Adler S A : Remuneration report 2023

ADLER Group S.A.

55, Allée Scheffer, L-2520 Luxembourg

Grand Duchy of Luxembourg

RCS Luxembourg: B 197554

2023

REMUNERATION REPORT

FOR THE FINANCIAL YEAR 2023

I. INTRODUCTION

Summary of legal basis and summary of content

This remuneration report constitutes the report on the remuneration which was awarded or due by ADLER Group S.A. (the "Company") and other entities of the same group (the "Group") to the members of the board of directors (the "Board" and each member a "Director") and senior management ("Senior Management") of the Company during the financial year ending 31 December 2023 (the "FY 2023") (the "Remuneration Report").

Pursuant to the Luxembourg law of 24 May 2011 on the exercise of certain rights of shareholders in general meetings of listed companies, as amended (the "Luxembourg Shareholder Rights' Law"), the Company is required to submit to its general meeting of shareholders (the "General Meeting"), each year, a report on the remuneration awarded or due to Directors in the preceding financial year. This Remuneration Report has therefore been prepared in accordance with the specific requirements of the Luxembourg Shareholder Rights' Law and, to the extent possible, the non-binding draft guidelines of the European Commission on the standardised presentation of the remuneration report under Directive 2007/36/EC, as amended by Directive (EU) 2017/828 (the "EC Guidelines").

Furthermore, pursuant to the Luxembourg law of 10 August 1915 on commercial companies, as amended, (the "Luxembourg Company Law") the Board is required to report to the General Meeting on the remuneration paid/awarded to any persons who hold the position of daily managers (délégué(s) à la gestion journalière) of the Company (the "Daily Manager"). This Remuneration Report therefore also covers the remuneration paid/awarded in FY 2023 to the Daily Managers who held office during that year.

In the interests of transparency, while not a legal requirement, this Remuneration Report includes the remuneration awarded/due during FY 2023 to all members of Senior Management of the Company who held office during that year, including those who are neither Directors nor Daily Managers.

This Remuneration Report has been approved by the Board on 16 May 2024 and shall be submitted to the annual general meeting of shareholders of the Company (the "AGM") expected to be held on 25 June 2023 for an advisory vote.

In accordance with the applicable laws and the EC Guidelines, this Remuneration Report discloses indetail only the remuneration actually awarded or due during FY 2023.

While the variable remuneration which the Senior Management was entitled to earn during FY 2023 was neither paid out nor awarded during 2023, in the interests of transparency, Section VI provides a briefexplanation of the expected basis and targets for FY 2023 variable remuneration.

Public availability of this Remuneration Report and information regarding approval of previous remuneration reports

This Remuneration Report, together with remuneration reports for financial years ending 31 December 2022, 31 December 2021, 31 December 2020 and 31 December 2019 ("FY 2022", "FY 2021", "FY 2020" and "FY 2019"), shall remain publicly available on the Company's website free of charge, at the following link:-

https://www.adler-group.com/en/investors/corporate-governance/remuneration

The remuneration reports of FY 2019, FY 2020, FY 2021 and FY 2022 were each submitted for an advisory vote of the General Meeting and were duly approved.

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Remuneration policy

Pursuant to the Luxembourg Shareholder Rights Law, the Company is required to establish a remuneration policy on the remuneration to be paid to Directors and to submit such remuneration policy to the General Meeting for an advisory vote. The Company has opted, since the General Meeting held in 2021, to establish its remuneration policy such that it describes not only the remuneration of Directors, but also, the remuneration of members of Senior Management.

On 21 June 2023, the AGM approved a remuneration policy and that remuneration policy was applicable in respect of FY 2023, i.e. the period covered by this remuneration report (the "Remuneration Policy").

The Remuneration Policy is available on the Company's website:-

https://www.adler-group.com/en/investors/corporate-governance/remuneration

At the upcoming AGM, the Company shall submit a revised Remuneration Policy for an advisory vote to confirm that remuneration of members of the Board shall only be composed of annual fixed remuneration and no additional fee for attendance of the Board of committee meetings shall be added.

