At first glance, these are fairly simple apartment buildings: in Göttingen, Wolfsburg or Wilhelmshaven, for example. The ailing Adler group wants to sell a good 15,000 apartments in northern Germany to its competitor LEG. The companies have now signed a corresponding letter of intent.
But beyond that, it is the substance of a struggling listed company. Because last week, speculator Fraser Perring made serious allegations against the Adler group, which is officially based in Luxembourg: the properties of their balance sheet are overvalued, complained for example Perring. Adler rejected this. However, the share price has now fallen to an all-time low of nine good euros; At the start of the year, an Adler share was still worth nearly 30 euros. Because Perring’s reminders carry weight: the Briton had already attacked the payment service provider Wirecard in 2016, now insolvent and being investigated for fraud.
LEG is now keen to acquire these apartments at market price, the Düsseldorf-based company announced that the property is valued at just under 1.5 billion euros. That’s more than the value at which houses are on the balance sheet, Adler points out – and thus tries to counter Perring’s criticisms. The company plans to use the proceeds to repay bonds and loans in order to reduce the level of debt.
The LEG buyer wants to circumvent the property transfer tax with a trick
Indeed, the property value / debt ratio on Adler’s balance sheet is less favorable than that of other real estate companies. The industry is profiting from the fact that rents and real estate prices are increasing in many cities. Adler, however, could turn even more homes into cash in the near future: they want to move forward with debt reduction with new sales, CEO Maximilian Rienecker said. To date, Adler owns around 70,000 apartments in Berlin and northern Germany. The S-Dax group was born last year from the rather delicate merger of the large owners Adler, Ado Properties and the project developer Consus Real Estate.
LEG now wishes to subject the proposed purchase to further consideration. The companies of course already agree on one thing: LEG does not want to buy all the real estate, because the company would then have to pay tens of millions of euros in property transfer taxes. Instead, LEG wants to acquire just under 90 percent of the sole proprietorships that own the apartments. The remaining ten percent should stay with Adler. These so-called share transactions are – despite all criticism – widespread in the industry in order to avoid property transfer taxes.
In any case, Adler’s sales plans come at a favorable time for LEG: the former North Rhine-Westphalia state development company, privatized in 2008, has recently expanded to Schleswig-Holstein and in Rhineland-Palatinate. “With a larger inventory, for example, we can make better use of our local employees,” said CEO Lars von Lackum, recently explaining his intention to buy outside of the home state of North Rhine-Westphalia. . Today, LEG has found gold again.