Focus on residential 

Having sold its trading activities at the end of 2017, ADLER Real Estate AG now only pursues one business objective: the letting of permanently held properties which have been acquired as fully lettable units or need to be constructed as part of a project development.

As at the end of the third quarter 2018, ADLER Real Estate AG held a total of 62,004 rental units with a total space of 3.8 million square metres, which represented a 23.3 percent increase when compared to the start of the year and is primarily due to the acquisition of the majority of shares in BCP.

The properties held for residential purposes also include commercial units which consist entirely of shops and offices of the kind that can often be found in city-centre residential properties. As of the end of the third quarter, these units numbered 1,148 and accounted for 1.9 percent of the properties held for permanent letting. BCP contributed 141 units of this type of commercial property. Accordingly, their share in the total number of rental units has changed only slightly over the course of the year.

Portfolio realignment31.09.2018  31.12.2017
DivestmentsAdditions
Rental portfolio62,00447312,17250,305

-of which residential units

60,85639311,99349,256

-of which commercial units

1,148801791,049

Key focuses in Lower Saxony and North Rhine-Westphalia

ADLER focusses its business activities in Germany and holds most of its properties in the northern and western parts of the country. This remained essentially unchanged after the acquisition of BCP. However, there have been some shifts in the state-specific focus areas. Following the consolidation of BCP, 30.3 percent of ADLER’s properties are located in Lower Saxony and 24.7 percent in North Rhine-Westphalia. Around 40 percent of ADLER’s portfolio is located in the eastern part of the country, with key focuses here in Saxony (17.1 percent), Brandenburg (6.5 percent) and Saxony-Anhalt (5.8 percent).

With the acquisition of BCP, ADLER has acquired real estate in attractive locations, partly in inner cities. Yet its portfolio still predominantly consists of properties located on the outskirts of larger conurbations. This is particularly apparent in North Rhine-Westphalia, where virtually all of the company’s properties are located in the Ruhr, which is still Germany’s largest industrial region. In Lower Saxony, the property holdings are mainly located in Hanover, the Wolfsburg/Braunschweig/Helmstedt region, a traditionally strong region in economic terms, the Bremen catchment area and in Wilhelmshaven, a city which is benefiting from the deep-water port and the location of the German Navy’s largest base on the North Sea. In Saxony and Saxony-Anhalt, the properties are predominantly located in the catchment areas for Halle, Leipzig, Chemnitz and Dresden – cities that after the German reunification initially lost their industry and part of their populations but which are now benefiting from growth once again as a consequence of the significant infrastructure investments carried out over the last 20 years in these areas.

Property holdings on the edges of conurbations are typically characterised by higher vacancy rates, but also generate higher rent yields than properties in central or “A” locations. Peripheral locations benefit to a particularly marked extent from tight rental markets in city centres, due to price sensitive demand automatically shifting to the surrounding areas when rent rises in desirable locations translate into a lower availability of affordable apartments.

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