Obligation ADLER Real Estate AG 1.5% ( XS1843441491 ) en EUR

ADLER Real Estate AG

100 % ▲

Allemagne

XS1843441491 ( en EUR )

1.5% par an ( paiement annuel )

16/04/2022 - Obligation échue

Prospectus brochure de l'obligation ADLER Real Estate AG XS1843441491 en EUR 1.5%, échue

100 000 EUR

400 000 000 EUR

ADLER Real Estate AG est une société immobilière cotée en bourse, axée sur l'acquisition, la gestion et le développement de propriétés résidentielles et commerciales, principalement en Allemagne et en Autriche.

L'Obligation émise par ADLER Real Estate AG ( Allemagne ) , en EUR, avec le code ISIN XS1843441491, paye un coupon de 1.5% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 16/04/2022

LISTING PROSPECTUS
NOT FOR DISTRIBUTION IN THE UNITED STATES
ADLER Real Estate Aktiengesellschaft
a German stock corporation (Aktiengesellschaft)
EUR 400,000,000 1.500% Notes due 2022, issue price 100%
ADLER Real Estate Aktiengesellschaft, a stock corporation (Aktiengesellschaft) organized under the laws of Germany, having its registered office at
Joachimsthaler Straße 34, 10719 Berlin, Federal Republic of Germany, registered with the commercial register (Handelsregister) at the Local Court
(Amtsgericht) of Berlin-Charlottenburg under number HRB 180360 B (the "Company" or the "Issuer" and, together with its consolidated subsidiaries,
"ADLER" or the "Group") will issue on April 17, 2019 (the "Issue Date") EUR 400,000,000 principal amount of 1.500% Notes due 2022 (the "Notes").
The Notes will constitute direct, unconditional, unsecured and unsubordinated obligations of the Issuer, ranking pari passu among themselves and pari passu
with all other unsecured and unsubordinated obligations of the Issuer, unless such obligations are accorded priority under mandatory provisions of statutory
law. The Notes will bear interest from, and including, the Issue Date, until, and excluding, April 17, 2022 (the "Maturity Date") at a fixed rate of 1.500% per
annum as set forth in the terms and conditions of the Notes (the "Terms and Conditions"). Unless previously redeemed or purchased and cancelled in
accordance with the Terms and Conditions, the Notes will be redeemed at par on the Maturity Date. The Notes may be redeemed before this date, in whole but
not in part, at their principal amount, together with, if applicable, accrued interest, notably in the event of any change in taxation or in an event of default. If a
change of control occurs, each Noteholder will have the option to require the Issuer to redeem or, at the Issuer's option, repurchase all or part of the Notes held
by such Noteholder at their principal amount together with, if applicable, accrued interest. If 80% or more of the aggregate principal amount of the Notes have
been redeemed or purchased by the Issuer or any direct or indirect subsidiary of the Issuer, the Issuer may at any time, redeem, at its option, the remaining
Notes in whole but not in part at the principal amount thereof plus unpaid interest accrued to (but excluding) the date of actual redemption. The Notes will be
issued in bearer form and in the denomination of EUR 100,000 each and will initially be represented by a temporary global bearer note (each a "Temporary
Global Note"), without interest coupons attached, deposited with a common safekeeper for Euroclear Bank SA/NV ("Euroclear") and Clearstream Banking,
S.A., Luxembourg ("Clearstream, Luxembourg"). Each Temporary Global Note will be exchangeable for interests recorded in the records of Euroclear and
Clearstream, Luxembourg in a permanent global note (each a "Permanent Global Note", and together with the Temporary Global Note each a "Global Note")
not earlier than 40 days after the Issue Date in accordance with the provisions set out in the Terms and Conditions.
This prospectus (the "Prospectus") constitutes a prospectus pursuant to Article 5 para. 3 of the Directive 2003/71/EC of the European Parliament and of the
Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading as amended by the Directive
2010/73/EC of the European Parliament and of the Council (the "Prospectus Directive") which will be fully replaced by Regulation (EU) 2017/1129 of the
European Parliament and of the Council (the "Prospectus Regulation") from July 21, 2019 onwards. This Prospectus has been approved by the Luxembourg
Commission for the Supervision of the Financial Sector (Commission de Surveillance du Secteur Financier - "CSSF"). Pursuant to Article 7 para. 7 of the
Luxembourg Law of 10 July 2005 on prospectuses for securities, as amended, ("Luxembourg Prospectus Law"), the CSSF does not take any responsibility
for the economic or financial soundness of the transaction and the Issuer's quality and financial solvency. The approved prospectus (including the documents
incorporated by reference therein) may be downloaded from the Issuer's website (www.adler-ag.com) under the heading "Investor Relations/Bonds" and the
website of the Luxembourg Stock Exchange (Société de la Bourse de Luxembourg) (www.bourse.lu) (the "Luxembourg Stock Exchange"). Application has
been made to the Luxembourg Stock Exchange for the Notes to be admitted to its regulated market, which qualifies as a regulated market for purposes of the
Markets in Financial Instruments Directive II (Directive 2014/65/EU, "MiFID II").
The Issuer is assigned a "BB" long-term issuer credit rating with stable outlook by Standard & Poor's Credit Market Services Europe Limited ("S&P"). The
Notes are assigned a "BB+" long-term issue credit rating by S&P. The stable outlook reflects S&P's expectation of continued favorable demand for residential
real estate in Germany translating into stable cash flow generation and positive revaluation for ADLER's portfolio of residential properties. The Issuer will
announce any rating it receives from S&P for the Notes to the holders of the Notes as soon as practicable following the receipt of such a rating (which will
include details of the rating). S&P is established in the European Community and is registered under Regulation (EC) No 1060/2009 of the European
Parliament and of the Council of September 16, 2009 on credit rating agencies, amended by Regulation (EC) No 513/2011 of the European Parliament and of
the Council of 11 May 2011 (the "CRA Regulation"). A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision,
suspension or withdrawal at any time by the assigning rating organisation.
The Notes have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The Notes may not be
offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. Persons (as defined in Regulation S under the Securities
Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Notes are not
being offered in the United States. This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Notes in any
jurisdiction where such offer or solicitation is unlawful.
INVESTMENT IN THE NOTES INVOLVES CERTAIN RISKS. PROSPECTIVE INVESTORS SHOULD CONSIDER THE RISK FACTORS
BEGINNING ON PAGE 1 OF THIS PROSPECTUS.
Sole Global Coordinator and Joint Bookrunner
J.P. Morgan
Joint Bookrunners
Morgan Stanley
UniCredit Bank
The date of this Prospectus is April 15, 2019

