1. In the consolidated balance sheet as at 31 December 2019, non-current assets held for sale were overstated by EUR 4,409 million, liabilities held for sale were overstated by EUR 1,700 million and non-controlling interests were overstated by EUR 1,743 million. Other financial assets were understated by EUR 470 million and deferred tax liabilities were understated by EUR 47 million. In the consolidated statement of comprehensive income, total comprehensive income was overstated by EUR 543 million. On the basis of its indirect interest in ADO Properties S.A. of 33.25% via its subsidiary ADO Group Ltd., which was acquired by ADLER Real Estate AG on 10 December 2019, ADLER Real Estate AG consolidated ADO Properties S.A. in its consolidated financial statements as at 31 December 2019 in spite of the fact that – in light of the agreements entered into by the reporting date of 31 December 2019 concerning the public takeover of ADLER Real Estate AG by ADO Properties S.A. – ADLER Real Estate AG no longer controlled ADO Properties S.A. at that time. This is because these voting rights did not give ADLER Real Estate AG power over ADO Properties S.A. as at the reporting date. The consolidation of ADO Properties S.A. was therefore in violation of IFRS 10.20 in conjunction with IFRS 10.7(a), according to which an investee must (only) be consolidated if the investor controls the investee, and in order to control an investee, the investor must have power over the investee.

2. In the risk report as part of the combined management report, ADLER Real Estate AG reported that risks in connection with the acquisition of an indirect interest in ADO Properties S.A. could arise if the requirements for control were not met and assessed these risks as “low”. Furthermore, ADLER Real Estate AG did not describe the circumstances under which these risks could materialise. It likewise did not explain that the consolidated total assets as at 31 December 2019 would be reduced by EUR 3,939 million if these risks were to materialise, which would result in an increase in the loan-to-value ratio to approximately 70%. As a consequence of the increase in the loan-to-value ratio, ADLER Real Estate AG would face restrictions on taking out financial liabilities, which could have an impact on the development of the company’s financial position. Moreover, ADLER Real Estate AG based its assessment of this risk as low on the composition of ADO Properties S.A.’s Board of Directors – which was not, however, a result of the rights held by ADLER Real Estate AG – and on the fact that, in terms of shareholders present, ADLER Real Estate AG with its 33.25% share in voting rights held the majority of voting rights at past annual general meetings of ADO Properties S.A. In light of the requirement of IFRS 10.B46, according to which it must be clear, based on the relevant factors considered, that the investor has power and thus control over the investee, and in view of the fact that ADLER Real Estate AG itself identified and reported the risk of non-fulfilment of the requirement for control, the assessment of this risk as low is not plausible. This is in violation of section 315 (1) sentence 4 of the German Commercial Code (Handelsgesetzbuch – HGB), which stipulates that the likely future development as well as the material risks must be assessed and that a corresponding explanation must be provided.

3. In the 2019 financial year, ADLER Real Estate AG kept no records on whether or not contractual partners in corporate and real estate transactions were classified as related parties. This is in violation of section 238 (1) sentence 2 of the HGB, according to which bookkeeping must be of a nature permitting an external expert to gain an overview, within a reasonable period of time, of the undertaking’s business transactions. The records to be kept in accordance with the principles of proper accounting as stipulated by section 238 (1) sentence 1 of the HGB must include records on transactions with related parties, in addition to documents from the control system set up for the accounting process to identify related parties.

The examination of the approved consolidated financial statements of ADLER Real Estate AG 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.