Adi Keizman still says hello to Berlin

Adi Keizman
Adi Keizman

Despite bad publicity, customer complaints, and changing local rules, Israeli real estate whiz kid Keizman stands by his Berlin operation, but he's matured, and he's diversifying.

This article did not start life as an interview with Adi Keizman.

In February this year, popular German daily "Berliner Zeitung" published a full-length investigative article on Keizman's business in Berlin under the headline "The City That Was Sold". The article focused on several stories concerning the way in which Keizman's management company in Berlin allegedly harassed tenants in order to get them out of rent-controlled apartments and put in other tenants instead, and thereby enhance the rent return for Israeli investors. The Israeli press cited the article extensively; the reputation of Berlin Aspire - the company through which Keizman marketed apartments to investors - suffered damage; Keizman sued, and managed to make the German daily retroactively change parts of the article.

In the wake of that exposé, we wanted to examine the credibility of the claims against Keizman, and to expose a little of his private real estate business in Berlin. We reached tenants of Keizman, some of the investors, and purchasers of apartments in the past and the present. We followed up on the companies, and tried to fathom how a fairly small Israeli player, who sold 1,500 apartments in a city with nearly two million of them, managed to upset the local market so much.

The fact that the rent control laws in Germany are about to change dramatically made investigating Keizman's business all the more of current interest. The gap between Keizman's glamorous and showy persona and the near secrecy that has cloaked his business in the city in recent years, at least until that investigative article, made the task all the more challenging, and the arrival of additional Israeli players in the German real estate market also added a pinch of motivation.

This article did not start life as an interview with Adi Keizman. But it ends on a late evening in the home of Adi Keizman and Esti Ginzburg in the Tel Aviv suburb of Tsahala, with a conversation with Keizman.

We previously put a long series of questions to Keizman based on our investigation, and he responded. Some of the responses refuted the original claims we had heard; in some instances, as we shall go on to explain, we think that questions remain. The questions led to an intense dialogue, the dialogue led naturally to a meeting, and the meeting yielded the conversation presented below. Keizman agreed to our request to talk on the record about his business, with an openness that has not been characteristic of him in recent years, and even to reveal here for the first time his business plans for the future.

By sheer coincidence, the conversation with him took place in the week in which ADO Group (TASE: ADO), which he founded, was sold to a German real estate giant for nearly NIS 3 billion. Keizman was not a beneficiary of that exit, at a price 82% above the company's share price at the time, following a decline in the past few months. By 2015, he had sold his stake in stages, but his presence at least symbolically hovers over that exit, if only by virtue of the fact that the first letters of his name and of the names of his daughter and of his former wife (Ofra Strauss) make up the name of the company that was sold.


Anyone trying to visit the website of real estate company Berlin Aspire in recent weeks has been greeted by an announcement that the site is under construction. Anyone trying to enter the website of Berlin Estate, another brand connected to Keizman's Berlin activity, encountered a similar announcement. Anyone searching for one of these names on Google no longer receives paid results declaring "guaranteed return in the capital of Germany" or "an apartment in Berlin for just €60,000 equity". There are no longer any advertising features on content sites, no inviting banners, and, in particular, advertising in Hebrew to Israeli customers has considerably diminished.

Keizman's business is alive and kicking, but it is changing. The company's manager has also been replaced, according to the website that aggregates public information on companies in Germany. The person who until recently was CEO of Berlin Aspire, and who was the contact person for many Israeli investors in the past few years, has become CEO of a new company with a shiny new website called Grand Urban. The new company's address is in prestigious Kurfürstendamm, in the west of the city, and its website is in German and English only. Nevertheless, examination of the properties that it offers for sale reveals that they are in the same buildings that were marketed by Berlin Aspire, Keizman's original brand.

The assessment in the local real estate market is that the rebranding is a response to the damage to Berlin Aspire's image from the Berliner Zeitung exposé, which aroused public anger, leading to the anti-landlord legislation now being enacted by the Berlin municipality.

