposure will decrease to ~25%, which is positive

against the backdrop of the rent cap. All in all, both companies have shown they

can successfully set up development strategies to counter Germany’s housing

shortage in all Top 7 cities (portfolio expansion, renovation, new development

projects, strategic cooperation agreement with Consus), and initial integration

steps and synergies are visible.

Balance sheet structure ADO Properties’ financial structure is stable and the company also has a strong

liquidity position of EUR 500m in directly accessible cash (ADO stand-alone:

EUR 387m; ADLER stand-alone: EUR 237m) as of 31 December 2019.

ADO Properties’ LTV stands at 27% (end-2019) and its average interest rate is 1.6%.

The average term to maturity of its debt obligations is ~4.2 years. Virtually all of its

debt is either fixed interest or is interest-rate hedged. ADO Properties intends to

continue this sustainable financing strategy and targets an LTV of no more than

50%. For ADO stand-alone we assume an LTV of less than 25% for the next few

years. Since a consolidated balance sheet including ADLER is not available to

in EUR 2018 2019 2020e 2021e 2022e

ADO 0.75 0.75 0.42 0.44 0.45

YoY grow th 0.0% -43.7% 3.5% 3.1%

ADLER Real Estate Group 0.75 0.75 1.00 1.03 1.07

YoY grow th 0.0% 33.3% 2.5% 4.5%

in m EUR 2018 2019 2020e 2021e 2022e

ADO 4,044.0 3,624.5 3,755.0 3,889.6 4,030.3

YoY grow th -10.4% 3.6% 3.6% 3.6%

ADLER 4,989.1 4,920.0 5,218.2 5,516.3 5,816.4

YoY grow th -1.4% 6.1% 5.7% 5.4%

ADLER Real Estate Group 8,544.5 8,973.2 9,405.9 9,846.7

YoY grow th 5.0% 4.8% 4.7%

GAV amounted EUR 8.5bn in

2019

ADO and ADLER have together

over 75,000 units across

Germany

Combined accessible cash

amounting to EUR 500m

ADO: LTV of 27% and average

interest rate of 1,6%


Page 52 of 62

indicate fair value adjustments and goodwill, we use ADO’s stand-alone LTV for the

time being. But with regard to EPRA NAV and FFO 1 growth, the company should

stay within its LTV target for the coming years, i.e. no more than 50% growth.

The integration of ADLER is likely to cause a slight increase in the group’s average

interest rate. ADO’s stand-alone average interest rate was just under 1.6%, while

we calculate the combined entity’s average interest rate at around 1,9%, which is

still a respectable level.

ADO: LTV and net debt

Source: ADO, FMR

in m EUR 2018 2019 2020e 2021e 2022e

Net debt 1,639.5 999.0 1,113.2 1,152.5 1,196.9

YoY grow th -39.1% 11.4% 3.5% 3.9%

LTV 40.5% 27.6% 24.6% 24.8% 25.0%

YoY grow th -32.0% -10.6% 0.5% 0.8%

Interest rate of the combined

company: around 1,9%


Page 53 of 62

Appendix ADO P&L

Source: ADO, FMR

in TEUR 2016 2017 2018 2019 2020e 2021e 2022e

Revenue 109,775 128,852 154,853 156,520 131,686 138,026 143,561

YoY grow th 44.9% 17.4% 20.2% 1.1% -15.9% 4.8% 4.0%

Net rental income 84,673 103,300 127,982 134,141 105,575 109,507 113,616

as % of revenues 77.1% 80.2% 82.6% 85.7% 80.2%

Selling of condominiums 19,965 19,671 20,265 14,948 17,938 19,731 20,718

as % of revenues 18.2% 15.3% 13.1% 9.6% 13.6% 14.3% 14.4%

Income from facility services 5,137 5,881 6,606 7,431 8,174 8,787 9,227

as % of revenues 25.7% 29.9% 32.6% 49.7% 45.6% 44.5% 44.5%

Gross profit 76,211 92,678 112,857 112,509 84,435 88,170 92,172

as % of revenues 69.4% 71.9% 72.9% 71.9% 64.1% 63.9% 64.2%

General administrative expenses -12,277 -12,762 -18,451 -25,050 -14,780 -15,331 -15,906

