S&P Global Ratings affirmed its BB issuer credit rating on Adler Real Estate AG and its BB+ rating on its unsecured debt, following the company's recently announced €708 million deal to acquire Israel-headquartered ADO Group Ltd.
The rating agency said the deal will not be adequately transformative to affect its rating assessment, as it takes into account Adler's business risk profile, which will remain constrained by its lower rent levels than the regional market average, and still significant exposure to smaller cities with less dynamic economies than larger metropolitan areas.
Ratings believes that Adler will continue to lower its leverage to below 65% in the next six months, including the expected equity increase and cash funding for the merger deal.
The stable outlook factors in the rating agency's expectation that the demand for residential real estate in Germany will continue to remain favorable, translating into stable cash flow generation and positive revaluation for Adler's portfolio.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.
