ADLER Real Estate AG (ADLER) signs merger agreement to acquire all shares in A.D.O. Group Ltd (ADO Group), for c. EUR 708m; transaction will result in ADLER holding 33.0% stake in ADO Properties S.A (ADO Properties).

- Transformational transaction creating a combined German residential company with a real estate portfolio with a gross asset value (GAV) of EUR 9.4bn

- Purchase price represents a 15% discount to ADO Properties' H1 2019 reported EPRA NAV not including any expected premium to be realised in connection to the possible sale of a real estate portfolio announced by ADO Properties on 16 September 2019

- Total equity consideration of c. EUR 708m and total value of transaction is c. EUR 970m¹

- To be funded by a combination of a rights issue, fully guaranteed and backstopped by ADLER anchor shareholders, cash from disposals of non-yielding assets and financial debt

- BB Stable Outlook rating to be reaffirmed post-closing the transaction

- Expected to reduce ADLER's pro forma H1 2019 LTV on a fully consolidated basis to c. 47% or c. 58%on a proportionally consolidated basis assuming completion of the proposed sale of a real estate portfolio announced by ADO Properties on 16 September 2019

Berlin, 23^rd September 2019: ADLER has agreed to acquire all the shares of ADO Group, an Israeli listed holding company and shareholder in ADO Properties, a EUR 4.4bn GAV German-listed, residential, real estate company with a high-quality portfolio focused on Berlin.

Initially, the transaction will be funded by acquisition finance which ADLER intends to repay through a combination of a rights issue fully-guaranteed and backstopped by ADLER anchor shareholders, cash from the disposals of non-yielding assets and financial debt. The BB stable outlook rating for ADLER is expected to be reaffirmed upon completion of the transaction.

Following this acquisition ADLER will hold a 33.0% stake in ADO Properties, a dividend paying company, and will see its main KPI's improving on a fully consolidated basis.

Tomas de Vargas Machuca commented "This purchase has an attractive entry price below ADO Group's EPRA NAV. This represents a highly attractive transaction on value per square meter and a considerable discount to privately traded berlin residential portfolios. The acquisition also provides longer term opportunities to generate sustainable shareholder value"

Maximilian Rienecker added "This transaction strengthens our balance sheet and P&L. It also further enhances our capital structure and reduces our fully consolidated leverage position Against this background ADLER will review its dividend policy for the current financial year."

ADLER's current portfolio provides significant upside potential in B locations primarily through yield compression and rental growth. This transaction adds high quality assets in Berlin, which the management believes offers long-term potential for rental and asset value growth.

This transaction will create a large, pure-play German residential real estate company with a fully consolidated GAV of EUR 9.4bn, net rental income of EUR 366 and FFO I of between EUR 130m and 140).

Summary of Key Operational and Financial Metrics
ADO Properties will be accounted for on a fully consolidated basis by ADLER following completion of the transaction and the positive impact on ADLER's key financial and operational KPIs is included below based on H1 2019 reported figures:

Note: LTV figures above include the expected effects of the ADO Properties' real estate portfolio sale announced on 16 September 2019.

ADO Properties S.A.
ADO. Properties is a pure-play Berlin residential real estate company with a EUR 4.4bn GAV portfolio trading on the Frankfurt Stock Exchange since 2015 with 86% of its portfolio concentrated on the Berlin residential market. Currently it owns 23.627 residential units representing a GAV of EUR 4.4bn with a reversionary potential of 48% and a 2.9% vacancy rate.

Proposed Sale of a Real Estate Portfolio
ADO Properties announced on 16^th September 2019 that it is in discussions around the sale of c 5,800 units together with some related commercial units and parking spaces. Should these discussions conclude then all key metrics are expected to improve further.

JPMorgan is acting as exclusive financial advisor and sole provider of acquisition financing for ALDER in context of this transaction. Freshfields is acting as German M&A counsel. Freshfields Bruckhaus Deringer is advising ADLER on German M&A, corporate law and the debt financing, Meitar Liquornik Geva Leshem Tal on Israeli M&A, Arendt&Medernach on Luxembourg corporate and securities laws and Norton Rose Fulbright is advising on the equity financing.

- ENDS -

ADLER to hold a conference on the acquisition at GMT 3.00pm (CET 4.00pm).
Dial in details to be available on ALDER's website at the latest 30 minutes before the call.

For further information

For enquiries, please contact:
Tina Kladnik
Head of Investor Relations
ADLER Real Estate AG
Telephone: +49 30 39 80 18 123
[email protected]]

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