as % of revenues -11.2% -9.9% -11.9% -16.0% -11.2% -11.1% -11.1%

Fair value adjustments of investment properties 444,268 383,638 404,936 461,517 92,303 92,303 92,303

as % of revenues 404.7% 297.7% 261.5% 294.9% 70.1% 66.9% 64.3%

EBIT 508,202 463,554 499,342 613,920 161,958 165,143 168,569

as % of revenues 462.9% 359.8% 322.5% 392.2% 123.0% 119.6% 117.4%

Financial result -27,728 -28,007 -31,516 70,100 -30,187 -30,404 -30,718

as % of revenues -25.3% -21.7% -20.4% 44.8% -22.9% -22.0% -21.4%

EBT 480,474 435,547 467,826 684,020 131,771 134,739 137,852

as % of revenues 437.7% 338.0% 302.1% 437.0% 100.1% 97.6% 96.0%

Taxes -69,706 -68,035 -70,362 -77,096 -18,418 -18,833 -19,268

as % of EBT -14.5% -15.6% -15.0% -11.3% -14.0% -14.0% -14.0%

Net income attributable to shareholders 410,768 367,512 397,464 606,924 113,353 115,906 118,584

Minority interests 15,618 11,542 10,550 5,050 1,134 1,159 1,186

Net income before minorities 395,150 355,970 386,914 601,874 112,219 114,747 117,398

Net margin in % 360.0% 276.3% 249.9% 384.5% 85.2% 83.1% 81.8%

Average shares outstanding (time-weighted, thousand) 39,083 44,100 44,101 44,151 55,515 55,515 55,515

Basic earnings per share (EUR) 10.11 8.07 8.77 13.63 2.02 2.07 2.11

FFO before minorities 43,513 54,345 66,777 63,173 46,858 48,500 50,014

FFO I p/s (EUR) before minorities 1.11 1.23 1.51 1.43 0.84 0.87 0.90

Dividend per share (EUR) 0.45 0.60 0.75 0.75 0.42 0.44 0.45


Page 54 of 62

ADO Balance Sheet

Source: ADO, FMR

in TEUR 2016 2017 2018 2019 2020e 2021e 2022e

Assets

Noncurrent assets 2,296,648 3,313,865 4,065,815 3,932,141 4,867,459 5,013,725 5,167,253

as % of total assets 89.6% 94.2% 97.5% 89.4% 91.9% 92.7% 93.8%

Investment properties 2,278,935 3,271,298 4,044,023 3,624,453 4,517,988 4,652,580 4,793,281

Advances in respect of investment properties 11,805 34,425 6,300 6,300 16,300 16,300 16,300

Property, plan and equipment 2,148 2,783 3,495 10,927 10,927 10,927 10,927

Other financial assets 3,760 5,359 6,615 98,871 113,702 125,072 137,579

Current assets 259,327 204,398 104,358 464,324 429,199 397,256 342,453


Trading properties 39,718 42,961 35,028 25,860 27,153 29,189 31,379

Restricted bank deposits 28,207 24,352 24,752 26,494 27,024 28,375 29,794

Trade receivables 6,604 10,324 13,313 15,570 15,570 15,570 15,570

Other receivables and other assets 1,377 5,231 3,299 8,842 8,842 8,842 8,842

Cash and cash equivalents 183,421 121,530 27,966 387,558 350,610 315,279 256,869

Total Assets 2,562,394 3,518,263 4,170,173 4,396,465 5,296,658 5,410,981 5,509,706

Shareholders´ equity and liabilities

Total equity 1,486,504 1,831,493 2,197,282 2,698,445 3,287,249 3,377,746 3,470,137


Share capital 55 55 55 55 69 69 69

Share premium 499,520 498,607 499,209 500,608 500,608 500,608 500,608

Capital reserve 333,872 330,638 324,877 250,684 750,684 750,684 750,684

Retained earnings 628,498 966,090 1,326,538 1,895,445 1,985,369 2,077,024 2,170,601

Shareholders equity 1,461,945 1,795,390 2,150,679 2,646,792 3,236,730 3,328,385 3,421,962