Highlights of FY 2023

The Company concluded the FY 2023 with a robust operational performance, underlined by a strong like- for-like rental growth of 5.1% over the financial year and a vacancy rate of just 1.1%. The average residential rent per square meter increased to EUR 7.60 compared to EUR 7.58 in 2022 despite the disposal of the "Wasserstadt" portfolio in Berlin, with c.700 new built units not falling under the Mietspiegel. By year-end 2023, the rental portfolio amounted to 25,043 units, of which 17,738 units are in the Berlin area.

The FY 2023 results reflect Company's successful disposals of portfolio assets, in order to generate liquidity, cover financial maturities and to reposition the portfolio. The disposal of the Berlin-based "Wasserstadt" rental portfolio was one of the largest transactions in the German residential sector last year.

However, given the tough transaction market environment, disposals are lagging the original plans. In response, the Company is proactively revising its restructuring framework, focusing on two key pillars: (i) a revised business plan to restructure the Group's most difficult assets and to participate in the expected market recovery, and (ii) a financial restructuring which improves the Group's cash position, stabilises the debt structure by postponement of maturities beyond 2026/27 and provides a sufficient equity position until maturity of Company's prolonged debt in order to provide a solid foundation for the Group's going concern for at least, but not limited to the next two years.

Net rental income was EUR 210,000,000 compared to EUR 245,000,000 in FY 2022, a decrease which was mainly due to asset disposals, both in FY 2022 and FY 2023. Hence, the Company met its FY 2023 guidance of EUR 207,000,000 to EUR 219,000,000. Adjusted EBITDA from rental income was EUR 110,000,000 (FY 2022: EUR 148,000,000). For FY 2024, Group expects net rental income in the range of EUR 200,000,000 to EUR 210,000,000.

The gross asset value (GAV) of the yielding portfolio came down from EUR 5,200,000,000 as per December 2022 to EUR 4,200,000,000 as per December 2023 (of which EUR 3,600,000,000 in Berlin), driven by both disposals and the portfolio revaluations. The l-f-l yielding portfolio revaluation amounted to minus 12.8%. However, the pace of devaluation slowed down significantly in the second half of 2023 compared to the first half.

In the fourth quarter 2023, Group placed EUR 191,000,000 of 1.5 lien notes with annual PIK interest amount of 21% due end July 2025. Gross proceeds from disposals amount to EUR 530,000,000 with associated

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debt repaid of EUR 270,000,000 and net cash generation of EUR 200,000,000. The total cash position at year end 2023 amounts to EUR 377,000,000.

The financial results were, however, negatively impacted by extraordinary expenses related to the restructuring program and its financing. Legal and consultancy costs as well as interest expenses were particularly noticeable, as well as the significant devaluations of the real estate assets. Overall, the aforementioned expenses resulted in a loss from operating activities of EUR 1,464,000,000 in FY 2023 (previous year: minus EUR 1,272,000,000). In addition, there was a negative financial result of EUR 497,000,000 (previous year: minus EUR 535,000,000).

The negative earnings situation is also reflected in the key figures FFO, EPRA NTA and EPRA LTV. For the first time, FFO I was negative at minus EUR 43,000,000 (previous year: plus EUR 87,000,000) due to the increasing interest burden. The EPRA NTA amounted to EUR 529,000,000, or EUR 3.49 per share, as of 31 December 2023, compared to EUR 2,400,000,000 / EUR 20.77 per share as of 31 December 2022. EPRA LTV was 97.6% (74.5% at the end of FY 2022).

The consolidated financial statements and annual accounts of the Company for the FY 2023 are unaudited. As the auditing process for the consolidated financial statements and annual accounts for the FY 2022 and 2023 is ongoing as expected, the Company envisages the publication of these audited financial statements by 30 September 2024.

For further information on the FY 2023 financial figures of the Company and the Group, reference is made to the annual report (including unaudited stand-alone and consolidated accounts and management report) of the Company for the FY 2023 which is available on the Company's website:-

https://www.adler-group.com/en/investors/publications/financial-results

Deviations from the Remuneration Policy

There were no deviations from the Remuneration Policy with respect to the remuneration awarded or due to Directors and Senior Management during FY 2023.

1. REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY

As at the date of publication of this Remuneration Report for the purpose of its approval by the General Meeting, the Board is composed of the following four Directors who held office for the entirety of FY 2023 except as indicated below:

• Mr. Stefan Brendgen (non-executive independent Director and chairman of the Board, in office since 21 June 2023)
• Mr. Thierry Beaudemoulin (executive Director)
• Mr. Thomas Echelmeyer (executive Director, in office since 21 June 2023)
• Dr. Heiner Arnoldi (non-executive independent Director, in office since 21 June 2023)
• Mr. Thilo Schmid (non-executive independent Director)
• Mr. Thomas Zinnöcker (non-executive independent Director)

The following person, who is no longer Directors, held office during the FY 2023:

• Prof. Dr. A. Stefan Kirsten (former non-executive independent Director and chairman of the Board; resigned on 19 February 2024).

The remuneration of Directors is determined by the General Meeting.

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On 29 September 2020, the General Meeting approved the following gross remuneration of the Directors which is applicable from the start of FY 2020 and shall remain applicable until there is a subsequent General Meeting amending same:

• an annual fixed remuneration in a gross amount of EUR 150,000 for the role as the chairman of the Board;
• an annual fixed remuneration in a gross amount of EUR 100,000 for the role as the deputy chairman of the Board;
• an annual fixed remuneration in a gross amount of EUR 75,000 for the role as a Director of the Company (excluding the chairman and deputy chairman of the Board);
• an additional annual fixed remuneration in a gross amount of EUR 25,000 for any Director who also acts as the chairman of any committee of the Company;
• an additional fee in a gross amount of EUR 1,500 per attendance of a Director at any meeting of the Board or any meeting of a committee of the Company, of which the Director is a member.

If a Director is not appointed for the entire duration of a given financial year, the annual fixed remuneration shall be paid pro rata temporis for the relevant period of appointment during the respective year.

Furthermore, for FY 2023, all Directors were covered by the Company's directors' & officers' liability insurance and were entitled to reimbursement of any reasonable costs incurred within the scope of their duties as Directors, upon presentation of proof of payment of such costs.

Current Directors

The total remuneration paid out or due to the executive and non-executive current Directors in respect of FY 2023 is in a gross amount of EUR 704,250 plus the value of any directors' & officers' liability insurance, expenses and VAT.

The following table displays the total remuneration (in gross figures in Euro) paid out to current non- executive directors, split out by component:-

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			Fixed remuneration			Total
	Name and position		(aside from directors' and officers'
			insurance, no other benefits are
			awarded)
			Annual fixed			Attendance fees
			remuneration
Mr. Stefan Brendgen*		2023			2023			2023
	non-executive independent Director and chairman of the	52,500		34,500		87,000
	Board
	member and chairman of the nomination and
	compensation committee
	member of the audit committee
	member of the investment and financing committee
*position of director held from 21 June 2023
*position of the chairman of the Board held from 19
February 2024
Mr. Heiner Arnoldi*		2023			2023			2023
	non-executive independent Director	52,500		39,000		91,500
	member and chairman of the investment and financing
	committee
	member of the audit committee
*position held from 21 June 2023
Mr. Thilo Schmid*		2023			2023			2023
	non-executive independent Director	100,000		70,500		170,500
	member and chairman of the audit committee
	member of the nomination and compensation committee		2022			2022			2022
*position held from 29 September 2020, re-appointed on 29	97,106		108,000		205,106
June 2022
Mr. Thomas Zinnöcker*		2023			2023			2023
	non-executive independent Director	86,875		57,000		143,875
	member of the investment and financing
	member of the nomination and compensation committee
		2022			2022			2022
*position held from 29 September 2020, re-appointed on
100,000		108,000		208,000
29 June 2022

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The following table displays the total remuneration (in gross figures in Euro) paid out to the current executive directors, split out by component:-

