Villain or victim? Property magnate Cevdet Caner steps out of the shadows

Cevdet Caner has loads of attorneys.

The property magnate on the centre of a struggle with short-sellers is flanked in Mishcon de Reya’s workplaces in London by the litigation specialist’s head of finance disputes, and a associate from Wolf Theiss, one of many greatest regulation companies in Caner’s native Austria. His media lawyer looms giant on a teleconference display screen.

Caner additionally has a way of humour.

“How I don’t wish to be seen is because the villain sitting on a nuclear-powered submarine within the Mediterranean,” he smiles, placing his little finger to his lips in imitation of Dr Evil, the supervillain within the Austin Powers movies.

Caner is referencing the short-seller report titled “Bond Villains” that has pressured the 48-year-old to return out of the shadows, breaking the greater than decade-long media silence that adopted the spectacular collapse of his earlier property empire.

Viceroy Analysis, which bets towards corporations earlier than releasing its findings publicly, has positioned Caner on the centre of what it calls a “secretive, kleptocratic cabal” controlling huge swaths of the German actual property market, together with by way of Frankfurt-listed Adler Group.

The title can be an allusion to the debt-fuelled dealmaking that reworked Adler from a lower-tier actual property firm right into a sprawling conglomerate, proudly owning 70,000 residences throughout Germany. The report despatched the group’s inventory and bonds plummeting, which triggered a wave of margin calls — Caner tallies up eight of them — amongst Adler’s main shareholders, which borrowed closely towards their stakes.

In Caner’s telling, he’s the sufferer of a sinister plot orchestrated by a fund supervisor with a grudge — whom he declines to call on document — working in live performance with Viceroy, banks and hedge funds to deliver down Adler.

Whereas his detractors allege that Caner secretly controls the group and that he masterminded a controversial sequence of acquisitions and mergers that reshaped the German actual property market to the detriment of atypical shareholders, he dismisses the claims as a “fantasy” and has filed a felony grievance towards Viceroy.

“You can not as a person, and even with a workforce of individuals, drive and make hidden transactions and humorous issues in listed capital markets,” he says.

Viceroy’s founder Fraser Perring informed the Monetary Occasions that Caner’s felony grievance was “proper out of the Wirecard playbook”.

“That is to distract from the problems now we have raised on Adler, who’re nonetheless missing any rebuttal of substance to our report,” he added.

Caner rejected Perring’s allusions to Wirecard, questioning his credibility. However at stake is extra than simply the repute of a vibrant financier.

Over the previous decade, falling rates of interest and rising property costs have pushed up the worth of an interconnected net of German actual property corporations. Adler alone sits on greater than €8bn of debt and if buyers start to chill on the sector, the fallout might show messy.

Rise and fall and rise once more

In Mishcon’s plush workplaces, Caner sketches out his starting because the son of Turkish immigrants and the bitter authorized battles which have outlined his profession.

Carrying a easy blue sweater and his trademark rimless glasses, Caner appears to be like modified since 2009, when he stood arms-crossed in a crisp swimsuit and tie as collectors picked over the wreckage of his closely indebted property empire.

He had simply presided over Germany’s second-largest actual property chapter on the age of simply 35, when his Stage One group fell into insolvency in 2008 owing collectors, together with Credit score Suisse, greater than €1bn. The fallout noticed him make headlines as his £20m Mayfair townhouse was repossessed.

aner, pictured in London in 2009
Caner pictured in Mayfair, London, in 2009 © Chris Ratcliffe/Bloomberg

Whereas collectors alleged cash was diverted out of the enterprise and a decade-long felony case in Austria adopted, Caner was lastly acquitted of fraud final yr.

Caner has been a Monaco resident for 20 years, although he insists he moved to keep away from Austrian army service somewhat than tax. There his social circle grew to incorporate the likes of Lars Windhorst, the flamboyant German financier along with his personal historical past of authorized troubles, and Henry O’Sullivan, the British businessman just lately charged with fraud in connection to Wirecard’s collapse.

Caner as soon as swapped coarse emails with O’Sullivan and Jan Marsalek, the senior Wirecard govt who’s now an international fugitive. He tells the FT he knew O’Sullivan as a result of their youngsters went to kindergarten collectively and that he solely met Marsalek two or 3 times.