Minorities 24,559 36,103 46,603 51,653 50,519 49,360 48,175

Noncurrent liabilities 1,014,062 1,563,910 1,897,902 1,586,306 1,849,730 1,812,174 1,774,846

as % of total equity and liabilities 39.6% 44.5% 45.5% 36.1% 34.9% 33.5% 32.2%

Liabilities from bonds 0 396,396 396,899 397,433 400,000 400,000 400,000

Liabilities from convertible bonds 0 0 154,252 156,334 165,000 165,000 165,000

Financial liabilities to banks 877,326 953,955 1,040,909 740,212 759,873 704,114 648,245

Other noncurrent liabilities 15,137 27,238 40,492 46,416 47,344 48,291 49,257

Liabilities from derivatives 3,926 2,878 16,236 6,091 6,091 6,091 6,091

Current liabilities 61,828 122,860 74,989 111,714 159,679 221,061 264,723

as % of total equity and liabilities 2.4% 3.5% 1.8% 2.5% 3.0% 4.1% 4.8%

Financial liabilities to banks 27,388 72,768 17,064 37,605 83,089 141,867 182,794

Liabilities from derivatives 259 107 103 59 59 59 59

Liabilities from other financial instruments 0 867 1,535 1,535 1,535 1,535 1,535

Trade accounts payables 8,957 13,642 18,497 22,079 22,079 22,079 22,079

Other payables 25,224 35,476 37,790 49,613 52,094 54,698 57,433

Total equity and liabilities 2,562,394 3,518,263 4,170,173 4,396,465 5,296,658 5,410,981 5,509,706


Page 55 of 62

ADO Cash Flow Statement

Source: ADO, FMR

in TEUR 2016 2017 2018 2019 2020e 2021e 2022e

Net income 410,768 367,512 397,464 606,924 113,353 115,906 118,584

Depreciation 356 452 527 1,488 1,422 1,493 1,567

Fair value adjustments of investment properties -444,268 -383,638 -404,936 -461,517 -92,303 -92,303 -92,303

Net finance costs 27,728 28,007 31,516 -70,100 30,187 30,404 30,718

Income tax expense 69,706 68,035 70,362 77,096 18,418 18,833 19,268

Share-based payment 859 564 546 1,530 0 0 0

Change in bank deposits related to tenants -2,883 -4,727 -4,944 -6,244 530 1,351 1,419

Change in receivables 2,092 -6,890 -499 -5,890 0 0 0

Change in trading properties 8,588 12,830 13,585 9,168 -11,293 -2,036 -2,189

Change in trade payables and other liabilities 1,509 1,408 4,623 5,632 0 0 0

Other non-cash items 2,276 4,163 -156 15,896 -40,948 -35,012 -36,415

Income tax paid -352 -864 -4,155 -7,087 -1,466 -1,577 -1,692

Cash flow from operating activities 76,379 86,852 103,933 88,764 17,899 37,058 38,956

Change in fixed assets -129,428 -223,952 -118,300 -47,189 -42,768 -47,607 -53,716Purchase and CAPEX of investment

properties -116,839 -189,182 -117,118 -44,068 -42,550 -47,389 -53,497

Purchase of PPE -784 -795 -1,182 -3,121 -219 -219 -219

Change in financial assets and receivables -99,877 -271,086 -215,734 -254,085 -763,782 0 0

Cash flow from investing activities -228,290 -495,038 -334,034 269,061 -591,901 -47,607 -53,716

Net borrowings/retirements of financial debt 5,149 384,243 189,247 61,994 72,969 -532 -18,643

Interest payments made -18,762 -18,103 -24,873 -26,427 0 0 0

Dividend payments -13,475 -19,845 -26,460 -33,098 -23,429 -24,250 -25,007

Cash flow from financing activities 265,887 346,295 136,537 1,767 537,054 -24,782 -43,650

Total change in cash and cash equivalents 113,976 -61,891 -93,564 359,592 -36,948 -35,331 -58,410Cash and cash equivalents at the start of the

period 69,445 183,421 121,530 27,966 387,558 350,610 315,279

Cash equivalents at the end of the period 183,421 121,530 27,966 387,558 350,610 315,279 256,869


