The share price of the real estate company Adler Group, which is under fire from short sellers, rose by up to 9 percent on Tuesday morning.

The Adler share took the lead in the S-Dax small-cap index.

The real estate giant Vonovia, which is listed in the leading index Dax, had previously announced that it had taken over 20.5 percent of Adler shares.

Mark Fehr

Editor in Business.

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The reason for the acquisition of the block of shares is unusual, because it is a pledge that Vonovia uses to protect itself against the default of a claim against the previous major shareholder of Adler, Aggregate Holdings Invest.

Aggregate had pledged the Adler share package to secure a loan that Vonovia came to the rescue with on October 7, 2021.

Thanks to the Vonovia loan, Aggregate was able to redeem a bank loan.

Because Aggregate did not provide a contractually agreed cash security to Vonovia, the real estate giant has now taken over the Adler shares pledged to it.

The stock exchange apparently sees the transaction as a positive signal because Vonovia could absorb the struggling Adler Group.

However, that is anything but certain, because Vonovia wants to reserve all options, according to Tuesday's announcement.

This also includes selling all or part of the acquired Adler shares.

The realization of the pledge serves to protect Vonovia's assets and is a consequence of the loan commitment.

Uncertainty is also caused by the fact that, according to a statement on Tuesday, Aggregate apparently does not agree at all with Vonovia taking over the block of shares.

Aggregate even wants the matter to be legally examined.

Vonovia's actions are clearly against the agreements with Aggregate and would reduce Aggregate's stake in Adler from 26.6 percent to 6.1 percent.

The real estate giant Vonovia owns more than half a million apartments, while the much smaller Adler Group has around 70,000 apartments in its portfolio.

Vonovia has been listed on the stock exchange since 2013 and was included in the Dax index in September 2015.

Also in 2015, the Adler Group went public.

Adler emerged from the real estate companies Ado Properties, Adler Real Estate and Consus Real Estate.

In connection with these M&A transactions, a balance sheet control procedure that is customary in such cases is being carried out by the financial supervisory authority Bafin.

Adler is also fighting doubts from investors after critical investor and short seller Fraser Perring accused the company of manipulating balance sheets and misvaluing real estate.

Therefore, a special audit is being carried out by the auditor KPMG, which, to make matters worse, will delay the presentation of Adler's business figures for 2021.

Adler canceled the balance sheet date originally planned for March 31 and has not yet announced a new date.

If the audited business figures are not available by April 30th, there is a risk of exclusion from the S-Dax small-cap index.

In this turbulent phase, a new chairman of the supervisory board is to ensure order at Adler.

It is the experienced Dax manager Stefan Kirsten, who was CFO at Thyssenkrupp and later held this position at Vonovia, the company that has now taken over a block of shares from Adler.