Germany’s Adler seeks debt extension after selling thousands of homes

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The two huge sales this month mark the latest attempt by the struggling company, whose shares have tumbled since it was targeted last year by short sellers who criticized its business transparency and finances, to boost its reputation.

Maximilian Rienecker, co-CEO of the Adler Group, told Reuters that the property sales meant the company had reduced its debt but that it would seek to extend repayments on bank loans maturing in the next two years.

“We have mainly local banks that we have extended debt with in the past,” Rienecker said, referring to an extension to repay 600 million euros ($688 million) of debt. “We’re in talks about that.”

In addition to these bank debts, bonds totaling 1.1 billion euros would mature over the next two years, which could be settled by issuing new bonds or repaying them in some other way.

Adler earlier Thursday announced the sale of about 14,400 homes and commercial properties, the second such sell-off in as many weeks.

In December, rating agency Standard & Poor’s expressed concern that such sales would reduce its portfolio of rental properties and increase reliance on longer-term development projects, which are typically risky.

She then rated Adler’s rating outlook as negative, indicating an increased risk of a rating downgrade as the company’s development projects are uncertain. It’s unclear if that attitude might change after the sale.

Moody’s withdrew its rating for the company early last year but didn’t say why.

Rienecker dismissed Standard & Poor’s criticism.

“We won’t have the net rent, but on the other hand we’re reducing our debt,” he said.

The group still has 30,000 apartments, two-thirds of them in Berlin, as well as property development projects.

Rienecker said he expects a special review of the company’s affairs by KPMG following allegations of fraud by a short seller to be completed and announced in the first six months of this year.

Adler Group said it would receive net proceeds of 600 million euros ($686 million) from the sale to private equity firm KKR announced on Thursday.

The company said the sale would help it meet its goal of reaching a loan-to-value ratio, a key measure of its debt burden, of about 45%.

Earlier this month, Adler announced a similar sale of more than 15,500 properties to LEG Immobilien.

($1 = 0.8740 euros)

(Writing by John O’Donnell; Editing by Sherry Jacob-Phillips and Bernadette Baum)

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