S&P revises Adler Real Estate view

S&P said it revised the outlook on Adler Real Estate AG to positive from stable and affirmed the BB long-term corporate credit rating.

The agency also affirmed the BB+ long-term issue rating on the company's senior unsecured debt. The 2 recovery rating is unchanged, reflecting an expectation of 70%-90% recovery (rounded estimate: 80%) in the event of a payment default.

The revision reflects Adler's improved cost of funding after its issue of €500 million 1½% senior unsecured notes due 2021 and €300 million 2 1/8% notes due 2024.

“We understand that management is currently repurchasing €676 million of its Schuldschein loans with the proceeds of the bond issues,” S&P said in a news release.

“As a result, Adler's cost of debt (cash interest) will likely improve to 2.7% in 2018 from 3.5%, and we estimate its expense-based interest rate will slightly exceed 3% in the same year.”

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