Uproar at the real estate group Adler – economy

The timing shows that the matter must be serious: On Saturday evening, the listed real estate group Adler Group sent out a volley of mandatory and press releases. And the content was as unusual as the time: the auditors from KPMG had put a so-called refusal note on Adler’s consolidated and individual financial statements. They did not feel able to express an opinion because important information was not made available to them in connection with some real estate deals. In addition, the Adler Group reported a pre-tax loss of a good one billion euros due to a billion-dollar write-down on its real estate developer. And finally, all board members who were on board last year resigned as a whole. At this point, only the new head of the board of directors, Stefan Kirsten, who was appointed in February, remained from management.

The only good news was actually that a degree could be presented at all. Because it had to be published by April 30th – i.e. Saturday – before midnight, otherwise bonds of around 4.4 billion euros would have become due. “That would have driven the company to the wall,” said Kirsten on Monday morning. But as it was, albeit at the last minute, “the past was done with”.

Many investors also closed on Monday – but above all with Adler. The share, which has been under severe pressure for months and had lost significantly again in the past week, collapsed on Monday morning: it lost almost half its value again and was temporarily listed at a record low of 3.89 euros. That she later recovered by a few cents was hardly worth mentioning.

Investor advocates are preparing lawsuits

According to the annual report, Adler most recently owned a good 27,000 rental apartments, most of them in Berlin. The group, based in Luxembourg and listed in the German small-cap index S-Dax, had sold more than 40,000 apartments in the past few months. How much the remaining properties are really worth is now one of the central questions, KPMG comes to significantly lower values ​​than Adler itself.

Such a refusal is “incredibly rare,” said balance sheet expert Carola Rinker – but in the case of Adler it was justified. Too many questions are unanswered, especially with regard to the valuation, but also with regard to the deficits in corporate management and possibly unclean deals. “In the past, profits were mainly achieved through the increase in the value of the real estate on the balance sheets,” says the economist, who is also spokeswoman for the Protection Association of Investors (SdK). Whether Adler is possibly over-indebted therefore depends largely on the proceeds of the houses when they are sold. The framework conditions have recently become significantly worse. “And Adler is now in a bad negotiating position because everyone knows they need money.”

According to its own statement, the SdK is examining claims for damages against the company and its managers and is already in talks with two litigation financiers. In addition, criminal consequences and a report to the auditor supervision Apas would be examined.

Attack of a notorious short seller

It was all started by the notorious short seller Fraser Perring, who are investors who bet on falling prices. In October, the Brit had in one Report by his analysis company Viceroy serious allegations made. Among other things, it was about overvalued real estate and secret deals in favor of the Austrian businessman Cevdet Caner and people close to him – to the detriment of shareholders and bondholders. Adler and Caner had always vehemently denied the allegations, the group commissioned a special test, the results of which were published last week.

In it, the head of the board of directors, Kirsten, had seen the company relieved of the allegations. Of the KPMG special report was “not a first-class acquittal”, but there had been systematic fraud and deception at Adler. What the examiners criticized, however, was that around 800,000 of around 3.9 million documents had been withheld from them. Kirsten justified this with the fact that these documents may be subject to the protection of the relationship between client and legal counsel, and publishing them could have entailed great legal risks in the USA and Great Britain. A detailed examination of all documents was impossible because of the urgency. “This obviously irritated and upset KPMG to a great extent,” Kirsten said on Monday. “April 30th was the more important deadline for us.”

Major shareholder Vonovia only wants to make a statement at the general meeting

Until the general meeting at the end of June, he now wants to continue with a skeleton group of the previous management. The current co-boss Thierry Beaudemoulin is to manage the day-to-day business alone, and a new chief financial officer is being sought externally. In addition, Thilo Schmid and Thomas Zinnöcker should remain on the board of directors until the shareholders’ meeting. All managers should then stand there for re-election.

Adler’s major shareholder Vonovia also wants to speak at the Annual General Meeting. Shortly after Perring’s attack, the Dax group granted the then most important Adler shareholder a loan and in return received the shares as collateral. Because there was no additional agreed cash payment, a good 20 percent of the shares were transferred to Vonovia shortly afterwards. Kirsten is known from his time as chief financial officer at Vonovia and is of the opinion that he takes care of the problems in governance, a Vonovia spokeswoman said on Monday. However, it seems unlikely that the group will again help out financially or even take over Adler. “We are keeping all options open and that clearly includes selling the shares,” said Vonovia boss Rolf Buch at his general meeting on Friday.