Adler - comment

Good execution, albeit in a lousy environment, should put marginal pressure on the bonds. The room to manoeuvre is narrowing as German real estate is turning cautious. We will be seeking to offload our small remaining position in the 1L and the 3L in the coming days. The development book is now down to €400m and management continues to warn of falling investor confidence in German real estate weighing on demand for speculative land plots. Loan repayments since Q126 have slowed significantly, and while management is hopeful to close some stretching sales processes before year-end, we get the impression that few new processes have been commenced. So with a view to the 2028 maturity wall, all eyes turn to the Berlin rental portfolio growing at +3% LfL, YoY. Significant rent rises up to Mietspiegel will take effect in September and should take annual growth to above 3.5%. That bodes well for 2027 - the year before the refinancing, which is beginning to look like a +5% LfL year. Upon request, management confirmed ongoing deliberations with Evercore on the sale of the rental portfolio, but had nothing concrete to report. Leverage is creeping up, and we expect to be restructuring one more time, before finding a buyer.