NOTICE TO INVESTORS
The Company accepts responsibility for the information contained in this Prospectus. To the best of the
knowledge of the Company, having taken all reasonable care to ensure that such is the case, the information
contained in this Prospectus is in accordance with the facts and contains no omission likely to affect its import.
The Company further confirms that (i) this Prospectus contains all relevant information with respect to the Issuer
and the Group and to the Notes which is material in the context of the issue and the offering of the Notes,
including all relevant information which, according to the particular nature of the Issuer and of the Notes is
necessary to enable investors and their investment advisers to make an informed assessment of the assets and
liabilities, financial position, profits and losses, and prospects of the Issuer, ADLER and of the rights attached to
the Notes; (ii) the statements contained in this Prospectus relating to the Issuer, ADLER and the Notes are in
every material respect true and accurate and not misleading; (iii) there are no other facts in relation to the Issuer,
ADLER or the Notes the omission of which would, in the context of the issue and offering of the Notes, make
any statement in the Prospectus misleading in any material respect; and (iv) reasonable enquiries have been
made by the Issuer to ascertain such facts and to verify the accuracy of all such information and statements.
This Prospectus should be read and understood in conjunction with any supplement hereto and with all
documents incorporated herein or therein by reference.
This Prospectus is drawn up in the English language, except for the Terms and Conditions which are drawn up in
English and German language, whereas German is the legally binding language. In case there is any discrepancy
between the English text and the German text, the English text stands approved for the purposes of approval
under the Prospectus Directive.
No person has been authorized in connection with the offering and the listing of the Notes to give any
information or make any representation regarding the Company, its financial results, the Notes, the Sole Global
Coordinator or the Joint Bookrunners other than as contained in this Prospectus. Any such representation or
information must not be relied upon as having been authorized by the Company or the Joint Bookrunners.
This Prospectus may only be used for the purpose for which it has been published. This Prospectus reflects the
status as at its date. The offering, sale and delivery of the Notes and the distribution of the Prospectus may not be
taken as an implication that the information contained herein is accurate and complete subsequent to the date
hereof or that there has been no adverse change in the financial condition of the Issuer since the date hereof.
To the extent permitted by the laws of any relevant jurisdiction, neither any Joint Bookrunner nor any of its
respective affiliates nor any other person mentioned in the Prospectus, except for the Issuer, accepts
responsibility for the accuracy and completeness of the information contained in this Prospectus or any other
documents incorporated by reference and accordingly, and to the extent permitted by the laws of any relevant
jurisdiction, none of these persons accept any responsibility for the accuracy and completeness of the
information contained in any of these documents. The Joint Bookrunners have not independently verified any
such information and accept no responsibility for the accuracy thereof.
Investors contemplating making an investment in the Notes must make their own independent investigation and
analysis of the Company, its financial condition and creditworthiness as well as the terms of the offering, with
particular reference to its own investment objectives and experience, and any other factors which may be
relevant to it in connection with such investment. In particular, each potential investor should:
(a)
have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and
risks of investing in the Notes and the information contained in this Prospectus or any applicable
supplement;
(b)
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular
financial situation, an investment in the Notes and the impact such investment will have on its overall
investment portfolio;
(c)
have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes,
including where the currency for principal and interest payments is different from the potential investor's
currency;
I

