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CPI Property says short seller Muddy Waters took facts 'out of context'

Reuters
·2-min read

NEW YORK, Dec 8 (Reuters) - Luxembourg-based commercial landlord CPI Property Group (CPIPG) said on Friday that short-seller Muddy Waters painted "a misleading picture" of the company "by taking facts out of context."

On Nov. 21, a key bond of CPI Property fell by the most on record after Muddy Waters said it had bet against the credit of the company, which owns properties in Germany, the Czech Republic, Poland and elsewhere in Central and Eastern Europe.

The short-seller alleged in a report that CPI Property's controlling shareholder, Czech billionaire Radovan Vitek, had misstated the value of the landlord. It also said some income had been booked against real estate properties that were in fact empty plots of land.

"CPIPG has never obscured our relationship with Radovan Vitek, his family, or any other related parties," the company said in a presentation on Friday reviewed by Reuters. It stated some transactions it engaged in are "complex," but that there is no conflict of interest there.

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The real estate company also said that law firm White & Case LLP will conduct a "fresh review" of its compliance, governance and related party transactions. On Nov. 30 CPI Property said it had started an internal audit and engaged a law firm to review the company's governance procedures, compliance policies and allegations raised by Muddy Waters.

The price of CPI Property's 2027 medium-term note has not yet fully recovered since Muddy Waters' report was published, although shares in CPI Property have recovered initial losses and are up 3.3% since Nov. 21.

Muddy Waters' report detailed four transactions totaling about 441 million euros ($474.38 million) in which it said the cash and real estate accounts "could be misstated" and inflated.

"Muddy Waters went on a fishing expedition, recycling themes that have proven successful for them in the past," CPI Property wrote in its presentation. ($1 = 0.9296 euros) (Reporting by Carolina Mandl; Editing by Susan Fenton)