Adler Group (ETR:ADJ) confirmed its full-year 2026 net rental income guidance after reporting first-quarter results that reflected continued rent growth in its Berlin-focused residential portfolio and further debt repayments from asset disposals.
Chief Executive Officer Dr. Karl Reinitzhuber said net rental income totaled EUR 31 million for the first three months of 2026, down from the prior-year period due to the disposal of the North Rhine-Westphalia portfolio. The decline was partly offset by rent increases across the remaining assets. Adler said it remains on track to reach 2026 net rental income of EUR 124 million to EUR 129 million.
Asset sales drive debt reduction
Adler continued to use proceeds from disposals to reduce debt, particularly its first lien new money facility. Reinitzhuber said the company closed Quartier Kaiserlei in January, followed by Benrather Gärten and Holsten Quartier in March. Adler has received 80% of the Holsten purchase price, with the remaining proceeds expected in the coming months.
The company also closed several non-strategic yielding asset disposals in Berlin, including Kornversuchsspeicher at the end of March, Hedemannstraße at the beginning of April and Hansastraße earlier in May. In addition, Adler signed sales of 21 condominium units in Berlin for a total price of EUR 7 million.
“All of these disposals have enabled us to repay debt of EUR 197 million since the beginning of the year,” Reinitzhuber said.
Chief Financial Officer Thorsten Arsan said total nominal interest-bearing debt declined to EUR 3.6 billion at the end of March from EUR 3.7 billion at the end of December. The company’s loan-to-value ratio increased slightly to 77.1%, which management said was in line with expectations. Adler’s weighted average cost of debt stood at 7.1%, and average debt maturity was about 3.2 years.
Arsan said 97% of the company’s financial debt matures in 2028 or beyond. The remaining EUR 50 million Adler Real Estate bond due in April 2026 was repaid using additional disposal proceeds in March, and Adler also extended a EUR 6 million secured bank loan from 2026 to the fourth quarter of 2028. Discussions are ongoing for the remaining EUR 12 million of 2026 bank maturities, with Arsan saying the company expects to reach prolongation agreements well ahead of maturity.
Berlin portfolio shows rent growth and low vacancy
Adler’s yielding portfolio remains almost entirely concentrated in Berlin. At the end of March, the company had 17,483 rental units, a decrease of 21 units from December due to condominium sales. More than 99% of the portfolio is located in Berlin, with only 49 units outside the city, which Adler expects to sell in coming quarters.
The gross asset value of the yielding portfolio remained stable at EUR 3.5 billion, while the development portfolio was valued at about EUR 400 million, bringing total gross asset value to EUR 3.9 billion. Arsan said the total was slightly down from EUR 4 billion at the end of December, primarily due to the handover of a development asset to the buyer during the quarter.
Operational performance remained firm. Reinitzhuber said like-for-like rental growth was 3.6% year over year, matching the level reported for the fourth quarter of 2025 and remaining above Adler’s target zone of more than 3% per year. Average rent rose to EUR 8.64 per square meter per month in March from EUR 8.31 a year earlier. Operational vacancy was 1.4%, slightly lower than 1.5% a year earlier.
Reinitzhuber said rental growth was supported by rent increases on current contracts and ongoing reletting activity. Over the last 12 months, Adler increased rents on close to 50% of its residential units, split between CPI-indexed and Mietspiegel-based leases.
Development market remains challenging
Management struck a cautious tone on the broader German residential development market. Reinitzhuber said the market appeared to stabilize through February, but the environment “clouded over” in recent months due to higher interest rates, which he linked to the Iran war. He said German developers and their equity partners have become more cautious and are delaying investment decisions.
Adler is running several development sales processes that Reinitzhuber said are in advanced stages, though finalizing purchase agreements has taken longer than expected. The company’s disposal holdback basket remained almost fully filled at EUR 245 million, unchanged from three months earlier.
Reinitzhuber said Quartier Hoym in Dresden was handed over to buyer abrdn in March with little residual work remaining. The Ostforum project in Leipzig is also close to completion outside the lettable area, and Adler is progressing the interior fit-out for Deloitte, its office anchor tenant, with handover expected by year-end. The company is also focused on leasing remaining floor areas after signing lease contracts with Deloitte and Aldi.
Strategic review continues
During the question-and-answer session, Othman El Iraki of Fidelity International asked about the investment market for standing assets and about Adler’s work with Evercore on strategic options.
Reinitzhuber said there had been a “very limited number of transactions in Germany and in Berlin over the last few months,” adding that higher interest rates had not helped the market. He said institutional investors are still holding back and described the market as “rather flat” at this point.
On the Evercore process, Reinitzhuber said there was little to report in detail. “We continue to work,” he said, adding that Adler would share conclusions and next steps when available.
Reinitzhuber also said Adler is monitoring the political debate over potential expropriation of private housing in Berlin. He said it would be helpful for Germany as a business hub “if the expropriation debate came to an end rather sooner than later.”
Adler said it will publish its second-quarter 2026 figures on Aug. 27.
About Adler Group (ETR:ADJ)
Adler Group SA engages in the purchase, management, and development of multifamily residential real estate properties in Germany. It operates through Residential Property Management, Adler RE, Consus, and Privatization segments. The company is involved in the rental and management of residential properties, including modernization and maintenance of residential properties, management of tenancy agreements, and marketing of residential units, as well as It also engages in holding, operating, and selling commercial units; and the modernization, maintenance, real estate investment, development of middle income houses, and management of non-vacant units.