(d)
understand thoroughly the Terms and Conditions of the Notes and be familiar with the behavior of the
financial markets in which they participate; and
(e)
be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic,
interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
Each investor should consult its own advisors as needed to make its investment decision and to determine
whether it is legally permitted to purchase the securities under applicable legal investment or similar laws or
regulations.
Legal investment considerations may restrict certain investments. The investment activities of certain investors
are subject to legal investment laws and regulations, or to review or regulation by certain authorities. Each
potential investor should consult its legal advisers to determine whether and to what extent (1) the Notes are
legal investments for it, (2) the Notes can be used as collateral for various types of borrowing and (3) other
restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisers
or the appropriate regulators to determine the appropriate treatment of the Notes under any applicable risk-based
capital or similar rules.
Neither this Prospectus nor any other information supplied in connection with the offering of the Notes
constitutes an offer of Notes or an invitation by or on behalf of the Issuer or the Joint Bookrunners to purchase
any Notes. Neither this Prospectus nor any other information supplied in connection with the Notes should be
considered as a recommendation by the Issuer or the Joint Bookrunners to a recipient hereof and thereof that
such recipient should purchase any Notes.
The distribution of this Prospectus and the offering, sale and delivery of Notes in certain jurisdictions may be
restricted by law. Persons into whose possession this Prospectus comes are required by the Company and the
Joint Bookrunners to inform themselves about and to observe any such restrictions.
For a description of the restrictions see section 13"OFFER, SUBSCRIPTION AND SALE, USE OF PROCEEDS
 Selling Restrictions" below. In particular, the Notes have not been and will not be registered under the
Securities Act and are subject to United States tax law requirements. Subject to certain exceptions, the Notes
may not be offered, sold or delivered within the United States of America or to U.S. persons as defined in
Regulation S under the Securities Act ("Regulation S").
Neither the Company nor the Joint Bookrunners represent that this Prospectus may be lawfully distributed, or
that the Notes may be lawfully offered in compliance with any applicable registration or other requirements in
any such jurisdiction or pursuant to an exemption available thereunder, nor do they assume any responsibility for
facilitating any such distribution or offering. In particular, no action has been taken by the Company or the Joint
Bookrunners which is intended to permit a public offering of the Notes or the distribution of this Prospectus in
any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly
or indirectly, and neither this Prospectus nor any advertisement or other offering material may be distributed or
published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws
and regulations.
NOTICE TO CERTAIN EUROPEAN INVESTORS
MIFID II product governance / Professional investors and ECPs only target market
Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect
of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and
professional clients only, each as defined in Directive 2014/65/EU (as amended, "MiFID II"); and (ii) all
channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any
person subsequently offering, selling or recommending the Notes (a "distributor") should take into
consideration the manufacturers' target market assessment; however, a distributor subject to MiFID II is
responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or
refining the manufacturers' target market assessment) and determining appropriate distribution channels.
For the avoidance of doubt, the Target Market Assessment does not constitute (i) an assessment of suitability or
appropriateness for the purposes of MiFID II or (ii) a recommendation to any investor or group of investors to
invest in, or purchase, or take any other action whatsoever with respect to the Notes.
II

