Status: 05/02/2022 2:59 p.m
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The Adler Group’s crisis has escalated dramatically. Auditors have refused to certify the real estate investor’s annual figures, and the share has plummeted. The remaining management promises a fresh start.
The Adler Group share, which is listed in the small-cap index SDAX, lost more than 40 percent. The crisis of the real estate investor, who has been confronted with serious allegations, has thus reached a new peak. Several members of management resigned on Saturday after KPMG’s auditors were unable to issue an audit opinion on the 2021 financial figures on Friday evening.
Such a refusal to testify is a serious process. The reasons given by the auditors also make one sit up and take notice. For example, management refused to give them access to certain information about affiliated companies and individuals.
In the absence of sufficient “evidence of identification and disclosure of related parties and significant related party transactions and account balances,” the auditors were unable to review several bookings for adequacy.
Loss reported in billions
On Saturday, however, the company presented the unaudited annual figures in order to comply with its reporting obligations in a timely manner. In it, the Adler Group, which has its legal seat in Luxembourg, shows a loss of almost 1.2 billion euros, after a profit of 191 million euros a year ago. The loss resulted primarily from write-downs on the real estate company Consus.
With the statement by KPMG, the allegations by the British investment company Viceroy from last October are back in focus. Behind Viceroy is the short seller Fraser Perring, who also put pressure on the now insolvent financial service provider Wirecard early on with publications.
Viceroy had accused the company, among other things, of having artificially inflated the balance sheet by exaggerating the valuation of real estate projects. Management is also withdrawing money from acquired companies. According to Viceroy, a group of shareholders and managers at Adler and in the environment of the group benefit from these machinations. Ultimately, the Adler Group is controlled by this hidden network.
“No evidence of systematic fraud”
Adler had repeatedly vehemently denied the allegations. Because of the allegations, KPMG had been commissioned with a special investigation. On April 21, after completing the special audit, the Adler Group declared that it was relieved of the allegations of systematic fraud. Deficiencies were found in the documentation and in the processing of some transactions. However, the special auditors found no evidence that there had been systematic “fraudulent transactions or transactions plundering the company with allegedly related persons”. Meanwhile, the financial regulator BaFin said it would continue to check the company’s books.
The Adler Group only emerged in 2020 from the merger of the companies ADO Properties, Adler Real Estate and Consus Real Estate. She had taken on a large debt burden. The volume of outstanding bonds alone is 4.4 billion euros.
In order to reduce the high debt, the company sold a large number of properties in late 2021 and early 2022, including to the investment company KKR and its competitor LEG. The company was also supported by the DAX group Vonovia with a stake and loans. Because of the large number of sales, Adler expects the operating result to drop significantly to between EUR 73 million and EUR 76 million this year. For 2021, the company reported 137.1 million euros.
Currently no access to capital markets
“We are having a difficult moment for the company,” said Stefan Kirsten, the head of the Adler board of directors who has only been in office since February. Adler, meanwhile, initiated a fresh start. KPMG’s decision has consequences for the refinancing. According to Kirsten, the bank and capital markets are closed to the company for the time being. But Adler has over half a billion euros in liquid assets, as the balance sheet shows. “We have no worries at this point,” Kirsten said.
The Adler Group has finished with the past and is still striving for an attestation for its 2022 annual financial statements: “We restarted the company on May 1st.” On Tuesday, the company will give an update on the real estate transactions in an investor call.
The previous co-CEO Maximilian Rienecker is now to leave the company – as well as three other members of the board of directors. The previous co-boss Thierry Beaudemoulin should remain in office at least until the general meeting in June. According to the Adler Group, legal action against the old board will be examined.
The previous co-boss of the Adler Group, Maximilian Rienecker (r.), is leaving the company. He previously managed the company together with Thierry Beaudemoulin.
Image: Adler Group
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