ADLER – A major provider of residential properties in Germany

The business model of ADLER Real Estate AG comprises two fields of activity – Rental (investment properties) and Trading (inventory properties). The company’s segment reporting is structured accordingly.

The Rental segment characterises the activities of the Group’s central Asset Management department, which manages residential units held in the portfolio in technical and commercial terms. It performs these activities mostly under its own management. Where this is not the case, it manages third-party property management companies by way of service agreements. With ADLER Wohnen Service GmbH, which was founded in 2016, ADLER now has a company at which group-internal activities in the field of property management, including existing activities at Wohnungsbaugesellschaft JADE mbH in Wilhelmshaven and WBG GmbH in Helmstedt, are due to be pooled in the near future. ADLER intends to further expand this section of its value chain and fully integrate it into the Group by the end of 2017.

The Trading segment is largely managed and directed by a standalone group company, ACCENTRO Real Estate AG, in which ADLER Real Estate AG owns 86.7 percent of the shares.

All activities related to the management of properties due to be retained in the portfolio on a permanent basis are pooled in the Rental segment. These relate almost exclusively to residential units. This portfolio has been built up over the past five years by acquiring individual portfolios or shares in property companies. It is regularly reviewed, adjusted in line with earnings and value considerations and developed further with the aim of increasing rental income and reducing the vacancy rate. The properties are regularly valued by independent surveyors. With a portfolio of almost 50,000 units, ADLER is now one of Germany’s top six listed property companies.

ADLER intends to further expand this portfolio by making additional acquisitions in the future. As in previous years, ADLER will be focusing its investments on residential property portfolios in “B” locations and on the edges of large conurbations, where rental yields are typically higher than in inner-city “A” locations. When suitable market opportunities arise, however, ADLER also supplements its portfolio by investing in so-called “A” cities, such as Berlin, in order to benefit from value growth in these markets. Either way, ADLER believes acquisitions only make sense when the properties promise to generate positive cash flows directly from acquisition onwards.


The apartments in ADLER’s portfolio have an average size of around 60 square metres and have two or three main rooms. The average monthly rent amounts to EUR 5.04 per square metre. ADLER thus operates in a market segment focused on people earning mid to below-average wages. ADLER offers decent living quality at appropriate market prices to this target group. Demand for affordable living space is continuing to grow as the average age of the population is rising in conjunction with an increasing number of single-person households. Furthermore, people are moving to Germany from various parts of the EU as they see better employment prospects here, while others are coming to Germany as asylum seekers from further afield. Simultaneously, the supply of new housing in this segment remains low as construction prices are so high that it is not possible to generate attractive returns based on the existing level of rent. The recently introduced political measures aimed at promoting the development of new housing have so far had little impact in this respect.

In the balance sheet, rental properties are typically recognised as investment properties at their fair values, which in turn are determined by specialised independent valuation companies. Changes in property values are recognised through profit or loss in the income statement and also change the Group’s net asset value (NAV).

Operations in the Trading segment involve the purchase and sale of residential properties and individual apartments. At the ADLER Group, this segment is primarily covered by the majority interest in the listed company ACCENTRO Real Estate AG. ACCENTRO markets suitable residential properties and individual apartments from the ADLER Group and also on behalf of third parties to owner-occupiers and capital investors in Germany and abroad. According to its own assessment, ACCENTRO is Germany’s largest privatiser of residential property.

Acting for the Trading segment, ACCENTRO regularly acquires residential properties that are suitable for privatisation. As they are intended for sale, these properties are then only held for short periods. Given that the Trading segment accords priority to marketability factors, when selecting properties ACCENTRO does not automatically target the same locations as those favoured in the Rental business, but consciously also includes properties in “A” cities in its target portfolio.

In the balance sheet, properties held for trading are recognised at cost as inventories. These items are typically not subject to value changes. Only when they are sold is the difference between the sale price and their respective carrying amount recognised through profit or loss in the income statement.

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