PRIIPs Regulation / Prohibition of sales to EEA retail investors
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or
otherwise made available to any retail investor in the European Economic Area ("EEA"). For these purposes, a
retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of
MiFID II; or (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the "Insurance
Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10)
of Article 4(1) of MiFID II. Consequently, no key information document required by Regulation (EU) No
1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them
available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise
making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
STABILIZATION
IN CONNECTION WITH THE ISSUE OF THE NOTES, J.P. MORGAN SECURITIES PLC (THE
"STABILISING MANAGER") (OR ANY PERSON ACTING ON BEHALF OF THE STABILISING
MANAGER) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO
SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH
MIGHT OTHERWISE PREVAIL. HOWEVER, STABILISATION MAY NOT NECESSARILY OCCUR.
ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE
PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN,
MAY CEASE AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS
AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF
THE NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY
THE STABILISING MANAGER (OR ANY PERSON ACTING ON BEHALF OF THE STABILISING
MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements. Forward-looking statements are all statements
which refer to future facts, events or other circumstances and do not refer to historical facts or events. They are
indicated by wording such as "believes", "estimates", "assumes", "expects", "anticipates", "foresees", "intends",
"hopes", "could" or similar expressions. Forward-looking statements are based on current estimates and
assumptions by the Company to the best of its knowledge. Such forward-looking statements are subjected to
risks and uncertainties, and as a result the Company's actual financial condition and results of operations may
differ materially from (in particular, be more negative than) those conditions expressly or implicitly assumed or
described in such forward-looking statements. Neither the Company nor the Joint Bookrunners assume any
obligation to update such forward-looking statements or to adapt them to future events or developments unless
required by law.
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
The Company's audited consolidated financial statements as of and for the fiscal years ended December 31, 2018
and 2017 incorporated by reference into this Prospectus, together with the notes relating thereto, were prepared
in accordance with International Financial Reporting Standards as endorsed by the European Union ("IFRS") as
at the time of preparing these financial statements.
Certain individual figures (including percentages) stated in this Prospectus have been rounded using the common
commercial method (kaufmännische Rundung). As a result the totals or interim totals contained in the tables may
not be exact arithmetic aggregations of the figures that precede them and may also differ from the non-rounded
figures contained elsewhere in this Prospectus due to this rounding.
The Company's fiscal year ends on December 31 of each year. References to any fiscal year refer to the year
ended December 31 of the calendar year specified. Year-end exchange rates represent balances and amounts as
of the end of the year. Average exchange rates represent the average over the year.
III

CURRENCY INFORMATION
The Company presents its consolidated financial statements in Euro. In this Prospectus, references to EUR, or
Euro are to the Euro, the common legal currency of the Member States participating in the third stage of the
European Economic and Monetary Union, which includes Germany. Unless otherwise indicated, all currency
amounts contained in this Prospectus are in euros. To the extent individual figures are in a different currency this
will be stated using the name of the respective currency or the currency symbol.
NON-IFRS MEASURES
This Prospectus includes certain references to non-IFRS measures including

"EBITDA" refers to earnings before interest, tax, depreciation and amortization and is calculated by
adjusting "earnings before interest and tax (EBIT)" for depreciation and allowances. Investors should
consider that EBITDA is neither uniformly applied nor standardized and its calculation may substantially
vary from company to company, and, taken by itself, it should not be drawn upon as a basis for
comparison to other companies.