			Fixed remuneration			Total
	Name and position		(aside from directors' and
			officers' insurance, no other
			benefits are awarded)
			Annual fixed			Attendance
			remuneration			fees
Mr. Thierry Beaudemoulin*		2023			2023			2023
	executive Director and chief executive officer	100,000		48,000		148,000
	chairman and member of the ad hoc committee of the
	Company
*position held from 10 December 2019, re-appointed on 29		2022			2022			2022
June 2022
100,000		81,000		181,000
	Note: the remuneration related to this Director's mandate
	as chief executive officer and Daily Manager is explained
	in the next section of this Remuneration Report
Mr. Thomas Echelmeyer*		2023			2023			2023
	executive Director and chief financial officer
	39,375		24,000		63,375*
	member of the ad hoc committee of the Company
*position of the Director held from 21 June 2023								*Rather than invoicing the
Note: the remuneration related to this Director's mandate								Company this amount and
							deducting same amount
as chief financial officer is explained in the next section of
							from remuneration under his
this Remuneration Report
							senior manager's
									agreement, this amount was
									not invoiced to the
									Company/paid by the
									Company.

In accordance with the Remuneration Policy in effect from June, 2023, any remuneration received by a senior manager of the Company for his mandate as a director of the Company (i.e. annual fees and fees for attendance at meetings of the Board or committees of the Company) shall be deducted from the remuneration to be paid under the respective senior manager's agreement for his or her role as senior manager or daily manager (délégué à la gestion journalière) of the Company.

Former Directors

The total remuneration paid to the former non-executive and executive Directors in respect of FY 2023 is in a gross amount of EUR 257,500, plus the value of any directors' & officers' liability insurance, expenses and VAT.

The following table displays the total remuneration (in gross figures in Euro) paid out to former non- executive directors who held office in FY 2023, split out by component:-

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			Fixed remuneration			Total
	Name and position		(aside from directors' and
			officers' insurance, no other
			benefits are awarded)
			Annual fixed			Attendance
			remuneration			fees
Prof. Dr. A. Stefan Kirsten*		2023			2023			2023
	Former non-executive independent Director and	175,000		82,500		257,500
	chairman of the Board
	Former member and chairman of the nomination and
	compensation committee
	Former member of the audit committee
	Former member of the investment and financing		2022			2022			2022
	committee
	146,027		75,000		221,027
* resigned on 19 February 2024

1. REMUNERATION OF SENIOR MANAGEMENT

The remuneration of members of the Senior Management and Daily Managers is determined by the Board (and, if applicable by the relevant governing body of the respective Group company) and is subject to individual service agreements between the Company and/or other Group entities and the respective member of Senior Management.

As at the date of publication of this Remuneration Report for the purpose of its approval by the General Meeting, the Senior Management of the Company is composed of:-

• Mr. Thierry Beaudemoulin (director and chief executive officer ("CEO"), position held from 10 December 2019; noting that until 30 April 2022 he acted as a co-CEO; Mr. Thierry Beaudemoulin is also appointed as a Daily Manager;
• Mr. Thomas Echelmeyer (chief financial officer ("CFO")), position held from 1 September 2022.
  From 1 June 2022 until 31 August 2022 Mr. Thomas Echelmeyer acted as an interim chief financial officer;
• Mr. Sven-ChristianFrank (chief legal officer ("CLO")), position held from 1 September 2020; and
• Mr. Hubertus Kobe (chief restructuring officer ("CRO")), position held from 19 June 2023.

General framework

The Senior Management remuneration system in place for the FY 2023 provided for a fixed annual salary,

1. short-termincentive ("STI-Bonus") and a long-term incentive ("LTI-Bonus"). Members of Senior Management were also entitled to receive certain fringe benefits and were covered by the directors' & officers' liability insurance. In addition, the Senior Management was entitled to reimbursement of any reasonable costs incurred within the scope of their duties as senior executives, upon presentation of proof of payment of such costs, and a travel allowance.

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Annual base remuneration - general framework

Pursuant to the service agreements with the Company and/or other Group companies, the current members of Senior Management are entitled to receive the following gross fixed annual remuneration (pro rata temporis as applicable):

• Mr. Thierry Beaudemoulin - EUR 800,000 per annum;
• Mr. Thomas Echelmeyer - EUR 700,000 per annum (in FY 2023, part of which was paid pursuant to a service agreement with Adler Properties GmbH);
• Mr. Sven-Christian Frank - EUR 600,000 per annum (in FY 2023, part of which was paid pursuant to a service agreement with Adler Properties GmbH and ADLER Real Estate AG);
• Mr. Hubertus Kobe - EUR 600,000 per annum (in FY 2023, part of which was paid pursuant to a service agreement with Adler Properties GmbH).

