Communism, Berlin Edition: Adler Bonds Crash To Record Low As Left Coalition Plans To Socialize 152,000 Apartments
Five years after Berliners voted to expropriate their landlords, the German capital finally has a government willing to do it. On Saturday, Die Linke, the Greens and the SPD presented the 30-page exploratory paper that will underpin their coalition agreement for the next Berlin Senate, and buried among the usual promises sits a plan to socialize, under Article 15 of the German constitution, every apartment a private landlord owns in Berlin above the first 10,000. The compensation for this act of municipal generosity: a hard cap of €16 billion which works out to about €105K per unit, or 58% of book value… and even that cap is conditional on “fiscal sustainability.” The bond market did the rest: Adler Group‘s 10% notes due 2029 plunged 20 points on Monday to a record low around 59 cents on the euro (they dropped as 53 earlier in the session), as creditors scrambled to price in the possibility that 43% of Adler’s yielding Berlin portfolio is about to be bought by the state at a 42% to 48% discount …






