According to a statement issued late Wednesday, the Dusseldorf landlord would no longer engage in a tender offer for Adler Group SA (ETR:ADJ)’s remaining 63 % ownership in Brack Capital Properties NV (TLV:BCNV), an Israeli-listed company situated in the Netherlands.
The transaction was initially disclosed in December as Adler Group SA (ETR:ADJ) sought to reassure investors over its liquidity following claims made by short-seller Viceroy Research.
The agreement breakdown creates additional problems for Adler Group SA (ETR:ADJ) and its nervous creditors, as the landlord continues to suffer from forensic audit results that failed to dispute all of Viceroy’s charges and led to the auditor’s departure.
After writing down nearly the entire acquisition price of its development subsidiary Consus, the corporation is attempting to seek funds to pay down debt.
Adler Group SA (ETR: ADJ) plummeted 6.8 % during Thursday’s early trade to a new all-time low. According to prices collected by Bloomberg, the Adler Group SA (ETR:ADJ) Real Estate AG euro bond maturing in April 2023 is set for its worst decline since May 24.
Under the terms of the agreement, LEG Immobilien SE (ETR:LEG) paid 328 million euros ($333 million) — a modest discount to the company’s asset worth — to purchase an initial 30.9% interest in Brack Capital Properties NV (TLV:BCNV) from Israeli investors and Adler Group SA (ETR:ADJ).
Then, LEG Immobilien SE (ETR:LEG) had the option to purchase the remaining share of the landlord. He owns residences in
Germany at any moment before September’s conclusion.
According to a statement released in December, Adler Group SA (ETR:ADJ) received around 82.5 million euros for the initial portion of the transaction and anticipated receiving an additional 765 million euros for its share remaining in the tender offer.
Brack Capital Properties NV (TLV:BCNV) and Adler Group SA (ETR:ADJ) Real Estate reportedly inked a financing deal for up to 200 million euros in May.
In the same week that the transaction collapsed, Germany’s financial regulator BaFin reported that Adler Group SA (ETR:ADJ) had exaggerated the value of a significant agreement involving a property held by Brack Capital Properties NV (TLV:BCNV) in Dusseldorf.
LEG Immobilien SE (ETR:LEG)’s decision to withdraw from the transaction is the most recent indication that increasing interest rates are rocking the formerly red-hot German residential sector, where firms like Adler Group SA (ETR:ADJ) had flourished on the back of cheap lending.
The largest landlord in Germany, Vonovia SE (ETR:VNA), which has written down its interest in Adler Group SA (ETR:ADJ), revealed on Wednesday that it is exploring the sale of around 13 billion euros worth of flats to reduce debt in light of increased financing costs and a decline in the stock’s value.
The rapid shift in the real estate markets of Europe has occurred at a crucial time for Adler Group SA (ETR:ADJ). Fraud allegations by the Viceroy and a former partner of Cevdet Caner have virtually cut off the company’s access to financial markets, making it more difficult to repay its debt.
The end of the age of cheap money poses a problem for LEG Immobilien SE (ETR:LEG), which is now a minority shareholder in a firm owned by a competitor in the middle of a crisis.
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