NEPI Rockcastle slumps on Viceroy report

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NEPI Rockcastle slumps on Viceroy report

Published Date: 2018-11-29 | Source: Stephen Gunnion | Author: Stephen Gunnion

NEPI Rockcastle slumps on Viceroy report

The activist short-seller has accused the European property investor of overstating profit from its investments in Romania.

Shares in NEPI Rockcastle fell sharply yesterday after activist short-seller Viceroy published a report accusing the group of fraud and manipulation of its accounts. The Central and Eastern European property group has denied the allegations, saying Viceroy has made no approach for clarification.

In a report entitle Horsing around in the Stable, Viceroy said its investigations had uncovered numerous inconsistencies within the group's financial reporting and "major links to an established financial fraud". It claimed the group was fundamentally overpriced when compared with peers, even without taking the inconsistencies into account.

Viceroy shot to prominence in South Africa last December after publishing a report on Steinhoff's financial gymnastics shortly after CEO Markus Jooste quit and the furniture group admitted to holes in its financial accounts. However, a report on Capitec earlier this year failed to hit the mark. Again, it published the Capitec report without engaging with the bank's management.

NEPI Rockcastle is part of the Resilient stable of companies, which also includes Fortress REIT and Greenbay Properties. The companies came under scrutiny earlier this year after investors raised concerns over the premiums they traded at and their cross-shareholdings. They were also accused of insider trading and share price manipulation.

Viceroy said NEPI's merger Rockcastle last year was immediately followed by a massive write-down of subsidiary loans reflecting uncollectible debt from special-purpose vehicles. It said local filings for NEPI's Romanian subsidiaries suggested a massive overstatement of company figures for the past three years.

NEPI Rockcastle said Viceroy had not approached it for comment or given it an opportunity to respond to the allegations prior to the release of the report. It said it had consistently proven transparency towards stakeholders and its disclosures had been prepared in accordance with the "legal requirements and best practices".

The company's shares fell as much as 16% before closing 14% down at R99.14.





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