"Adjusted EBITDA" in general refers to adjusted earnings before interest, taxes, depreciation,
amortization, write-ups and write-downs and is calculated by adjusting EBITDA for consolidated result
or expense from the measurement of investment property, project costs of a one-off nature, other
extraordinary and prior-period income and expenses.

"Consolidated Coverage Ratio" is the Ratio of Consolidated Adjusted EBITDA to Net Cash Interest.
Net Cash Interest means all interest and other financing charges accrued to persons who are not members
of the Group less the amount of any interest and other financing charges accrued to be received from
persons who are not members of the Group, in each case, excluding any one-off financing charges
(including without limitation, any one-off fees and/or break costs).

"FFO I" refers to funds from operations (not including net income/expense from the sale of investment
property). In FFO I, the Adjusted EBITDA for the respective periods is adjusted to generally reflect the
interest income and expenses impacting cash and the income taxes impacting cash.

"FFO II" refers to funds from operations (including from the sale of real estate held as investment
properties). The income from real estate sold, the income from companies accounted for at equity, the
income before tax of the trading segment and the remaining income before tax which is not attributed to a
segment are added in the respective periods. The Company decided not to report FFO II figures in the
financial year 2018 and going forward.

"EPRA NAV" refers to net asset value calculated in accordance with the guidelines by the European
Public Real Estate Association. It is used to represent the Group's long-term equity and is calculated
based on the net asset value (NAV) excluding the fair value of financial instruments (net) and deferred
taxes. The EPRA NAV includes fair value adjustments for all main balance sheet items that are not
recognized at fair value as part of the NAV in the IFRS accounts.

"LTV" is defined as the ratio of adjusted net financial liabilities (net financial liabilities adjusted for
sales receivables/ marketable securities) to adjusted fair value of real estate portfolio. Convertible notes
were excluded.
The Company uses these non-IFRS measures to evaluate its financial performance. This information is not
prepared in accordance with generally accepted accounting principles and should be viewed as supplemental to
the Company's financial statements. Investors are cautioned not to place undue reliance on this information and
should note that these non-IFRS measures, as the Company calculates them, may differ materially from similarly
titled measures reported by other companies, including the Company's competitors.
See section 5.5 "Other selected key figures (inter alia Alternative Performance Measures)" for further
information on non-IFRS measures.
IV

See section 12 "TERMS AND CONDITIONS OF THE NOTES" for the definition of "Adjusted EBITDA" under
the Terms and Conditions of the Notes.
NO INCORPORATION BY REFERENCE OF WEBSITE
The Company's website is www.adler-ag.com. The information on this website, any other website mentioned in
this Prospectus or any website directly or indirectly linked to this websites has not been verified and does not
form part of this Prospectus unless explicitly stated otherwise, and investors should not rely on it.
V

TABLE OF CONTENTS
1
RISK FACTORS .......................................................................................................................................... 1
2
GENERAL INFORMATION..................................................................................................................... 30
3
INDUSTRY AND MARKET .................................................................................................................... 33
4
BUSINESS ................................................................................................................................................. 40
5
SELECTED FINANCIAL INFORMATION............................................................................................. 77
6
PROFIT FORECAST ................................................................................................................................. 84
7
DESCRIPTION OF OTHER INDEBTEDNESS ....................................................................................... 89
8
GENERAL INFORMATION ABOUT THE COMPANY ........................................................................ 96
9
SHAREHOLDER STRUCTURE............................................................................................................. 100
10
GENERAL INFORMATION ABOUT THE SHARE CAPITAL OF THE COMPANY........................ 101
11
GOVERNING BODIES OF THE COMPANY ....................................................................................... 107
12
TERMS AND CONDITIONS OF THE NOTES ..................................................................................... 113
13
OFFER, SUBSCRIPTION AND SALE, USE OF PROCEEDS .............................................................. 152
14
LISTING AND GENERAL INFORMATION......................................................................................... 155
15
TAXATION ............................................................................................................................................. 157
16
GLOSSARY............................................................................................................................................. 161
17
INCORPORATION BY REFERENCE ................................................................................................... 164
18
RECENT DEVELOPMENTS AND OUTLOOK .................................................................................... 167
VI

