(Bloomberg) -- Creditors to Adler Group SA are set to take control of the company after the embattled landlord struggled to sell assets and repay debts against the backdrop of plunging prices. 

The company has reached an agreement in principle with some bondholders on another overhaul of its debt load that will hand them majority voting control, according to a statement Thursday. The announcement came ahead of the company’s full year results, revealing a 12.8% writedown in the value of its German apartments which, together with asset sales, shrank its total portfolio value by €1 billion ($1.1 billion). 

The company is in advanced negotiations with the steering committee of bondholders for a deal that would include refinancing and extending its obligations. The potential agreement, which is not yet signed, would buy the company more time to sell assets, a process that’s been hampered by the sharp correction gripping European real estate. 

“Given the tough transaction market environment, disposals are lagging the original plans,” the company said in comments accompanying its full-year results. “In response, Adler Group is proactively revising its restructuring framework.” 

Read more: Cash-Strapped Adler Seeks Nod for Asset Sale at 47% Discount

Adler has already been through one painful restructuring, handing a group of creditors a 25% stake in the company as part of a deal to inject almost €1 billion of new money and buy time for asset sales. But that agreement was overturned by the UK Court of Appeal after holders of its longer-dated bonds complained they would lose out. 

While Adler has appealed to the Supreme Court to consider the case, the landlord has stressed it would not impact the restructuring. Chairman Stefan Kirsten, who helped lead the restructuring plan, has since stepped down, citing health reasons.

The troubled real estate firm has been under pressure since short seller Viceroy Research and a whistle blower accused it of fraud more than two years ago — allegations the firm has strongly rejected. They alleged that controversial tycoon Cevdet Caner, whose family invested in the landlord, was secretly pulling the strings behind the company without holding any official role. 

While creditors have long been in the driving seat, the proposed deal would be the final step in wresting control from Adler’s shareholders, which include Caner’s wife Gerda and long-time associate Guenther Walcher. The company’s largest holder is rival landlord Vonovia SE, which seized a stake in the company after a margin call on a loan secured against most of Walcher’s stake. 

The company now owns about 25,000 apartments, down from a peak of more than 70,000, that are scarcely worth more than its outstanding debts. Adler’s loan-to-value ratio reached 97.6% at the end of the year, up from 74.5% a year earlier, as its valuations fell faster than it was able to sell assets and repay debt. 

The 12.8% writedown, coupled with advisory fees and much higher interest costs on its new money deal, pushed the company to a €1.5 billion loss in 2023. Adler will still need to sign a lock-up agreement with members of the steering committee as well as further bondholders of the group “in due course,” it said in the statement. 

(Updates with context throughout)

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