German police have conducted raids on the offices of Adler Group SA and the homes of several individuals suspected of engaging in false accounting, breach of trust, and market manipulation. The raid, which spans seven countries, including Germany, Austria, the Netherlands, Portugal, Monaco, Luxembourg, and the UK, could further deepen the crisis of the troubled landlord.
The investigation, led by Frankfurt prosecutors and federal criminal police, targets seven individuals, including former board members of Adler Real Estate. A total of 175 officers were involved in the raids, which took place at 21 locations, including a law firm. Adler Group, the owner of Adler Real Estate, confirmed that its offices in Luxembourg and Berlin were among those raided and stated that it is fully cooperating with the authorities.
The individuals being targeted are German, Austrian, and UK nationals aged between 38 and 66. They are suspected of manipulating the accounts of Adler Real Estate between 2018 and 2020. It is alleged that they hired and paid consultants on behalf of the company who never provided any real services. Additionally, they are accused of orchestrating sham transactions to artificially inflate real estate prices and improve the company's loan-to-value ratio.
Adler has been embroiled in a crisis since October 2021 when short-seller Fraser Perring published a report accusing the company of fraud. A whistleblower had also raised concerns about the role of real estate tycoon Cevdet Caner. These raids come a year after prosecutors in Frankfurt initiated an investigation into Adler related to the sale of a property in Dusseldorf-Gerresheim in 2019, which was sold to a firm controlled by Caner's brother-in-law.
The allegations made by Perring suggest that Caner and his associates used Adler to enrich themselves at the expense of bondholders and shareholders. They allegedly accomplished this by selling assets to undisclosed related parties and taking undisclosed fees from the company. Caner has not responded to requests for comment.
The regulatory authority BaFin has previously investigated the Gerresheim deal and found that the price tag overvalued the portfolio by up to €233 million. This transaction, which was later reversed, was highlighted by Perring as an example of how a small group of investors used agreements with Adler for personal gain.
Adler's shares have plummeted by 98% over the past two years as the company struggled to refute the allegations and its auditor resigned. The company is currently working on selling off assets in a controlled manner after creditors agreed to a restructuring of its debt, which exceeds €6 billion ($6.6 billion).