No collateral for loans?
BaFin finds further errors in Adler balance sheets
December 27, 2023, 2:36 p.m
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A good two years ago, Adler came into the firing line of British short seller Fraser Perring. He accuses the company of artificially inflating the valuation of numerous properties. BaFin finds further inconsistencies during a balance sheet control procedure.
According to the findings of the financial regulator BaFin, the real estate group Adler Real Estate presented its financial situation in its balance sheets for 2020 and 2021 in a significantly too rosy manner. In addition to inflated valuations for the shaky “Glasmacherviertel” real estate project in Düsseldorf, which the auditors of the Federal Financial Supervisory Authority (BaFin) had already criticized for 2019, they found that the investment in the Accentro housing company was valued too high. In addition, Adler Real Estate did not note in its 2021 financial statements that the company did not receive any security for a controversial 265 million euro loan to the Luxembourg parent Adler Group.
The glassmaker’s quarter is worth less than Adler stated.
(Photo: IMAGO/Michael Gstettenbauer)
The Bonn authorities explained that the balance sheet control proceedings against Adler Real Estate, which lasted more than two years, were now concluded. Since the Wirecard scandal, she has taken on the tasks of the “accounting police” DPR at listed companies. The Adler Group emphasized that BaFin had neither requested a restatement of the balance sheets nor imposed a fine. She still doesn’t share the skepticism about the “Glasmacherviertel”. Adler considers the valuation – it was 270 million euros at the end of 2021 – to be “appropriate and correct”. We are therefore checking whether we will take action against the error discovery.
Adler came into the firing line of British short seller Fraser Perring more than two years ago. He had accused the company of having artificially inflated the valuations of numerous properties. Adler found new auditors for his balance sheets only with difficulty and after a long search.
Overly optimistic assumptions
According to the auditors’ assessment, the glassmaking district was still overvalued at at least 86 million euros in the 2020 balance sheet. Even in 2021, after the sale of the project was reversed, it was still worth less than the 270 million euros it was still on the balance sheet. A residential area is to be built on the site of a former glassworks in Düsseldorf’s Gerresheim district. The BaFin auditors criticized the assumptions about the start of construction and the completion of the project were too optimistic, especially since there was no development plan for the site.
According to BaFin, the 59 million euros that Adler Real Estate received from the sale of the majority of shares to Accentro in 2017 should only have been included in the balance sheet with a risk discount. The buyer of the shares allowed several payment deadlines to pass after Adler had already transferred the shares to him. Nevertheless, Adler valued the securities at the stock market price. Accentro is now 83 percent owned by the financial investor Brookline, which joined in 2017.