Page 56 of 62

Consus P&L

Source: Consus, FMR

in EURm 2017 2018 2019e 2020e 2021e 2022e

Overall performance 10 468 905 1,148 1,397 1,680

YoY grow th 4715.8% 93.6% 26.8% 21.8% 20.3%

Income from letting activities 10 33 18 21 25 32

as % of overall performance 7.0% 2.0% 1.8% 1.8% 1.9%

Income from real estate inventory disposal 0 164 292 440 550 715


Income from property development 0 408 444 500 600 690


Income from service, maintenance and management 0 10 12 13 13 14


EBITDA 6 108 279 319 404 497

as % of revenues 66.1% 23.1% 30.8% 27.8% 28.9% 29.6%

Personnel expenses -1 -37 -73 -102 -122 -134

as % of revenues -10.6% -7.9% -8.0% -8.9% -8.7% -8.0%

Expenses from letting activities -5 -16 -9 -10 -12 -14

as % of revenues -49.1% -3.4% -1.0% -0.9% -0.9% -0.9%

Cost of materials 0 -286 -498 -654 -782 -941

as % of revenues 0.0% -61.1% -55.0% -57.0% -56.0% -56.0%

Other operating income 0 13 18 21 25 30

as % of revenues 2.5% 2.8% 2.0% 1.8% 1.8% 1.8%

Other operating expenses -15 -60 -72 -92 -112 -134

as % of revenues -152.3% -12.8% -8.0% -8.0% -8.0% -8.0%

Fair value adjustments of investment properties 17 26 8 9 10 11

as % of revenues 175.7% 5.5% 0.9% 0.8% 0.7% 0.6%

Depreciation and amortisation 0 -2 -7 -8 -10 -12

as % of EBT 0.7% 18.9% -14.5% -8.8% -5.2% -4.4%

EBT -2 -11 48 91 194 285

as % of revenues -25.1% -2.5% 5.3% 7.9% 13.9% 16.9%

Taxes -6 11 -14 -27 -58 -85

as % of EBT 226.2% -97.4% -30.0% -30.0% -30.0% -30.0%

Net income before minorities -8 0 34 64 135 199

Minority interests 0 -13 -17 -22 -47 -70

Net income attributable to shareholders -8 -14 16 41 88 129

Net margin in % -81.8% -2.9% 1.8% 3.6% 6.3% 7.7%

Average shares outstanding (time-weighted, millions) 33 86 135 135 135 135

Basic earnings per share (EUR) -0.24 -0.16 0.12 0.31 0.65 0.96


Page 57 of 62

ADLER Real Estate P&L

Source: ADLER Real Estate, FMR

in EURm 2016 2017 2018 2019 2020e 2021e 2022e

Rental revenues 167,5 170,3 238,4 248,7 256,5 263,2 270,0

Income from recoverable expenses 81,2 91,6 107,6 115,0 128,2 131,6 135,0

Other income from property management 3,6 2,5 3,5 6,7 3,8 3,9 4,0

Gross rental income 252,4 264,4 349,6 370,4 388,6 398,8 409,0

Expenses from property lettings -138,8 -138,6 -145,9 -151,0 -163,7 -168,0 -172,3

Earnings from property lettings 113,6 125,8 203,7 219,3 224,9 230,8 236,7YoY growth 24,0% 10,7% 61,9% 7,7% 2,5% 2,6% 2,6%

Income from the sale of properties 160,4 34,9 75,1 533,8 213,5 111,6 114,6

Expenses from the sale of properties -124,0 -34,1 -67,0 -533,3 -213,5 -111,6 -114,6

Proceeds from the sale of properties 36,4 0,8 8,1 0,5 0,0 0,0 0,0YoY growth 55,1% -97,8% 927,2% -93,9% -100,0% 0,0% 0,0%

Other operating income 8,7 9,5 8,9 8,4 8,4 8,4 8,4

Fair value adjustments of investment properties 199,7 235,4 465,1 362,6 300,1 300,1 300,1

