After a weekend of shocking news from the company, Adler's chairman of the board, Stefan Kirsten, is now talking about a fresh start.

The company has published a billion-dollar loss and has not received an accounting certificate for the 2021 fiscal year.

In a telephone press conference on Monday, Kirsten described that Adler was about to hit the wall over the weekend.

"It was a pretty close race," he said.

Just five hours before the deadline, Adler Group released its 2021 financial statements to comply with the terms of its corporate bonds.

Mark Fehr

Editor in Business.

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Jonas Jansen

Business correspondent in Düsseldorf.

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Michael Psotta

Editor in business, responsible for the real estate section.

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Adler has bonds in the amount of almost 4.5 billion euros on the market that would have fallen due if the conditions had been breached.

The company would then have had to repay these debts early.

The situation remains tense, because eagles are blocked from getting fresh money from banks and the capital market.

Unable to heal old degree

With the strict deadlines in the bond conditions, Kristen justified the decision to have published the business figures for 2021 without a certificate from the auditors instead of waiting for further more extensive examinations.

"We finished April 30 with the past Spitz on a button," said Kirsten and emphasized: "There was an examination, we have an audited degree." The auditing company KPMG could not form an opinion, which does not mean that the balance sheet is not correct.

Kirsten now wants to speak to the examiners in order to receive an unrestricted certificate again, at least for 2022.

"We will no longer heal in 2021," he said, the goal now is to achieve a stable opening balance as of January 1, 2022.

Real estate manager Kirsten was brought in in mid-February to clean up because Adler has been trying to build trust in its balance sheets since October 2021 - so far in vain.

Kirsten used to be CFO of real estate giant Deutsche Annington, which later became Vonovia, which is now a Dax member.

Vonovia recently became an anchor shareholder of Adler via the detour of realizing a pledge.

The real estate industry is interconnected.

In the industry, the Adler case raises the question of whether it is just an isolated case or whether the spotlight is on an overall sector of the economy that is slipping.

Apartment prices, especially in the big cities, have increased at times breathtakingly over the past ten years, while rents have also risen, albeit far less than purchase prices.

But the Bundesbank is now warning that prices are up to 40 percent above a justified market value.

In extreme cases, this would indicate that a bubble has emerged that is about to burst.

However, the prevailing view in the industry is that instead of a shock, a lower price increase than before or smaller price declines are imminent.

This is supported by the fact that there are rather too few apartments and that this will not change anytime soon in view of skyrocketing construction prices and a lack of building plots.

To get under pressure

Nevertheless, the housing industry as a whole has definitely come under pressure: This is due to gradually rising interest rates, which are making construction financing more expensive and favoring alternative investments.

This can already be seen in the share prices of the major housing companies: Vonovia, Deutsche Wohnen, LEG and TAG have lost more in value than the leading share index Dax since the beginning of the year.

The Adler share, which is listed in the S-Dax, suffered even more due to home-grown problems and collapsed on Monday by up to 40 percent to temporarily less than four euros after the bad news of the weekend.

How does Adler's major shareholder Vonovia assess the situation?

The Dax group holds 20.5 percent of the Adler shares, which it had taken over from a loan via the detour of a pledge.

Vonovia does not have a general concern that valuations in the real estate industry are generally too high.

After all, the selling prices are currently much higher than the values ​​​​that are in the books.

As a result of the Ukraine crisis, the demand for apartments has risen again, and real estate groups are generally seeing demand continuing to rise.

"Our basic assessment has not changed, and the most recent market reaction does not change our assessment either," said a Vonovia spokeswoman on Monday when asked.

"Our premise from the start was that there is more value in Adler than the stock market suggests,

Vonovia analyzed the Adler portfolio last October, when the housing group had secured its first purchase options on Adler.

However, Vonovia is not aiming for a complete takeover, as CEO Rolf Buch reaffirmed at the Annual General Meeting at the end of last week.

In view of the increased cost of capital and the already high debts resulting from the multi-billion takeover of competitor Deutsche Wohnen, Vonovia does not intend to make any further purchases at the moment.

The Adler participation is a purely financial and comparatively small investment.

Adler's head of the board of directors, Kirsten, admitted on Monday that the subsidiary Consus Real Estate with its properties under development had been written off down to a residual value of only 90 million euros and referred to a collapse in new business.

Adler had also justified the billions in depreciation with a lower development volume and increased construction costs.

According to Kirsten, construction costs are currently rising even faster than general inflation, but real estate projects can still be completed.

But you have to set priorities.