Until the end of 2017, the business model of ADLER Real Estate AG comprised two fields of activity – Rental (investment properties) and Trading (inventory properties). Since ADLER ceased its trading activities the focus is solely on rental business. The business model has thus been simplified.
From letting the portfolios, ADLER Real Estate AG aims to generate sufficient long-term gross rental income in order to cover all letting-related expenses and prospectively enable the company to pay a dividend to its shareholders.
The rental portfolio consists almost entirely of residential units and has been built up over the past five years by acquiring individual portfolios or shares in real estate 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. With a portfolio of over 50,000 units, ADLER is now one of Germany’s top five listed residential property companies.
ADLER intends to further expand this portfolio by making further acquisitions in the future. ADLER has and will further be focusing its investments on residential property portfolios in “B” locations and on the edges of large conurbations, where the 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. As it has become increasingly difficult to acquire portfolios on the market at attractive prices in the last two years, to complement its existing approach – which will remain unchanged – ADLER will also expand its portfolio in future by means of project developments, portfolio densification or loft conversions of existing portfolios.
The apartments in ADLER’s portfolio have an average size of around 60 square metres and have two or three main rooms. At the end of the current period under report, the average monthly rent amounts just above 5 euros per square metre and month. ADLER thus operates in a market segment focusing on people with medium to below-average incomes. ADLER offers decent living quality at appropriate market rents to this target group.
As an integrated real estate group ADLER aims at offering its tenants all tenant-related services from one source. Property management is therefore in the hands of the group company ADLER Wohnen Service GmbH, facility management is operated by ADLER Gebäude Service GmbH and ADLER Energie Service GmbH is in charge of the energy supply for the entire portfolio.