Tel Aviv

As far as Adi Keizman is concerned, it's business as usual or better. He was due to fly to London to further a fifteen-year leasing deal on about 600 furnished apartments for short-term letting. He spends between a week and ten days a month in Berlin, with his family. The rest of the time, he is in Tel Aviv. He does not rule out raising finance on the Israeli capital market again, but meanwhile he is planning expansion to a new market, under a new brand, of short-term letting of furnished apartments. "A sort of WeWork of the residential market" he says, and jokes that "this is not a good time to use that brand name."

Let's go back to that exposé in February. To what extent did it hurt the company's reputation, and is that what lies behind the new brand?

"There's no doubt that an article like that did not do Berlin Aspire any good. In the immediate term, it certainly caused some kind of damage," he says openly. "But that wasn't the consideration. The consideration was purely a business one. It was decided to rebrand, including going beyond Berlin to other places. Up to now, the brand has been very local - we wanted something global."

And as part of the rebranding, you've stopped selling to Israelis?

"Berlin has changed in the past few years. At one time, the entry ticket for an investor was €60,000-80,000 equity. Today, the equity required to purchase apartments in Berlin could be as high as €200,000. As time goes by, the business becomes less and less based on the Israeli market. Within the last few years, a new CEO joined the company. One of the things that he has developed very successfully is sales to Germans. The center of gravity has shifted from foreign or Israeli investors to Germans. The new CEO helped to set up a brand that appeals to Germans as well, called Grand Urban. One of the new channels we have entered is construction. There were several service companies that we didn't need, and we merged them all into one company. This company now carries out property development."

The core of the claims against you is that your companies harass tenants with old contracts in order to make them leave and thereby maximize returns.

"In our case, there is a close association between the companies that sell the apartments and the companies that manage the properties after a sale, and so the motivation of the management company is to squeeze as much out of the project as possible. But I don't engage in illegitimate conduct, and the law doesn't allow me to do so. I can't spread mice or cockroaches or put glue in the lock. In Germany, there's a very orderly system, and the tenants will complain, or call the police. Still, I get up in the morning wanting to maximize the return on investment. People put their trust in us to do that, and I do it using all the legitimate means at my disposal. Listen, in the end, antisemitism hasn't completely disappeared. A German couple is living in peace, and some kid from Tel Aviv comes along, buys the building, and tells them 'That's it. The party's over.' He throws them out of the house, so I cop it, right?"

But we hear that buyers, and not just tenants, are not exactly happy with the investment.

"I've been active in Berlin for nearly fifteen years. In the initial projects, we 'painted' the buildings the way we wanted - we split apartments, added, changed - we could do anything. I bought thousands of apartments in Berlin that no-one wanted to go near. We did wonderful things there. But the rules of the game changed - regulation, rent reform, all these processes meant that things would be much more complicated and slow. The party ended."

The question is whether you are transparent about this complexity to investors, whether Israelis or investors in general.

"Certainly, to everyone. Even in the days when it was easy, I said that Berlin was not a city for quick returns, but for long-distance running. Whoever wants to put their money somewhere safe and has patience should put it with us, and anyone who doesn't - shouldn't."


Keizman, 47, was one of the first Israeli businesspeople to spot Berlin's real estate potential in the early 2000s, and he founded listed company ADO. He shared ownership of the company with Shikun & Binui Holdings Ltd. (TASE: SKBN), then controlled by Shari Arison, but eventually sold his shares when differences of opinion emerged between the owners. Later, the company became the target of a hostile takeover by the Dayan family and the Apollo fund, which the other week sold it at a high premium with the impressive price tag of NIS 2.7 billion.

