Cevdet Caner has a lot of lawyers.
The property magnate at the centre of a fight with short-sellers is flanked in Mishcon de Reya’s offices in London by the litigation specialist’s head of finance disputes, and a partner from Wolf Theiss, one of the biggest law firms in Caner’s native Austria. His media lawyer looms large on a teleconference screen.
Caner also has a sense of humour.
“How I don’t want to be seen is as the villain sitting on a nuclear-powered submarine in the Mediterranean,” he smiles, putting his little finger to his lips in imitation of Dr Evil, the supervillain in the Austin Powers films.
Caner is referencing the short-seller report titled “Bond Villains” that has forced the 48-year-old to come out of the shadows, breaking the more than decade-long media silence that followed the spectacular collapse of his previous property empire.
Viceroy Research, which bets against companies before releasing its findings publicly, has placed Caner at the centre of what it calls a “secretive, kleptocratic cabal” controlling vast swaths of the German real estate market, including through Frankfurt-listed Adler Group.
The title is also an allusion to the debt-fuelled dealmaking that transformed Adler from a lower-tier real estate company into a sprawling conglomerate, owning 70,000 apartments across Germany. The report sent the group’s stock and bonds plummeting, which triggered a wave of margin calls — Caner tallies up eight of them — among Adler’s major shareholders, which borrowed heavily against their stakes.
In Caner’s telling, he is the victim of a sinister plot orchestrated by a fund manager with a grudge — whom he declines to name on record — working in concert with Viceroy, banks and hedge funds to bring down Adler.
While his detractors allege that Caner secretly controls the group and that he masterminded a controversial series of acquisitions and mergers that reshaped the German real estate market to the detriment of ordinary shareholders, he dismisses the claims as a “fantasy” and has filed a criminal complaint against Viceroy.
“You cannot as an individual, or even with a team of people, drive and make hidden transactions and funny things in listed capital markets,” he says.
Viceroy’s founder Fraser Perring told the Financial Times that Caner’s criminal complaint was “right out of the Wirecard playbook”.
“This is to distract from the issues we have raised on Adler, who are still lacking any rebuttal of substance to our report,” he added.
Caner rejected Perring’s allusions to Wirecard, questioning his credibility. But at stake is more than just the reputation of a colourful financier.
Over the past decade, falling interest rates and rising property prices have driven up the value of an interconnected web of German real estate companies. Adler alone sits on more than €8bn of debt and if investors begin to cool on the sector, the fallout could prove messy.
Rise and fall and rise again
In Mishcon’s plush offices, Caner sketches out his beginning as the son of Turkish immigrants and the bitter legal battles that have defined his career.
Wearing a simple blue sweater and his trademark rimless glasses, Caner looks changed since 2009, when he stood arms-crossed in a crisp suit and tie as creditors picked over the wreckage of his heavily indebted property empire.
He had just presided over Germany’s second-largest real estate bankruptcy at the age of just 35, when his Level One group fell into insolvency in 2008 owing creditors, including Credit Suisse, more than €1bn. The fallout saw him make headlines as his £20m Mayfair townhouse was repossessed.
While creditors alleged money was diverted out of the business and a decade-long criminal case in Austria followed, Caner was finally acquitted of fraud last year.
Caner has been a Monaco resident for 20 years, though he insists he moved to avoid Austrian military service rather than tax. There his social circle grew to include the likes of Lars Windhorst, the flamboyant German financier with his own history of legal troubles, and Henry O’Sullivan, the British businessman recently charged with fraud in connection to Wirecard’s collapse.
Caner once swapped coarse emails with O’Sullivan and Jan Marsalek, the senior Wirecard executive who is now an international fugitive. He tells the FT he knew O’Sullivan because their children went to kindergarten together and that he only met Marsalek two or three times.
The entrepreneur says he rebuilt his fortune after the failure of Level One using two things: a smart investment idea and “100 per cent leverage”.
Borrowing from what he calls a “small German bank” in 2012, Caner’s family trust built up a large stake in Adler Real Estate, an obscure property company that began life as a German manufacturing business in the late-19th century. Adler then embarked on a debt-fuelled expansion that transformed it into a significant player in German real estate and saw its share price rally as much as 2,000 per cent.
While questions have swirled around the precise nature of Caner’s relationship with the company, he is unabashed about his love for Adler, saying he collects the classic cars and bicycles it once produced: “My heart is Adler, my brain is Adler. I love Adler. Everybody knows that.”
Yet Caner — through his lawyers — has until now been at pains to distance himself from the company. Adler declined to comment about the relationship and turned down a request for an interview.
“I could never say ‘I was a shareholder of Adler’, because I wasn’t,” Caner explains, “The beneficiary [of the trust] is not me, it’s my family.”
While Caner confirms that he has advised Adler on a “deal by deal” basis, he insists that the arrangement has always been backed up with contracts negotiated at “arm’s length”.
For his critics, this is another example of a legal smokescreen concealing the involvement of the Austrian businessman and his associates in key transactions.
In 2016, Caner found himself in a legal battle with the Austrian takeover commission, which accused him of acting in concert with others to seize control of Conwert, another real estate group, whose management dubbed Caner the “undercover boss” of Adler. Caner dismisses the findings as “bullshit” and says he was vindicated by a ruling against the regulator from the European Court of Justice last month.
Asset sales have also drawn scrutiny. Last year, the Tel Aviv Stock Exchange forced an Israeli subsidiary of Adler to reveal that the previously undisclosed buyer of one of its real estate portfolios was Caner’s brother-in-law, who holds a stake in Adler. The deal has since been unwound and Caner says it did not amount to a related party transaction.
But it is the convoluted three-way merger that created the company now known as Adler Group that caused the biggest uproar.
Through an intricate sequence of takeovers and mergers spanning Israel, Germany and Luxembourg, Adler subsumed its more creditworthy rival ADO Properties, which owned an extensive portfolio of Berlin rental apartments. Debt-laden real estate developer Consus was then folded into the newly christened Alder Group.
Caner insists he was not the mastermind behind the “very complex” deal, which he maps out on a Mishcon-branded notepad. But he praises its brilliance, arguing that landlords have to be combined with developers to alleviate pressure on Germany’s rental market.
“Everybody, even our enemies, are saying this was the most genius transaction that ever happened in German real estate,” he claims.
ADO lost its investment-grade status, however, and many of its minority shareholders failed to appreciate the genius, arguing that the deal hollowed out the group. Several complained to financial regulator BaFin in an unsuccessful bid to block it.
The combination handed a major stake in Adler Group to Consus’s previous owner Aggregate Holdings, which booked a €95m gain on the transaction. Caner describes Aggregate’s owner Günther Walcher as a “very good friend”, who stuck by him even after losing money on Level One, and someone who he helped enter the real estate market.
Caner has also advised Aggregate on transactions and he was present at meetings the group held with real estate lenders last week, according to people familiar with the matter. Aggregate’s chief financial officer Benjamin Lee confirmed that Caner attends the group’s investor meetings from “time to time”.
Large players have sensed opportunity in the wake of the Viceroy report, with rival LEG Immobilien and private equity firm KKR examining buying assets from Adler. Germany’s biggest landlord Vonovia snapped up a call option on the group’s shares in return for helping Aggregate repay a margin loan.
While some investors burnt on Level One have vowed never to finance Caner again, others are more pragmatic.
“He travels at high speed,” said one real estate lender. “It works sometimes and it doesn’t work at others.”
Additional reporting by Olaf Storbeck and Stephen Morris