1
RISK FACTORS
Before deciding to purchase the Notes to be issued by the Company, investors should carefully read and
consider the material risk factors described below along with the other information contained in this Prospectus.
The materialization of one or more of these risks, whether individually or in combination with other
circumstances, could have material adverse effects on ADLER's business and on its financial condition and
results of operations. The sequence in which the risks are described below does not represent an indication of
either the probability of their occurrence, their severity, or their significance. In addition, there may be further
risks and issues of which ADLER is not aware at present. If any one of these or other risks materializes, the
stock exchange price of the Notes could decrease and investors could lose part or all of their investment.
1.1
Market-specific risks
ADLER is dependent on the development of the German real estate market. The German real estate
market, in turn, depends on the performance of the overall economy and on the demand for real estate
and rental space. Unfavorable macroeconomic developments could adversely affect ADLER's business
and may also result in restricted access to debt and equity financing and potential payment defaults of
ADLER's business partners.
ADLER's core business is in acquiring and managing a residential real estate portfolio in Germany. ADLER's
business success is therefore especially dependent on the performance of the German real estate market, the
demand for properties, in particular rented properties, in Germany and certain regions therein, the level of
achievable rents, the expenses necessary to generate the rental income, as well as the achievable purchase and
sale prices and market values of properties. The German real estate market, in turn, is dependent in particular on
the performance of the overall economy, political developments, including changes in legislation, and the
demand for real estate in Germany. Key factors affecting macroeconomic developments in Germany include the
state of the German, European and global economy, the development of commodity prices and inflation rates,
the extent of national indebtedness, and interest rates. Another worldwide economic downturn, a rise in the
inflation rate, deflationary tendencies or a sustained upturn in interest rates could adversely affect
macroeconomic performance. Moreover, the recent recession in the Eurozone, particularly the need for some
governments to cut back on spending to retain credibility in the financial markets, has impacted economic
developments in Germany and an increasing level of national indebtedness could have consequences, including
reduced economic output, a higher inflation rate, rising taxes, and lower income, thus reducing the willingness of
private individuals and institutional investors to invest. A deflation may have similar effects. Fluctuations in
exchange rates, especially the euro-to-dollar rate, could have a material effect on German exports and therefore
also on the performance of the German economy as a whole.
The demand for real estate is driven mostly by demographic developments, interest rate levels, financing
conditions, labor market performance, the personal debt levels of potential buyers, the real income levels of
individuals, and foreign investor activity on the German real estate market. A population decline could result in
shrinking demand for residential space. In addition, a decrease in real income and an increase in unemployment
could adversely affect the population's buying power, and therefore its propensity to acquire residential real
estate, or to lease large or high-end residential spaces. An increase in national indebtedness particularly of
Greece, Spain, Italy, Portugal or Ireland, a full dissolution of the Eurozone, the at the date of this Prospectus still
largely unpredictable consequences of the United Kingdom's decision to leave the EU ("Brexit"), an increase in
interest rates or a deflation could lower private and institutional investors' propensity to invest in real estate.
In addition, when granting loans, credit institutions could lay down stricter eligibility criteria for borrowers. This
could lower investors' propensity to invest in real estate due to the restricted access to or less attractive terms of
financing options. In the past, also, the general tax environment shaped demand for real estate in Germany
through tax incentives for new building of real estate, real estate investments and refurbishments. However, such
tax incentives have been reduced considerably in recent years. For example, substantial changes have been made
in respect of depreciation periods, time limits for private disposals, and inheritance tax. These changes have
already had a negative effect on the demand for real estate. Negative changes to state subsidization of real estate,
such as the elimination of the subsidies for environmentally friendly buildings and refurbishments, could have a
further negative effect on the demand for real estate.
The European and global economies may also be impacted by the outcome of the referendum in the United
Kingdom in favour of a withdrawal from the European Union (Brexit), the current severe geopolitical crises in
the Middle East as well as in the Ukraine, the uncertain economic prospects in China and other parts of the
1

