Moody’s reviews ADO for downgrade

Moody's Investors Service said it placed on review for downgrade the Baa3 long-term issuer and Baa3 senior unsecured ratings of ADO Properties SA. The outlook has been changed to rating under review from negative.

The review follows ADO's announcement on Sunday for a voluntary all-share public takeover offer for all shares in Adler Real Estate AG and the acquisition of a 22.18% minority stake in Consus Real Estate AG for €294 million in cash.

ADO made an unconditional offer to acquire all of Adler’s shares via tender, and both parties have signed a business combination agreement for the joint entity that will be renamed Adler Real Estate Group. A 52% majority of Adler shareholders have irrevocably consented to tender their shares. The transaction is expected to close end of the first quarter with a rights issue being fully underwritten by banks following in the remainder of 2020. In the parallel transaction of buying a 22% stake in Consus, ADO also secured an option to acquire an added 51% of the shares in Consus. ADO has indicated the exercise of the option or any further stake in Consus will be funded with shares and is linked to a commitment of an investment grade rating, the agency said.

The combined entity will have higher leverage and a weaker fixed charge coverage than ADO has as a standalone company.

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