(Bloomberg) -- German real estate firm Adler Group SA posted a €81 million ($88 million) loss in the first quarter as it struggled with high interest and advisory costs linked to its second major debt overhaul.

Funds from operations, a metric for the operating earnings of real estate companies that strips out valuation gains, was down €27 million, while the firm spent €23 million on advisory fees this quarter, according to a statement on Tuesday.

The landlord said it had been exposed to a challenging situation that was “partly self-inflicted and largely caused by external factors throughout the financial year 2022,” it said in the statement.

Adler has been struggling to recover since short seller Fraser Perring published a damning report on the company in October 2021, accusing it of fraud. Separately, Bloomberg News reported that a whistleblower had raised concerns about the role of real estate tycoon Cevdet Caner, whose Aggregate Holdings SA is a major Adler shareholder.

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“The situation itself manifested in liquidity constraints, lack of financing capacities and dried real estate markets that made portfolio sales almost impossible,” Adler said Tuesday.

As its valuations fell quicker than it was able to sell assets and repay debt, the residential landlord’s loan-to-value ratio reached 99.1%, up from 97.6% reported in its year-end results. The company owns around 25,000 apartments, down from a peak of more than 70,000, that are now hardly worth more than its outstanding debt. 

Adler was once again pushed to restructure its debt after failing to raise enough cash through property disposals, and last week signed a deal with a majority of bondholders to refinance debt and inject more liquidity to the embattled company in what would be its second debt overhaul in the past two years.

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The latest debt revamp comes after Adler faced considerable opposition from creditors to its restructuring last year, with holders of its longer-dated securities successfully appealing in court against the plan, which they argued treated them unfairly. 

Other highlights from the earnings:

  • The firm said its next portfolio revaluation will be concluded in the second quarter of 2024. In its full-year statement, Adler reported a 12.8% writedown in the value of its German apartments which, together with asset sales, shrank its total portfolio value by €1 billion
  • The firm said it’s in exclusivity to sell development projects Cologne Apart, VauVau and Grand Central Düsseldorf. In March, Adler sought permission from its bondholders to sell an unfinished apartment development at a 47% discount to its 2022 valuation

--With assistance from Libby Cherry.

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