Personnel expenses -19,6 -20,3 -35,1 -47,1 -47,1 -47,1 -47,1

Other operating expenses -35,7 -38,5 -66,3 -69,0 -69,0 -69,0 -69,0

EBITDA 303,0 312,6 584,4 474,7 417,2 423,2 429,1as % revenues 202,0% 247,0% 275,9% 216,0% 185,5% 183,3% 181,2%

Depreciation and amortisation -1,2 -0,8 -1,6 -5,7 -1,9 -1,9 0,0

as % of revenues

EBIT 301,8 311,8 582,8 469,0 415,3 421,3 429,1as % of revenues 201,2% 246,3% 275,2% 213,4% 184,7% 182,5% 181,2%

Financial result -125,6 -153,4 -131,2 -110,7 -33,8 -24,3 -21,1

EBT (Earnings before income taxes) 187,5 158,4 454,8 357,0 381,5 397,0 408,0as % of revenues 125,0% 125,2% 214,7% 162,4% 169,6% 172,0% 172,3%

Income taxes -53,7 -52,1 -122,6 -81,2 -75,6 -77,6 -79,6as % of EBT -28,6% -32,9% -27,0% -22,8% -19,8% -19,6% -19,5%

Consolidated net profit from continiuing operations 133,8 106,4 332,2 275,8 305,9 319,3 328,4

Earnings after taxes of discontinued operations 0,0 36,3 0,3 92,0 0,0 0,0 0,0

Net income 133,8 142,6 332,4 367,8 305,9 319,3 328,4

Minority interests -12,8 -15,9 -66,9 -129,4 -61,5 -64,3 -66,1

Net income attributable to shareholders 121,0 126,7 265,6 238,3 244,3 255,1 262,3as % of revenues 80,6% 100,1% 125,4% 108,4% 108,6% 110,5% 110,8%

Earnings per share (EUR), basic 2,07 1,91 3,96 3,46 3,55 3,70 3,81

FFO I 27,30 40,50 74,20 84,40 96,60 102,33 108,07

FFO I per share (EUR) 0,47 0,60 1,08 1,22 1,39 1,47 1,56


Page 58 of 62

Consus Pipeline

No. Project Name City Approx. Total Sellable Area

(sqm)

