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JPMorgan sticks by controversial German real estate group Adler

JPMorgan is sticking by German real estate firm Adler in the face of allegations from an anonymous whistleblower, after the US bank conducted a review into its client’s ties to a controversial property magnate.

Short seller Viceroy Research sent Frankfurt-listed Adler Group’s shares tumbling last month, after publishing a critical report outlining the real estate group’s ties to Cevdet Caner, an Austrian entrepreneur who previously presided over one of Germany’s largest-ever real estate insolvencies.

Months before Viceroy published its report, an anonymous whistleblower emailed major banks that have transacted with Adler, such as Goldman Sachs and Deutsche Bank. The March emails, which were first reported by Bloomberg, alleged that Caner was concealing his involvement in Adler and several related companies through “complicated opaque structures”.

The broad allegation from his critics, which Caner dismisses, is that he secretly controls Adler Group, having masterminded a series of acquisitions and mergers that have reshaped the German real estate market.

JPMorgan, which has forged a close relationship with Adler in recent years, has decided to continue to back the company, according to people familiar with the decision.

After the bank received an email addressed to its chief executive Jamie Dimon and other senior managers, a member of its legal team responded to the whistleblower in July and said that their allegations had been “appropriately reviewed and addressed in line with internal processes and as such the matter has been closed”. The email, a copy of which has been seen by the Financial Times, did not provide details about the outcome of the review.

Caner told the FT that the whistleblower’s emails to the banks were part of a wider campaign against him, noting that the messages had contained “all the keywords to interrupt the business of the targeted company”, such as “criminal” and “organised crime”.

“It’s all bullshit, it’s a fake whistleblower,” Caner said. “This is an orchestrated campaign.”

JPMorgan and Adler declined to comment.

The German property group has proved to be a lucrative client for the US bank.

JPMorgan became Adler’s bank of choice for billions of euros worth of debt and equity transactions, which helped transform the once-obscure group into a sprawling real estate conglomerate that owns 70,000 apartments across Germany.

JPMorgan single-handedly underwrote a €3.5bn bridge loan to Adler in December 2019, paving the way for the bank to win the coveted “sole global co-ordinator” role on five subsequent bond sales. JPMorgan closed the most recent of these deals, a €500m bond sold in April, a month after the whistleblower first emailed the bank.

The bank also led a €450m equity raise for Adler last year, as well as providing a margin loan to Aggregate Holdings, one of the property group’s major shareholders. Aggregate, which has previously employed Caner’s services as an adviser, repaid this margin loan from JPMorgan and other lenders earlier this month, after selling a call option on its stake in Adler to German property giant Vonovia.

Caner has rejected the allegations made against him and publicly announced that he has filed a criminal complaint against Viceroy and its founder Fraser Perring.

He told the FT that he did not have a direct relationship with JPMorgan.

“The management is running the business,” Caner said. “I’m not talking to the banks for the company, I’m not talking to anyone for the company. I cannot [do that] and that’s why all these allegations are totally wrong.”

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