Status: 17.11.2022 3:35 p.m
The financial supervisory authority BaFin has once again identified significant deficiencies in Adler Real Estate’s balance sheet. The real estate company is said to have overstated its total assets by almost four billion euros.
The balance sheet scandal at Adler Real Estate continues: The Federal Financial Supervisory Authority (BaFin) found three more calculation errors during its balance sheet control of the 2019 consolidated financial statements of Adler Real Estate. The authority accuses the company of inadmissibly consolidating the then subsidiary ADO Properties.
Against this background, Adler Real Estate had overestimated various balance sheet items, according to the authority in a press release. It is about the non-current assets held for sale by EUR 4.4 billion, the liabilities held for sale by EUR 1.7 billion and non-controlling interests by EUR 1.7 billion.
Adler wants to take legal action against BaFin allegations
The result of these calculations, which BaFin considered incorrect: Adler Real Estate reported the consolidated balance sheet total by 3.9 billion euros and the overall result by 543 million euros too high.
The Adler Group has already announced that it will appeal against the new BaFin decision. The company wants to “exhaust the legal process to promote clarification”.
How the Adler Group came into being
The Adler Group emerged in 2020 from the merger of Luxembourg-based ADO Properties with Berlin-based housing companies Adler Real Estate and Consus Real Estate. ADO Properties first took over its own major shareholder Adler Real Estate and then Consus.
Auditors refused attestation
With the new allegations by BaFin, the Adler Group is suffering another major setback in its struggle for credibility. As early as April, the auditing company KPMG Luxembourg had refused to certify the company’s annual report for 2021. This means that the auditors who subsequently resigned their audit mandate found significant deficiencies in the report.
Prior to this, the Adler Group had already massively lost confidence in the capital markets. Last fall, British short seller Fraser Perring accused the real estate group of artificially inflating its balance sheet and bet on the price of Adler shares falling.
Adler stock is a capital destroyer
Fraser Perring is no stranger to the financial markets. The short seller had often shown good instincts in the past. He was one of the first to do so in 2016 Doubts about Wirecard’s business model had expressed and accused the company of fraudulent activities and accounting falsification.
As long as the balance sheet audits by BaFin are not completed, the uncertainties for the shareholders of the Adler Group will remain high in any case. Investors who have stuck with the company face devastating losses. Since the beginning of 2021, the Adler Group share has lost around 95 percent of its value.
BaFin’s review of Adler’s balance sheets is ongoing
Incidentally, this is not the first time that BaFin has pointed out errors in Adler Real Estate’s balance sheet. As early as August, the authority had criticized the overvaluation of a real estate project in Düsseldorf-Gerresheim by 170 to 233 million euros.
And it may not have been the last time that BaFin spoke up about the Adler. The authority also announced that the audit of the accounting for the consolidated financial statements for the 2019 financial year and for the subsequent 2020 and 2021 financial years is ongoing. Against the background of your two previous decisions, that almost reads like a threat.