STI-Bonus - general framework

The STI-Bonus is an annual payment dependent on the achievement of certain targets, which are agreed between the relevant member of Senior Management and the Company.

Pursuant to the respective service agreements with the Company and in some cases, other Group entities, the maximum STI-Bonus payable to current members of Senior Management pro rata temporis (as applicable) is as follows:

• Mr. Thierry Beaudemoulin - EUR 350,000 per annum.
• Mr. Thomas Echelmeyer - EUR 350,000 per annum.
• Mr. Sven-Christian Frank - EUR 300,000 per annum.
• Mr. Hubertus Kobe - EUR 300,000 per annum.

LTI-Bonus - general framework

The current members of Senior Management are eligible to earn an LTI-Bonus.

The LTI bonus attributable to a given financial year (the "Relevant Year") shall be generally settled by the Company during the first four months of the financial year commencing two years after the close of the Relevant Year.

So long as it is in accordance with the remuneration policy of the Company, the LTI remuneration may be structured so that it shall be awarded by reference to an amount which is settled directly in cash or shares (at the discretion of the Company); it may also be virtual share-based whereby virtual shares are awarded (which gives a notional stake in the Company), the value of which can appreciate or depreciate based on determinable factors; the virtual shares (if applicable) may be settled in cash or shares (at the discretion of the Company). The Company shall determine, at the time of settlement of the LTI bonus, whether to settle the LTI bonus in cash or in shares.

Pursuant to the respective service agreements with the Company and in some cases, other Group entities, the maximum LTI-Bonus payable to members of Senior Management (pro rata temporis as applicable) is as follows:

• Mr. Thierry Beaudemoulin - EUR 350,000 per annum.
• Mr. Thomas Echelmeyer - EUR 350,000 per annum;

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• Mr. Sven-Christian Frank - EUR 200,000 per annum;
• Mr. Hubertus Kobe - EUR 200,000 per annum.

Discretionary bonus

The Board may decide to attribute an additional bonus for outstanding performances without a prior agreement.

Total remuneration of current members of Senior Management

The total remuneration awarded or due to the current members of Senior Management during FY 2023 is in a gross amount of EUR 3,543,350, plus insurance premium for directors' & officers' liability insurance, expenses and VAT.

Note that the reference to "due" in this context is important as regards the LTI-Bonus. For all other remuneration described in this Remuneration Report, all amounts which became due in FY 2023 were also paid out. However, for the LTI-Bonus, even though it was decided upon during FY 2023 (in respect of the work completed during FY 2022), it shall only be paid out during the first four months of the financial year commencing two years after the close of the relevant year.The STI-Bonusand LTI-Bonusearned during

FY 2023 are not reported on in the table below because they were not awarded or paid out during FY 2023.

The following table displays the total remuneration (in gross figures in Euro) awarded or due in FY 2023 to current members of senior management who held office during the FY 2023, split out by component:-

Name and

Fixed remuneration

Variable

Extraordin

Total

Proporti

position

remuneration

ary items

on of

fixed

							and
							variable
							remuner
							ation
							NOTE:
							proportio
							n does
							not
							include
							extraordi
							nary
							items
	Base salary	Fringe	STI-	LTI-
		benefits	Bonus	Bonus
Mr. Thierry	2023	2023	2023	2023	2023	2023	2023
Beaudemoulin*	646.667	59,500	350,000	350,000	N/A	1,406,167	50%/50%
Executive director and	* remuneration in	*car allowance;	STI-Bonus	LTI-Bonus
Daily Manager	an amount of	travel allowance;	for the FY	for the FY
EUR 70,000 for	health insurance	2022	2022
chairman and	mandate as a		STI-Bonus	A
director was
member of the ad hoc		for FY 2023	confirmatory
deducted		assessment
committee of the		- the
		will be
		amount will
Company	* a further		made
	be
	remuneration in		following
		determined	the issue of
* position held from 10	an amount of
	and will be	an audit
December 2019	EUR 13,833 for
	report on
	payable
	mandate as a		the
		only after
	director was		standalone
		the close of
			annual

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