Adler Real Estate AG is facing significant issues, including an imminent bond default and liquidity crisis. The company's balance sheet has been artificially inflated through questionable accounting practices and sham transactions. Adler's largest auditor, Ebner Stolz, is now under investigation for its role in audit failures at another company. Regulators in multiple countries have also taken interest in Adler and have intervened in some of its transactions. Due to the widespread fraud and dishonesty in its business practices, Adler's shares are considered un-investable and its bonds are almost certain to default.
Adler Real Estate AG is facing significant issues, including an imminent bond default and liquidity crisis. The company's balance sheet has been artificially inflated through questionable accounting practices and sham transactions. Adler's largest auditor, Ebner Stolz, is now under investigation for its role in audit failures at another company. Regulators in multiple countries have also taken interest in Adler and have intervened in some of its transactions. Due to the widespread fraud and dishonesty in its business practices, Adler's shares are considered un-investable and its bonds are almost certain to default.
Adler Real Estate AG is facing significant issues, including an imminent bond default and liquidity crisis. The company's balance sheet has been artificially inflated through questionable accounting practices and sham transactions. Adler's largest auditor, Ebner Stolz, is now under investigation for its role in audit failures at another company. Regulators in multiple countries have also taken interest in Adler and have intervened in some of its transactions. Due to the widespread fraud and dishonesty in its business practices, Adler's shares are considered un-investable and its bonds are almost certain to default.
Adler Real Estate AG is facing significant issues, including an imminent bond default and liquidity crisis. The company's balance sheet has been artificially inflated through questionable accounting practices and sham transactions. Adler's largest auditor, Ebner Stolz, is now under investigation for its role in audit failures at another company. Regulators in multiple countries have also taken interest in Adler and have intervened in some of its transactions. Due to the widespread fraud and dishonesty in its business practices, Adler's shares are considered un-investable and its bonds are almost certain to default.
Bond Default: Any entity subjected to the “business practices” referred to above will inevitably be hollowed out. By our calculations, and using reasonable assumptions, Adler would be substantially in breach of its bond covenants. A loan-to-value (LTV) covenant breach constitutes a default-event under Adler’s bond terms, which in turn means its bonds become immediately due and payable. - Adler has insufficient liquidity to repay its bonds in a default scenario and does not have good assets to pledge or sell to raise money in an emergency. - Adler conceals its true leverage by changing the way certain figures (e.g. LTV) are calculated and recording semi-sham transactions that allow it to realize paper gains and fabricate deductions against its debt. Adler will face significant issues obtaining further finance when lenders realize they have been fooled. This would immediately result in a liquidity crisis and technical insolvency.
We believe Adler‘s balance sheet has been artificially inflated to mask a default event, with questionable chances of full recovery if Adler loses access to funding and its ability to refinance its ever-increasing debt.
An Auditor under investigation: Adler Real Estate AG’s auditors, Ebner Stolz, is now under investigation for serious audit failures surrounding “imaginary invoices that are unlikely to be collected” at Greensill. Adler is Ebner Stolz’s largest client after Greensill. - Adler’s receivable balance exceeds b, much of which is unlikely to be collectable, some of which is from Caner associates and undisclosed related parties. In absence of generous payment terms provided by Adler, some of these receivables are overdue by up to 4 years. Authorities already intervening: Regulators have their sights set on Adler. - The Israel Securities Authority has already intervened in Adler’s handling of the Gerresheim Transaction, forcing the disclosure of Caner’s brother-in-law as the purchasing counterparty. - Questions have been raised by German MP’s regarding BaFin’s actions, or lack thereof, around Adler. - ADO shareholders also unsuccessfully appealed to BaFin to put a stop to the ADO Properties acquisition of Adler.
The Grim Conclusion
Adler’s business is built on systemic dishonesty and fraud to enrich friends and associates. Its balance sheet has been artificially inflated to a significant degree, its shares are not investible, and its bonds are almost certain to default with very large impairments.
The business practices at Adler and amongst its kleptocratic network are not simply sharp dealing, they amount to gross dishonesty and fraud, and the roll-up nature of the company makes any financial analysis time- consuming and difficult. There are significant regulatory issues at play, and we expect authorities may soon act. For these reasons we refuse to assign a target price to Adler s shares and believe they are un-investable.
Note: to avoid confusion Viceroy refer to Adler Real Estate AG as “Adler Real Estate” and Adler Group SA (formerly ADO Properties) as “Adler Group” for events following its renaming.
