Villain or victim? The mysterious Mr. Caner comes out of the shadows

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Cevdet Caner has a lot of lawyers.

The real estate mogul at the center of a fight against short sellers is flanked in the Mishcon de Reya offices in London by the head of financial litigation of the litigation specialist and a partner of Wolf Theiss, one of the largest law firms in the native Austria of Caner. His media lawyer looms large on a teleconference screen.

Caner also has a good sense of humor.

“I don’t want to be seen 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 villain from the Austin Powers movies. .

Caner refers to the short sellers report titled “Bond Villains” which forced the 48-year-old out of the shadows, breaking the media silence of more than a decade following the dramatic collapse of its previous real estate empire.

Viceroy Research, which bets against companies before releasing its findings, has placed Caner at the center of what it calls a “secret and kleptocratic cabal” controlling large swathes of the German real estate market, including through the Frankfurt-listed Adler group .

The headline is also an allusion to the debt-fueled transaction 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 stocks and bonds tumbling, triggering a wave of margin calls – Caner has eight – among Adler’s major shareholders, who have borrowed heavily against their stakes.

In Caner’s account, he is the victim of a sinister plot orchestrated by a spiteful fund manager – whom he refuses to officially name – working in concert with the viceroy, banks and hedge funds to bring down Adler.

While his critics allege that Caner secretly controls the group and that he orchestrated a controversial series of acquisitions and mergers that reshaped the German real estate market to the detriment of common shareholders, he dismisses the allegations as a “fantasy” and has filed a criminal complaint. against the viceroy.

“You cannot as an individual, or even with a team of people, conduct and perform hidden trades and fun things in the listed capital markets,” he says.

Viceroy founder Fraser Perring told the Financial Times that Caner’s criminal complaint was “straight out of the Wirecard playbook.”

“This is to divert attention from the issues we have raised on Adler, who still lacks a substantive rebuttal to our report,” he added.

Caner dismissed Perring’s allusions to Wirecard, questioning his credibility. But what is at stake is more than the reputation of a colorful financier.

Over the past decade, falling interest rates and rising house prices have driven up the value of an interconnected network of German real estate companies. Adler alone is sitting on more than $ 8 billion in debt and if investors start to calm down on the industry, the fallout could prove messy.

Go up and down and go up again

In the plush offices of Mishcon, Caner sketches his beginnings as the son of Turkish immigrants and the bitter legal battles that defined his career.

Dressed in a simple blue sweater and his trademark rimless glasses, Caner has changed since 2009, when he stood with folded arms in a crisp suit and tie as creditors scooped up the wreckage of his heavily estate empire. indebted.

He had just chaired Germany’s second-largest real estate bankruptcy at the age of just 35, when his Level One group went bankrupt in 2008 due to creditors including Credit Suisse over $ 1 billion. euros. The fallout saw him grab headlines as his £ 20million townhouse in Mayfair was taken over.

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

As creditors alleged money had been embezzled from the company and a decade-long criminal case in Austria ensued, Caner was ultimately acquitted of fraud last year.

Caner has been a resident of Monaco for 20 years, although he insists he moved to avoid Austrian military service rather than tax. There his social circle widened to include people like Lars Windhorst, the flamboyant German financier with his own history of legal trouble, and Henry O’Sullivan, the British businessman recently accused of fraud in connection with the collapse of Wirecard.

Caner has previously exchanged rude emails with O’Sullivan and Jan Marsalek, the senior manager of Wirecard who is now an international fugitive. He tells the FT that he knew O’Sullivan because their children went to kindergarten together and he only met Marsalek two or three times.

The entrepreneur says he rebuilt his fortune after Level One failed using two things: a smart investment idea and “100% leverage.”

Borrowing from what it calls a “small German bank” in 2012, Caner’s family trust acquired a large stake in Adler Real Estate, an obscure real estate company that started as a German manufacturing company in the late 19th century. Adler then embarked on a debt-fueled expansion that turned him into a major player in German real estate and saw its share price rise to 2,000 percent.

While questions have revolved around the precise nature of Caner’s relationship with the company, he is not ashamed of his love for Adler, saying he collects the classic cars and bikes he once produced: “My heart is Adler, my brain is Adler. I like Adler. Everyone knows it.”

Still, Caner – through his lawyers – has so far been careful to distance himself from the company. Adler declined to comment on the relationship and declined a request for an interview.

“I was never able to say ‘I was a shareholder in Adler’, because I was not,” explains Caner, “The beneficiary [of the trust] it’s not me, it’s my family.

Although Caner confirms that he advised Adler on a “deal by deal” basis, he insists the deal has always been backed by “arm’s length” negotiated contracts.

“An undercover boss”?

For its detractors, it is another example of a legal smokescreen hiding 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 Board, which accused him of acting in concert with others to take control of Conwert, another real estate group, whose management has nicknamed Caner the “undercover boss” of Adler. Caner calls the findings “bullshit” and says it was vindicated by a ruling against the European Court of Justice regulator last month.

Asset sales have also attracted attention. 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 the brother-in-law of Caner, who owns a stake in Adler. . The deal has since been unwound and Caner said it was not a related party transaction.

But it was the convoluted three-way merger that created the company now known as the Adler Group that caused the biggest uproar.

Through a complex sequence of takeovers and mergers spanning Israel, Germany and Luxembourg, Adler took on more creditworthy rival ADO Properties, which had a large portfolio of rental apartments in Berlin. The indebted property developer Consus was then integrated into the new Alder group.

Caner insists he was not the mastermind behind the “very complex” chord, which he plots on a Mishcon-branded notepad. But he praises his genius, saying landlords need to partner with developers to ease pressure on the German rental market.

“Everyone, even our enemies, says this is the coolest deal that has ever taken place in German real estate,” he says.

ADO, however, lost its investment grade status and many of its minority shareholders did not appreciate the genius, arguing that the agreement had emptied the group. Several have complained to financial regulator BaFin in an unsuccessful attempt to block it.

The combination sold a major stake in Adler Group to the former owner of Consus, Aggregate Holdings, which recorded a gain of 95 million euros on the transaction. Caner describes Aggregate’s owner, Günther Walcher, as a “very good friend,” who stuck by his side even after losing money at level one, and someone he helped get into the world. estate market.

Caner also advised Aggregate on the transactions and was present at meetings the group held with real estate lenders last week, according to people familiar with the matter. Aggregate CFO Benjamin Lee has confirmed that Caner occasionally attends the group’s investor meetings.

Big players sensed an opportunity in the wake of the Viceroy report, with rival LEG Immobilien and private equity firm KKR considering Adler’s asset purchase. The largest German owner Vonovia has scooped a call option on the group’s shares in exchange for helping Aggregate to repay a margin loan.

While some level one burned investors have vowed never to fund Caner again, others are more pragmatic.

“He travels at high speed,” said one mortgage lender. “Sometimes it works and it doesn’t work in others.”

Additional reporting by Olaf Storbeck and Stephen Morris


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