It’s all over after exactly 20 minutes and 20 seconds. The management of the scandal-ridden real estate group Adler read out its statements via video stream. This concludes the virtual general meeting. Allegations of fraud, trouble with the auditors, panic among investors – was there something? “According to plan”, the statement from the Luxembourg-based group only said that the shareholders had confirmed the board of directors and accepted all proposed resolutions.
Not a word about debate. There wasn’t either. All questions to the head of the board of directors, Stefan Kirsten and his people, had to be submitted days ago and were answered in writing. The document comprises just four pages, with a total of eight points.
There would be enough to talk about: The Adler share, after all part of the S-Dax, is tumbling towards its record low again, the rating agency S&P now classifies every investment in the group as “extremely speculative”, creditors now prefer to sell bonds with a high loss than to continue living with the risk Adler, the auditors from KPMG first refused the most recent balance sheet the attestation and the group then further cooperation, and the financial supervisory authority Bafin now also wants the 2021 balance sheet of the German subsidiary Adler Real Check Estate for sleazy deals.
More property sales are imminent
And the problems don’t end with the accounting, they continue on the construction sites: many new construction projects of the subsidiary Consus have apparently come to a virtual standstill. In Hamburg, Berlin and Düsseldorf, huge areas have been lying idle for years, promised apartments are not finished, municipalities and investors are put off and craftsmen are not paid, like Research by the NDR demonstrate.
But Adler is silent on all of this.
“Our goal is to fully restore trust,” says Kirsten. The goal for the current year is still an unreservedly confirmed balance sheet. However, it remains unclear who should test it. Only at the very end does Kirsten admit that Adler will probably have to consider selling other properties in order to service any liabilities that may arise. Of what used to be around 70,000 apartments, only a good 27,000 are still owned by the group.
Adler hardly manages to rebuild trust after the serious allegations
The notorious short seller Fraser Perring had started the crisis. One released last October Report by his analysis company Viceroy raises serious allegations: There is talk of overvalued real estate and secret deals within the company network. According to Perring, the beneficiary is a network around the Austrian businessman Cevdet Caner, which would harm shareholders and creditors.
Adler and Caner have always denied this, but investors believed the Brit – although he is by no means a neutral expert, but earns his money by betting on falling prices. As a result, Adler felt compelled to entrust KPMG with a special review of the allegations and to bring real estate expert Stefan Kirsten into the group as a new strong man.
Right on its first day, it promised absolute openness and transparency. “Building trust” has since become something of his mantra. Only: It doesn’t quite work.
The KPMG auditors, for example, were unable to refute the allegations – mainly because the group withheld around 800,000 documents requested for verification. Kirsten justified this with legal problems and confidentiality obligations. An argument that many observers could not quite follow.
And even in the run-up to the Annual General Meeting, there was one thing about transparency. The shareholders had to submit their questions to the management by June 21, but only after that did the group announce far-reaching restructuring: the remaining minority shareholders at the subsidiary Adler Real Estate are to be forced to settle and the company taken off the stock exchange, as well as the project developer Cons. In addition, around 1,400 apartments changed from the parent company to the subsidiary, at an estimated value of 326 million euros. Creditors now fear that the amount may be too high and that they could be left with the damage in an emergency.
But the shareholders could not say anything about that either. “It all fits into the picture,” says Carola Rinker, balance sheet expert at the Protection Association of Investors (SdK). It is “shocking”, but shows how virtual general meetings are abused: “An exceptional situation is being exploited to the detriment of the shareholders.” Incidentally, unlike usual, the shareholders’ protectors also had no opportunity to speak.