world, the possibility of increased barriers to trade or "trade wars" e.g. between the United States and China or
with other countries or regions, and other factors, such as the fluctuation of raw material prices and currency
fluctuations. Such instability and the resulting market volatility and the economic situation in Germany and
Europe may result in an unfavorable development of the real estate market in Germany. Deterioration in
Germany's economic performance and falling demand for real estate or rental property in Germany could
negatively affect ADLER's business performance and could have material adverse effects on ADLER's business,
net assets, financial condition and results of operations.
Moreover, there is the risk of an unfavorable development in economic conditions in Germany driven by
instability in the Eurozone, especially due to Brexit. Any such political instability in the Eurozone may result in
an unfavorable development of the real estate market in Germany and thus indirectly negatively affect ADLER's
business.
A negative trend in the economic environment could, for example due to the introduction of stricter eligibility
criteria for borrowers, also adversely affect ADLER's ability to finance its acquisition of real estate portfolios by
debt capital and refinance its existing and future liabilities and could result in a lack of liquidity, operational loss,
insolvencies or other developments at ADLER's business partners as a result of which they could no longer be in
the position to meet their obligations under the contracts entered into with ADLER.
The occurrence of any of the aforementioned risks could have material adverse effects on ADLER's business, net
assets, financial condition and results of operations.
The current economic uncertainty regarding the future of the Eurozone and economic developments in
Germany and the European Union together with the current favorable low interest rate environment
result in comparably high valuations of residential real estate portfolios in Germany. Any rise in interest
rates could have material adverse effects on the German real estate market and on ADLER.
The global financial and economic crisis and the slow and uncertain recovery of the global economy have
resulted in increased uncertainty regarding future economic developments even in Germany. This uncertain
economic outlook has increased demand for investment opportunities that typically provide stable and largely
predictable cash flows, including investments for German real estate. The low interest rate level in Europe
contributes to this trend. As a result, property prices and the value of residential real estate have increased. These
developments could reverse themselves if, for example, interest rates were to rise. A rise in interest rates could
result from an improvement of the general economic situation, which could lead to greater interest in
investments with a higher yield and less interest in real estate investments. Among other consequences, such
developments could have an adverse effect on ADLER's portfolio optimization efforts, for which purpose
ADLER continues to hold certain properties for sale following the discontinuation of its trading segment. Rising
interest rates could also adversely impact ADLER in a number of other ways: the discount rate used to calculate
the fair value of real estate portfolios tends to rise as the market prices paid for the units tend to decline. Rising
interest rates therefore generally have a negative impact on the fair value of ADLER's real estate portfolio. Any
such development would require ADLER to recognize corresponding losses from the resulting fair value
adjustments of its investment properties, resulting in a negative income from fair value adjustments of
investment properties. At the same time, ADLER's net asset value (NAV) and loan-to-value (LTV) ratios would
deteriorate.
The general economic situation could also deteriorate as a result of any number of factors, including but not
limited to a worsening of the European sovereign debt crisis, an exit of one or more additional countries from the
Eurozone following the United Kingdom's decision to leave the EU which may also give rise to or strengthen
tensions in other Member States regarding their membership in the European Union, potentially resulting in
additional referendums or other actions in Member States regarding withdrawal from the European Union. If
general economic conditions deteriorate, or if a deflation scenario were to become likely, investors might prefer
other, more liquid assets, which could reduce demand for German real estate. In addition, more stringent
borrowing requirements could be introduced (including as a result of a deterioration in general economic
conditions), which could impair ADLER's ability to finance property portfolio acquisitions through debt and its
general ability to refinance maturing debts.
Higher interest rates or a deterioration in general economic conditions could lead to changes and circumstances
that could have significant adverse effects on ADLER's business, financial condition and results of operations.
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High current market prices and competition from other real estate companies could make it increasingly
