Europe also seems to have its Evergrande, it is Adler, a Luxembourg real estate group charged with 8 billion euros in debt, accused of fraud and false financial information. Listed on the Xetra segment of Frankfurt, Adler Group SA (formerly Ado Properties) was born from the merger, in 2020, of Ado Properties, Adler Real Estate and Consus Real Estate which gave rise to a portfolio of 11.4 billion euros, mainly focused on top seven major German cities.
According to Bloomberg indiscretions, it seems that the group has reached an agreement to sell assets worth over 1 billion euros to the American giant KKR, in an attempt to reduce the debt load. The company, in a statement, limited itself to saying that it has signed an asset transfer agreement worth one billion euros with a primary investment group. These are 14,368 real estate units, valued at a price higher than the book value estimated by Cbre Group last June, explained Adler herself, located in medium-sized cities in eastern Germany. The stock is gaining 2% this morning, but has lost more than 58% year to date to 1.4 billion capitalization.
And while Adler tries to cut the leverage of debt, Christina Padgett, head of the Leveraged finance sector at Moody’s, warns that the credit and private assets industry in general, which has grown “explosively” in recent years among venture capitalists, private equity and real estate “in a gray area, less regulated, carries with it systemic risks”, which are “difficult to quantify”. What strikes the analyst (quoted by the FT) is that “we are now experiencing a high degree of indebtedness even in the smallest companies … at the moment it is not a problem, because rates are low, but a hike could represent a risk Padgett added.
As for Adler, the net proceeds from the transaction are expected to hover around € 600 million after the repayment of the guaranteed loans, bringing the loan-to-value ratio below 50%, explained the group in a separate release. The German firm, linked to financier Cevdet Caner, had to defend itself against allegations published by Fraser Perring’s Viceroy Research earlier this month, which called European real estate “a hotbed of fraud, deception and financial misrepresentation designed to hide the its real financial position “.
Shortly after dismissing the accusations, Adler entered into an exclusive period with rival LEG Immobilien SE for the sale of a majority stake in two holding companies that own assets worth 1.5 billion, which should ensure Adler proceeds for about 800 million euros. The company’s largest shareholder, Aggregate Holdings, has signed an agreement with Germany’s largest property owner, Vonovia SE, to help repay bank loans in exchange for a call option on half of its stake. “This is clearly good news for the group,” commented David Shnaps, an analyst at CreditSights. “We are still surprised that no further information has been provided on who the counterparty to the sale is and the exact agreed value of the deal.”

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