For several years, Keizman has looked from afar at developments in the company that bears his name. During this time, through various companies, he bought famous properties, such as the old post office in central Berlin (which he subsequently sold to another Israeli investor), and spent a great deal of time in the city. He harnessed his reputation and his familiarity with the city to persuade customers, personally, to invest in Berlin real estate, through Berlin Aspire and under the brand Berlin Estate. The vast majority of these customers were Israelis.

"The Israeli customers looked on Keizman as a god. He gave them his personal telephone number; they worshipped him," an Israeli who is familiar with the company's sales dynamic relates. "He was in the headlines, starred in the media. You felt as though you wanted to join his success."

Berlin Aspire's model is to buy an entire building with loan finance. If it has not been divided into apartments, the company divides it "on paper" into the existing apartments and offers them to investors at below-market prices. Keizman generally retains the roof and possible building rights on it, which are worth a great deal in the Berlin real estate market.

At the same time, a property management company, also of the Berlin Aspire group, is responsible for day to day management, rent collection, and responding to tenants' demands. According to a count by tenants organizations in Berlin, Berlin Aspire bought about 40 buildings in various parts of Berlin in the past decade. Keizman mentions the number "1,500 apartments, maybe even more."

The model worked successfully for a large proportion of the company's clients. Anyone who invested through the company and now has an apartment in Berlin registered in his name in the German land registry has been able to benefit from the steep annual rises in real estate prices there up to now. Many investors who spoke to "Globes" told of satisfaction with the way the company operated, of good relations with Keizman - who was available for queries on his personal telephone - and of a profit on paper on their investment and a return on the rent. Some of them were not perturbed by the steps the company took to encourage tenants to leave in order to raise the rent under a new contract.

There are also others. Several Israeli clients complained to "Globes" of a sense of a lack of transparency at the company, of what they claimed were "inexplicable" delays in the process of registering apartments in the German land registry, and of inability to obtain a mortgage on the property that they said they had been promised could be obtained at any time. Keizman forcefully denies these claims, and it should be said in his favor that they do come from a minority of the buyers.

The explanation he furnishes for some of the instances of dissatisfaction is that two obstacles lie in the buyers' way to significant upside. One is that tenant protection laws in Berlin do not permit rent hikes for a sitting tenant, and many tenants in the city have contracts at very low rents. In this situation, the only way to obtain a return is for the tenant to leave and for a new tenant to come in at a higher rent, a process that can take years, if it happens at all.

The second hurdle is local regulation which currently makes it difficult to take a mortgage on apartments when ownership has not been registered in the land registry, and the registration process is a long one.

"We had concerns, and he tried to the utmost of his ability to reassure us," adds one investor. "We were worried, for example, about what would happen if the tenant in the apartment we wanted to buy didn't want to leave. He said to us, 'We'll find a way of getting him out. We'll drill around him from every direction. We'll make his life tough.'"

"He told us about mistakes he had made, about investments he had missed out on and investments that had succeeded for him," says a person who bought an apartment through Berlin Aspire. "He made an excellent impression, of someone you could rely on." "Like many Israelis," one of the investors said, "I too don't shed a tear at the thought that some German has to leave his apartment."

The locals: The Israelis arrived, the problems started

In the local market, however, what can be called at the very least Israeli impudence, or the export of problematic real estate market norms from Tel Aviv to Berlin, does not go down so well.

Since the investigative article in February, it has been hard for Berlin Aspire to avoid public attention in the city. Whether or not it's because of the problematic reputation, apartment buyers report that they have found it hard to obtain mortgages recently.

Merav (not her real name) is a client who came to Berlin Aspire through a recommendation from a relative. She paid just half the acquisition price in advance, and claims she was told that she would be able to apply for a mortgage from a local bank or other financial institution to cover the remaining half, with the apartment as collateral. But when she did so, her application was refused.

