Announcement under section 109 (2) sentence 1 of the WpHG
Within the scope of its examination, the Federal Financial Supervisory Authority (BaFin) has determined that the approved consolidated financial statements of ADLER Real Estate Aktiengesellschaft, Berlin, as at 31 December 2019, contain errors.
In the consolidated balance sheet as at 31 December 2019, the real estate project “Glasmacherviertel“ in Düsseldorf-Gerresheim, recognised under the balance sheet item “Non-current assets held for sale”, was overvalued by between EUR 170 million and EUR 233 million. The “Income from fair value adjustments of investment properties” recognised was therefore also overvalued by the same amount. A property value implicitly agreed in a share purchase agreement was incorrectly taken as the basis for the valuation as at 31 December 2019. This property value was not representative of the price that could have been received for the sale of the asset as part of an orderly transaction between market participants on the valuation date.
This is in contravention of IFRS 5.6, 5.5 (d) in conjunction with IAS 40.33 in conjunction with IFRS 13.9, IFRS 13.15, IFRS 13.22, IFRS 13.27. The property value implicitly agreed in the purchase agreement does not correspond to the fair value within the meaning of IFRS 13.9 since the value agreed in the purchase agreement was based on the assumption that application for planning permission would be successful; the price was thus based on assumptions regarding possible uses for the site that were not certain as at 31 December 2019 (IFRS 13.27). Furthermore, this purchase agreement did not constitute an orderly transaction (IFRS 13.15) between market participants (IFRS 13.22).
The examination of the approved consolidated financial statements of ADLER Real Estate Aktiengesellschaft as at 31 December 2019 and the corresponding consolidated management report for the 2019 financial year is still ongoing. When this examination has been concluded, BaFin will publish an announcement to this effect, alongside announcements regarding any additional error findings, if applicable.