Investors Circle Giant Berlin Project Owned by Adler’s Backer
Investors Circle Giant Berlin Project Owned by Adler’s Backer
(Bloomberg) -- Investors are circling a prized asset that the key shareholder of embattled German landlord Adler Group SA bought just a few months ago.
At least three interested parties made offers to buy the Fuerst project, a major development on Berlin’s famed avenue Kurfuerstendamm that Aggregate Holdings SA bought in June, according to people briefed on the talks. The investors have approached the site’s previous owner, Vivion Investments, which is still owed more than 300 million euros ($347 million) by Aggregate.
The investors may be seeking to capitalize on a crunch at Adler, and by extension at its biggest shareholder Aggregate, after the property firm’s stock and bonds dropped amid a short seller attack. Aggregate responded to the drop in the value of its holding in Adler by pledging all of that stake to rival Vonovia SE to refinance margin loans.
Aggregate, owned by Austrian financier Guenther Walcher and advised by Austrian tycoon Cevdet Caner, agreed to pay more than 900 million euros in June for the project and has payment installments running into 2022, according to one of the people, who asked not to be identified because the information is private. Vivion referred the potential buyers to Aggregate, which has so far rejected the offers, the person said.
“We can confirm that we have been approached by parties interested in the acquisition of Fuerst after the closing,” a representative for Vivion wrote in an email to Bloomberg News. “This is not unusual given the quality of the asset and the competition on the buyer side in the current market situation.”
Vivion did not respond to questions about why buyers approached it instead of Aggregate. A spokesperson for Aggregate declined to comment.
Criminal Complaint
Adler’s stock has lost 17% of its value since the publication of the report by Fraser Perring’s Viceroy Research in October and more than 60% since the start of the year. Caner, whose family owns a stake in Adler, has filed a criminal complaint against Fraser Perring and denied the report’s allegations.
Aggregate bonds have tumbled, pushing their yields up. Its 600 million euros of notes due in November 2025 are quoted at a yield of almost 20%, Bloomberg data show. The company paid holders of the bond an annual cash coupon due on Tuesday, Bloomberg reported earlier.
Aggregate has also been in contact with firms including Oaktree Capital Management, Apollo Global Management and Fortress Investment Group to raise additional financing, Bloomberg reported earlier this month.
Read more: Adler Backer Aggregate Sought Oaktree, Apollo Loans at 15% Rates
The Fuerst project will eventually span about 183,000 square meters (2 million square feet), of which about 60% will be offices. The remainder will include stores, a hotel and leisure space.
The development is expected to generate about 50 million euros of rent annually and be valued at about 2.5 billion euros once completed, Aggregate said in a statement at the time of the purchase. The first phases of construction are already complete with the remainder due to be finished by the end of 2023, it said at the time.
As part of the financing package of the Fuerst deal, Vivion provided 485 million euros of financing guaranteed against a special purpose vehicle that owns the site, Vivion said in a statement last month. Vivion has the right to seize shares in the Fuerst unit should Aggregate fail to make the remaining payments, according to the statement.
After Adler became targeted by short sellers, Aggregate asked to postpone a 50 million-euro installment due at the end of October, according to a person familiar with the matter. It made the payment after Vivion refused the request for delay, the person said.
Vacancy rates in Berlin’s office markets are near record lows, increasing competition for development plots and boosting prices.
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