In the letter of refusal, which "Globes" has seen, the representative of the pension fund of VZN, the dentists' association of Nordrhein (Versorgungswerk der Zahnärztekammer Nordrhein K.d.ö.R), which specializes in granting mortgages and that had worked with the company in the past, states that "unfortunately" they can no longer offer mortgages to customers of Berlin Aspire or any of its subsidiaries because of the nature of the company's business. The association's representative confirmed in correspondence with "Globes" that "for a while now we have not been financing properties that Berlin Aspire sells." He said that this policy applied not just to Israeli clients of the company, but to all its clients. Asked whether this was because of new tax rules, he replied in the negative.

Tel Aviv

Adi Keizman, how do you respond to someone who has bought an apartment from Berlin Aspire and is concerned that in the end the apartment will not be registered in his name in the land registry?

"There's no such thing as apartments that won't be registered in the land registry, but there are apartments that are in the process of being registered: either the purchase has not yet been completed - that is to say, the purchaser still owes me part of the purchase price - or it's a case of a building that has still not undergone parcelization."

Are there apartments for which investors have paid in full, the building has undergone parcelization, and they are still not registered in the land registry?

"No, apart from specific units, belonging to people who bought ground-floor apartments that were commercial units and that need to be converted to residences. These can be counted on the fingers of one hand. In every building in which I completed parcelization, there is no case of a purchaser not registered in the land registry. If anyone isn't registered in the land registry, he presumably owes me money."

And what about the pension fund that, according to the information we have, refuses to give your clients mortgages?

"Look, just two hours ago it gave a mortgage to a client (shows a WhatsApp message with an update from one of his employees). They work with us, but in dribs and drabs."

In other words, it could be that you promised clients mortgages that they can't obtain?

"What's true is that it's a changing situation. Financial regulation is changing, not just with regard to us, with regard to the entire market, and I take responsibility. I, Adi Keizman, respect every single one of my buyers. I call on each of them, from first to last, to meet me. I have met fifteen buyers and more in a day. I say to them, you bought an apartment, true; we said that there would be a mortgage, true; but the rules of the game have changed. It's impossible to obtain a mortgage. The only way is to pay it all with equity, or with a bridging loan that will enable you to register the apartment in your name in the land registry, and then obtain a mortgage and repay the loan. There isn't a single client whom I forced to complete the deal if he hadn't received a mortgage. I myself have arranged 600-800 mortgages. And if it didn’t work out, there hasn't been a single case of a buyer who said to me 'I don't have the equity' and who remained stuck with the deal. I repay the money to anyone who wants it. I don't even take the 10% compensation that is customary in deals of this kind."

Who in fact owns Berlin Aspire and the group of companies?

"To some extent through a chain of holdings, I own all of it. ADO Holdings Israel holds dozens of companies."

Can Berlin Aspire currently repay all the loans it has taken on the buildings?

"Of course, there's a huge cash surplus. All the old properties are no longer encumbered."

You say that regulation has changed, that mortgages are hard to come by, so why in fact continue investing in Berlin?

"Because even after all the changes, real estate prices in Berlin are low, as is the cost of living, and so I think that there's still a substantial buying opportunity. Nevertheless, I'm also developing other businesses at the same time. One of our local brands was Berlin Homes, which dealt in short-term rentals of furnished apartments. We're rebranding it as Belong Livings, so as to expand to other countries and cities. We're in negotiations on a fifteen-year lease of 600 apartments in the UK that will be part of the new company."

Are your clients happy?

"The vast majority - very. Clearly, there are some unhappy ones. Perhaps some who thought the path would be shorter."


Adi Keizman, may we ask a personal question? Ten years ago you were a wunderkind, a kind of playboy, you starred in the gossip columns.

"In that respect I received much more credit than I deserved."

So what sort of Adi Keizman are you at age 47?

"I'm a family man. If I travel to Berlin for more than a day, we travel together, as a family. My children are my whole world. The thing most important to me."

Is there anything for which you feel remorse?

"If I regret anything, it's that I didn't buy more."

Published by Globes, Israel business news - - on October 29, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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