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.

Taken with a purchase premium of ~80%, it's clear the only winners in this

transaction were Resilient Stable insiders," Viceroy said."Were NEPI to trade

in-line with peers we believe shareholders would face a 25% downside, however,

given the suspected extent of financial misrepresentation, we believe the

company's shares are worth substantially less."

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 report is based on numerous factual errors, misleading information and

false claims," NEPI Rockcastle said."The company is considering taking

measures to hold any parties accountable for presenting misleading

information."

The company's shares fell as much as 16% before closing 14% down at 99.14 rand.

> We are still in the process of analyzing the Viceroy Report on Nepi. Our

initial view is that the report is compelling as the conclusions drawn appear

to be justified. The report echos the concerns we had and continue to have

about the entire Resilient Group.

>

> -- Cy Jacobs (@Cy36ONE) November 28, 2018

> So after failing to drag down Capitec, the short-selling hyenas at Viceroy

are after NepiRock again. As ever, thin on evidence and high on emotive

language such as "massively overstated" and "criminal implications". I don't

own NRP but object to this predatory behaviour. https://t.co/OIs1HP1Gxe

>

> -- Karin Richards (@Richards_Karin) November 28, 2018

> Going through Viceroy's attack on NEPI. Market thrashing the shares. Down

13%. Need company's response to accusations of a disconnect between filings in

Romania and locally published numbers. In meantime investors will choose to

remain cautious. Another let down by Corp SA??

>

> -- David Shapiro (@davidshapiro61) November 28, 2018