Expected date of completion

1 Miners / Glück-Auf-Haus Köln 2.800 2020

2 Four Living VauVAu Leipzig 20.000 2020

3 Cologne Apart VauVau Köln 22.000 2020

4 Residenz am Ernst-Reuter-Platz Berlin 11.000 2020

5 Carré Sama Riga Berlin 12.000 2020

6 Franklinstraße 26 Berlin 11.000 2020

7 No.1 Mannheim 19.000 2020

8 Bundesallee (inkl. MOMENTE) Berlin 29.000 2020

9 Palatium (Palaisplatz Altbau) Dresden 5.000 2020

10 Wohnen an der Villa Berg Stuttgart 4.000 2020

11 Westend Ensemble – Grand Ouest Frankfurt 9.000 2020

12 UpperNord Hotel Düsseldorf 43.000 2020

13 Schwabenland Tower Stuttgart 9.000 2020

14 Delitzscher Straße B & C Leipzig 65.000 2020

15 Mary Ann Apartments VauVau Dresden 14.000 2021

16 NewFrankfurt Towers VauVau Frankfurt 38.000 2021

17 Vitopia-Kampus Kaiserlei Resi Frankfurt 14.000 2021

18 Steglitzer Kreisel Tower Berlin 27.000 2021

19 Südtribüne Dortmund 25.000 2021

20 Bahrenfelder Carré I

Von-Sauer-Str. Hamburg

4.000 2021

21 GEM Hofgarten Karlsruhe 111.000 2021

22 Böblingen Stuttgart 108.000 2021

23 GlockenGut Bayreuth 16.000 2021

24 Peschl Quartiere Passau 21.000 2021

25 Dessauer/Hamburger Straße Leipzig 10.000 2020/2021

26 Hallesches Ufer BT 1 – 3 Berlin 25.000 2020/2021

27 UpperNord Tower VauVau Düsseldorf 25.000 2022

28 Ostforum Leipzig 18.000 2022

29 Westend Ensemble – Upper West Frankfurt 20.000 2022

30 UpperNord Quartier Düsseldorf 5.000 2022

31 TAP Hochhaus Erfurt 6.000 2022

32 Ritterstraße Leipzig 13.000 2022

33 Neues Korallusviertel Hamburg 34.000 2022

34 Quartier Hoym Dresden 27.000 2021/2022

35 Königshöfe im Barockviertel Dresden 15.000 2021/2022

36 Kreuzstraße Leipzig 3.000 2021/2022

37 Cologneo I Part 1 Köln 54.000 bis 2022

38 Vitopia-Kampus Kaiserlei Comm Frankfurt 31.000 2023

39 Ostplatz – FLI Mensa Leipzig 19.000 2023

40 Zerbster / Wittenberger Straße Leipzig 31.000 2023

41 Braugold Erfurt 17.000 2023


Page 59 of 62


(sqm)

Expected date of completion

42 2stay Frankfurt 28.000 2023

43 Covent Garden München 29.000 2023

44 The Wilhelm Berlin 16.000 2023

45 COL III (Windmühlenquartier) Köln 23.000 2022/2023

46 Max-Reger-Str. Erfurt 16.000 2022/2023

47 Cologneo I Part 2 Köln 36.000 bis 2023

48 Neuländer Quarre Hamburg 19.000 2024

49 Billwerder Neuer Deich Hamburg 81.000 2024

50 NY Hamburg 44.000 2024

51 Mariannenpark Leipzig 2.000 2024

52

Steglitzer Kreisel Parkhaus & Sockel Berlin 42.000 2023/2024

53 Wachendorff Quartier Bergisch-Gladbach 31.000 2023/2024

54 Cologneo II Köln 72.000 2025

55 Forum Pankow Berlin 36.000 2025

56 Ostend Frankfurt 31.000 2025

57 Otto Quartier Wendlingen 70.000 2024/2025

58 Quartier C Karlsruhe 45.000 2026

59 Holsten Quartiere Hamburg 133.000 2026

60 VAI Campus Stuttgart 185.000 2026

61 Benrather Gärten Düsseldorf 159.000 2027-2029

62 Plagwitz Development Leipzig 99.000 versch.

63 Plagwitz Bestand Leipzig 8.000 -

64 GEM H Portfolio Karlsruhe 20.000 -


(sqm)

Completion

1 Residenz am Waldplatz Leipzig 6.000 2019

2 Carré Löbtau Dresden 10.000 2019

3 Katharinenstraße Leipzig 2.000 2019

Source: Consus, FMR

The completed projects were already included in the 9M 2019 figures, Carré Löbtau

was completed in December 2019. Miners Glückauf-Haus was not completed in

2019, the company expects to complete it in 2020.

It appears that the Residenz am Waldplatz has not been fully sold and some

residential units are rented out; we have included this in our estimates.


Page 60 of 62

Declaration of liability (disclaimer) and mandatory details pursuant to Section 85 Securities Trading Act (WpHG), EU Market Abuse Regulation (EU

Regulation No. 596/2014), Delegated Regulation 2016/958 and Delegated Regulation 2017/565 including details of possible conflicts of interest

(disclosures), the author and the responsible supervisory authority

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When producing an analysis, we have procured the actual details from the sources available to us that are generally deemed to be reliable. We cannot

make any claim regarding the accuracy and completeness of such information. The recommendations and/or prognoses made by us on the basis of

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2. Mandatory details

a) First publication: 22.04.2020,

b) Time conditions of expected updates: quarterly

c) Supervisory authority: Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht), Lurgiallee 12, 60439 Frankfurt am

Main

d) Previous analyses: No analysis was published in the 12 months before publication of this analysis that contains a recommendation for a specific

investment decision which contradicts this analysis.

e) The analysis was made available to the issuer, to the extent that is legally permissible, before publication and was not amended thereafter.

f) All prices and price developments listed in the analysis are based on closing prices insofar as no contradictory details were provided about prices

and price developments.

