It was the most violent stock market crash in Germany since Wirecard: On Monday, shares in the real estate company Adler Group plummeted by more than 50 percent!
The company previously reported a loss of 1.2 billion euros (after a profit of 191 million euros in 2020) – although it is unclear whether the company is not hiding something else: because the auditors do not want to issue a certificate for the balance sheet.
By September 2021, the Adler Group managed around 69,000 residential units worth 13 billion euros.
“Shareholders face a total loss like Wirecard”
The case initially sounds reminiscent of Wirecard’s total crash in June 2020 – and also has something in common with the billion-euro fraud scandal at the Munich financial service provider: Months earlier, star investor Fraser Perring’s Viceroy Research company had been on the pelt of both companies, Both times the accusation of the empty investor and balance sheet falsifier hunter was: The company figures are deliberately inflated …
And he sees clear parallels: “The Adler shareholders are threatened with total loss, as in the Wirecard case, they are being duped,” says Perring to BILD.
• In the case of the Adler Group, the auditing company KPMG wrote a so-called refusal note on the balance sheet on Saturday, pointing out that it could not fully understand certain transactions at the company because it was withholding emails.
800,000 documents were withheld from the examiners. So what else could be missing from the balance sheet?
Company almost hit the wall
• Even with the controversial balance sheet, the company only narrowly missed total failure. If the figures had only been published five hours later, creditors could have pulled the plug and immediately reclaimed 4.4 billion euros.
“The company would have hit the wall,” admitted CEO Stefan Kirsten, who also explains why the auditors were not yet allowed to see the thousands of documents and emphasized that the balance sheet had also been checked in this way.
Foto: Bloomimages
” data-zoom-src=”https://bilder.bild.de/fotos/das-hochhaus-steglitzer-kreisel-konzept-gehoert-der-adler-group-395a43dc072c45e699dbfe3fb346c648-79964220/Bild/5.bild.jpg” /> The high-rise Steglitzer Kreisel (draft) belongs to the Adler GroupFoto: Bloomimages
Reason for the high loss: Increased construction costs and fewer projects at the subsidiary Consus Real Estate AG, which was bought in 2019. That would have resulted in a €1 billion write-off.
800,000 documents kept under lock and key
But it is unclear whether these documents will now be disclosed, emphasizes Fraser Perring, who speaks of “market manipulation”. He is particularly interested in the e-mail traffic between Adler and the Austrian businessman Cevdet Caner.
What the counterfeiter hunter accuses him of: deliberately delaying construction projects. Assumed goal: get out of unprofitable projects, but with a profitable sale of the building plot. Because contrary to what Adler claims, projects have not only been delayed since the Corona crisis, but much earlier.
As early as October 2021, Perring warned that the valuation of the company’s real estate was exaggerated – the share price then fell by a good 60 percent.
BaFin must intervene
Perring to BILD: Adler still has assets to cover liabilities, but: “You have shot yourself in the foot and are now completely dependent on the mercy of the creditors.”
“But the creditors must be very nervous because the company has been looted. We think it is likely that they will soon take the necessary steps to protect their interests.”
And further: “The examiners have made it clear that Adler cannot be examined. The ball is now in the hands of the financial regulator so that Adler does not continue to pretend that the failed test was a successful one. It is absurd to think that a denial of an attestation is anything but a disaster for a company. Investors are once again being cheated – as with Wirecard.”
He also sees BaFin as having an obligation: “We are amazed at the inaction of the regulatory authorities. You have not clarified the statements by the Adler management that the annual accounts are audited.”
What does the Adler Group case mean for the real estate market?
Real estate expert Achim Amann from Black Label Immobilien believes that large housing companies could have made a blunder: their profits in recent years have mainly been balance sheet profits, calculated from ever higher valuations. They have taken a lot of risks, financed themselves more and more by borrowing, although building costs and interest rates are now rising, while house prices are no longer rising as much.
Prices don’t rise that much anymore
One thing is clear: real estate prices are no longer exploding as they have been in recent years. “But that’s no reason to panic, on the contrary, it’s actually better that way.” Because small investors still have the chance to own their own home and to benefit from constant increases in value, even if they have slowed down.” In any case, there can be no talk of a bubble bursting.
Can real estate investors also experience what Adler is going through?
“No,” says Amann, “at least not in such a way that they break. Small investors are scrutinized much more than the big ones and have much more difficult access to credit from the outset.”