The property portfolio

As of 30 June 2019, ADLER held a total of 58,095 rental units with a total space of 3.5 million square metres and an annualised net rent (including parking spaces and other areas) of EUR 219.5 million. The fair value of the total portfolio (investment properties and inventories) amounted to EUR 5,008.2 million. The regional focus is on Lower Saxony (18,312 units), North Rhine-Westphalia (13,808 units) and Saxony (9,679 units). At the end of December 2018, around 3,700 non-core residential units have been sold in two separate transactions (notarised in Q1 2019), reducing the overall portfolio accordingly.

The residential properties also include a small number of commercial units which consist entirely of shops and offices of the kind that can often be found in city-centre residential properties. As at the end of the first half of 2019, these units numbered 898 and accounted for 1.5 percent of the properties held for permanent letting.

ADLER’s business activities focus on Germany, where the Group holds most of its properties in the northern and western parts of the country. The largest share of ADLER’s properties are in the federal states of Lower Saxony (31.5 percent of the overall portfolio) and North Rhine-Westphalia (23.8 percent of the overall portfolio). In the eastern part of the country, ADLER holds 16.7 percent of its portfolio in Saxony, 6.7 percent in Saxony-Anhalt and 6.2 percent in Brandenburg.

ADLER owns properties located on the edges of larger conurbations. This is particularly apparent in North Rhine-Westphalia, where all of the company’s properties are in the Ruhr, which still is Germany’s largest industrial region. In Lower Saxony, the property holdings are mainly located in the Wolfsburg/Braunschweig/ Helmstedt region, a traditionally strong region in economic terms, and in Wilhelmshaven, a city which is benefiting from its deep-water port and from what is 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 population but which are now benefiting from growth once again as a consequence of the significant infrastructure investments made in these areas over the last 20 years.

Property holdings on the edges of conurbations are typically characterised by higher vacancy rates, but also generate higher rental yields than properties in central or so-called ‘A locations’. Peripheral locations benefit to a particularly marked extent from tight rental markets in city centres. When rents rise in desirable locations in the city centre and affordable flats are no longer available, price-sensitive demand in particular tends automatically to shift to the surrounding areas.

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