The entrepreneur says he rebuilt his fortune after the failure of Stage One utilizing two issues: a sensible funding concept and “100 per cent leverage”.

Borrowing from what he calls a “small German financial institution” in 2012, Caner’s household belief constructed up a big stake in Adler Actual Property, an obscure property firm that started life as a German manufacturing enterprise within the late-Nineteenth century. Adler then launched into a debt-fuelled growth that reworked it into a major participant in German actual property and noticed its share worth rally as a lot as 2,000 per cent.

Whereas questions have swirled across the exact nature of Caner’s relationship with the corporate, he’s unabashed about his love for Adler, saying he collects the traditional vehicles and bicycles it as soon as produced: “My coronary heart is Adler, my mind is Adler. I like Adler. Everyone is aware of that.”

But Caner — by way of his attorneys — has till now been at pains to distance himself from the corporate. Adler declined to remark concerning the relationship and turned down a request for an interview.

“I might by no means say ‘I used to be a shareholder of Adler’, as a result of I wasn’t,” Caner explains, “The beneficiary [of the trust] will not be me, it’s my household.”

Whereas Caner confirms that he has suggested Adler on a “deal by deal” foundation, he insists that the association has all the time been backed up with contracts negotiated at “arm’s size”.

‘Undercover boss’?

For his critics, that is one other instance of a authorized smokescreen concealing the involvement of the Austrian businessman and his associates in key transactions.

In 2016, Caner discovered himself in a authorized battle with the Austrian takeover fee, which accused him of performing in live performance with others to grab management of Conwert, one other actual property group, whose administration dubbed Caner the “undercover boss” of Adler. Caner dismisses the findings as “bullshit” and says he was vindicated by a ruling towards the regulator from the European Courtroom of Justice final month.

Asset gross sales have additionally drawn scrutiny. Final yr, the Tel Aviv Inventory Alternate pressured an Israeli subsidiary of Adler to disclose that the beforehand undisclosed purchaser of one among its actual property portfolios was Caner’s brother-in-law, who holds a stake in Adler. The deal has since been unwound and Caner says it didn’t quantity to a associated social gathering transaction.

However it’s the convoluted three-way merger that created the corporate now often known as Adler Group that brought about the most important uproar.

By means of an intricate sequence of takeovers and mergers spanning Israel, Germany and Luxembourg, Adler subsumed its extra creditworthy rival ADO Properties, which owned an intensive portfolio of Berlin rental residences. Debt-laden actual property developer Consus was then folded into the newly christened Alder Group.

Caner insists he was not the mastermind behind the “very advanced” deal, which he maps out on a Mishcon-branded notepad. However he praises its brilliance, arguing that landlords must be mixed with builders to alleviate strain on Germany’s rental market.

“Everyone, even our enemies, are saying this was essentially the most genius transaction that ever occurred in German actual property,” he claims.

ADO misplaced its investment-grade standing, nevertheless, and plenty of of its minority shareholders failed to understand the genius, arguing that the deal hollowed out the group. A number of complained to monetary regulator BaFin in an unsuccessful bid to dam it.

The mix handed a serious stake in Adler Group to Consus’s earlier proprietor Combination Holdings, which booked a €95m acquire on the transaction. Caner describes Combination’s proprietor Günther Walcher as a “excellent good friend”, who caught by him even after dropping cash on Stage One, and somebody who he helped enter the true property market.

Caner has additionally suggested Combination on transactions and he was current at conferences the group held with actual property lenders final week, based on individuals aware of the matter. Combination’s chief monetary officer Benjamin Lee confirmed that Caner attends the group’s investor conferences from “time to time”.

Massive gamers have sensed alternative within the wake of the Viceroy report, with rival LEG Immobilien and personal fairness agency KKR inspecting shopping for belongings from Adler. Germany’s greatest landlord Vonovia snapped up a name possibility on the group’s shares in return for serving to Combination repay a margin mortgage.

Whereas some buyers burnt on Stage One have vowed by no means to finance Caner once more, others are extra pragmatic.

“He travels at excessive velocity,” mentioned one actual property lender. “It really works generally and it doesn’t work at others.”

Extra reporting by Olaf Storbeck and Stephen Morris

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