3. Disclosures

a) Neither FMR Frankfurt Main Research AG nor an affiliated company, nor any person who contributed to the compilation

(i.) has an involvement in the share capital of the issuer of at least 5 per cent;

(ii.) was involved in the management of a syndicate within the past five months that issued financial instruments of the issuer in the context of a

public tender;

(iii.) managed financial instruments of the issuer on a market by means of concluding purchase or sale agreements:

(iv.) has, within the past twelve months, concluded an agreement regarding services in connection with investment banking business or received a

service or performance promise from such agreement, with issuers which either themselves or the financial instruments thereof, are the subject of

the financial analysis;


Page 61 of 62

(v.) is in possession of a net sales or purchase position which exceeds the threshold of 0.5% of the total issued share capital of the issuer;

(vi.) has concluded an agreement regarding the preparation of investment recommendations with the issuer.

(vii.) has other significant interests with regard to the company being analysed, for example clients with the company being analysed.

Company Disclosure(s)

ADO Properties S.A. (ADLER Real Estate Group) -

Recommendation history over last 12 months:

Date Recommendation Share price at publication date Price target

22.04.2020 BUY 23.88 35.00

4. Creation and distribution

a) Responsibility for creation and distribution

FMR Frankfurt Main Research AG

Registered office: Frankfurt am Main; Commercial Register No. HRB 113537, Frankfurt am Main district court; Chairman: Marcus Silbe

b) Issuers

Mariya Lazarova, Analyst

Robel Tesfeom, Analyst

c) This study may only be used for the internal purposes of the addressee within the EEA or Switzerland.

5. Investment recommendation details

Investment recommendation details - stocks:

BUY: In our opinion, the stock will demonstrate an absolute price gain of at least 10 % in a 12-month period.

HOLD: In our opinion, the stock will not exceed or fall below an absolute price gain or loss of 10% in a 12-month period.

Sell: In our opinion, the stock will demonstrate an absolute price loss of at least 10 % in a 12-month period.

6. Sensitivity of the evaluation parameters

The figures from profit and loss calculations, cash flow statements and balance sheets which form the basis of the company evaluation are date-

related estimates and therefore subject to risks. These may change at any time without prior notice. Regardless of the evaluation methods used,

there are significant risks that the price goal/trend will not be achieved within the expected time frame. The risks include unforeseeable changes with

regard to competition pressure, demand for the products of an issuer and the offer situation with respect to materials required for production as well

as non-occurrence of the assumed development. Such deviations may be the result of changes relating to technology and changes relating to the

economy, legal situation and exchange rates. No claim is made that this statement of evaluation methods and risk factors is complete.

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not verified all this information. Therefore, we cannot guarantee or ensure the accuracy, completeness or correctness of the information or opinions

contained in this document. National and international media and information services (e.g. Factset, Bloomberg etc.), the financial press (e.g.

BörsenZeitung, FAZ, Handelsblatt, Wallstreet Journal, etc.), specialist press, published statistics, the internet, as well as publications, details and

information of the issuer that is the subject of the analysis.

8. Summary of the basis for evaluation

Individual issuers: Current and recognised evaluation methods (e.g. DCF method and Peer Group Analysis) are used for company analysis purposes.

The DCF method calculates the value of the issuer based on the sum of the discounted cash flows, i.e. the cash value of the future cash flows of the

issuer. The value is therefore determined on the basis of expected future cash flows and the applied discount rate. In Peer Group Analysis, issuers

listed on the stock exchange are evaluated by comparing ratios (e.g. price/profit ratio, Enterprise Value/turnover, Enterprise Value/EBITDA, Enterprise

Value/EBIT). The comparability of the ratios is primarily determined with reference to the business activity and economic prospects.


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9. Internal organisational and regulatory measures for the prevention or management of conflicts of interest

Employees of FMR Frankfurt Main Research AG who are involved with the compilation and/or presentation of financial analyses are subject to the

internal compliance regulations. The internal compliance regulations correspond to the provisions of the directive for the substantiation of the

organisational obligations of investment service companies pursuant to Section 80 Securities Trading Act and EU/ESMA legislation on the basis of the

Market Abuse Regulation.

The analysts of FMR Frankfurt Main Research AG do not receive any direct or indirect remuneration from the investment banking business of FMR

Frankfurt Main Research AG.

On acceptance of the financial analysis, the recipient accepts that the above restrictions are binding.