difficult for ADLER to acquire residential real estate portfolios throughout Germany on attractive terms
and to enlarge and integrate its portfolio of residential holdings.
ADLER aims at growing and managing a profitable and cash-flow generating real estate portfolio throughout
Germany. This strategy requires that attractive real estate portfolios are available to it for purchase at reasonable
prices. Given the high current demand for residential real estate portfolios in Germany, such portfolios may be
unavailable or available only at unfavorable terms. Additionally, the supply of real estate portfolios might be
limited, for example due to fewer sales of real estate portfolios by municipalities and federal states. Prior to the
beginning of the financial crisis in 2008, many of these portfolios were privatized in Germany. The pace of such
privatization has subsequently slowed. Any such development could constrict supply, increase competition for
acquisitions that would be suitable to ADLER and result in price increases of residential properties on the
German market, as a result of which ADLER would be forced to pay higher prices or would be able only to
acquire fewer (or no) properties.
In pursuing its strategy, ADLER competes with various other, and in particular larger, companies and is subject
to intense competition from them. ADLER's competitors in acquiring residential real estate and trading real
estate include foreign and domestic real estate companies and institutional investors. Some of these competitors
have substantially greater financial resources or better financing opportunities, larger or more diversified real
estate holdings, or, because of greater specialization, they have real estate holdings more specific to their target
groups, or they may have other competitive advantages over ADLER. In addition, in the recent past, there has
been a consolidation trend in the real estate industry which may continue and thus further intensify competition
in the future. In comparison to these companies, ADLER is still a comparatively small market player. As a result
of such competition for real estate portfolios in Germany attractive portfolios may become unavailable to
ADLER or available only at unfavorable terms, due to sustained price increases. Higher purchase prices in
conjunction with stagnating or more slowly rising rents can reduce the estimated return on the property holdings.
Conversely, competition or a market surplus of available residential properties at a time when ADLER is ready
to sell can lead to unexpectedly low selling prices or prevent ADLER from selling residential properties at all.
Any inability to acquire suitable properties on attractive terms, to differentiate itself adequately from its
competitors, or to profitably sell the properties held in current assets could have material adverse effects on its
business, net assets, financial condition and results of operations.
An overall rise in interest rates would increase ADLER's financing costs, could make the sale of
properties less profitable or more difficult, and could make the acquisition, modernization, maintenance
and refurbishment of residential properties more expensive, thereby diminishing the attractiveness of and
demand for real estate holdings.
ADLER finances its business activities with its own and borrowed capital. Since current interest rates in
Germany on (real estate) loans are at historically low levels, there is a high likelihood that interest rates may rise
in the future. The European Central Bank ("ECB") last raised interest rates in early 2011 and the Company
expects a tightening in monetary policy for the Eurozone.
A general, noticeable increase in interest rates could affect ADLER's ability to finance the acquisition,
modernization, maintenance and refurbishment of real estate portfolios by debt capital and the general ability to
refinance debt which becomes due. To the extent ADLER uses external debt financing at partially variable
interest rates, an increase in interest rates would directly result in higher financing costs for ADLER. To control
its interest rate risk ADLER has entered into hedging contracts in respect of a portion of its interest rate
exposure. However, if any counterparty to these hedging contracts is unable to meet its obligations or if
ADLER's hedging procedures turn out to be ineffective for other reasons, the interest expenses incurred by
ADLER could be higher than expected.
In addition, the sale of real estate for purposes of optimization of the rental portfolio could be less profitable as,
due to higher financing costs, potential buyers might be able or willing to pay only lower prices for properties.
Also, the sale of the remaining properties held in current assets (following the discontinuation of its trading
segment) further continues to generate a portion of ADLER's revenues. The future financial success of ADLER
will therefore also depend partly on its success in selling the properties held in current assets at favorable
conditions. In addition, the demand for residential property is sensitive to changes in real estate affordability.
Most real estate purchasers finance their real estate purchases through mortgage financing. Lack of availability
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