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EQS-News: CPI PROPERTY GROUP / Key word(s): Real Estate
CPI PROPERTY GROUP - Latest Short Seller Report
2024-06-04 / 23:23 CET/CEST
The issuer is solely responsible for the content of this announcement.
CPI Property Group
(société anonyme)
40, rue de la Vallée
L-2661 Luxembourg
R.C.S. Luxembourg: B
102 254
Press Release - Corporate News
Luxembourg, 4 June 2024
CPI PROPERTY GROUP - Latest Short Seller Report
CPI PROPERTY GROUP ("CPIPG" or the "Group") has prepared a response to the latest report by our short seller.
Similar to the multiple reports published previously, the latest report is of poor quality. CPIPG clearly sees that our
short seller needs to make money and is willing to write anything to damage the Group's reputation. False statements,
photos of our primary shareholder's teenage daughters, apparently nothing is off limits.
This time, our short seller focused on last year's contribution of assets in Dubai by our primary shareholder. Because
the Dubai transaction took place after the short-seller's initial misguided attack, CPIPG anticipated that we would
receive questions. Hence, the transaction was subjected to extra layers of scrutiny and review.
Background
As outlined in CPIPG's first response to the short seller in December 2023, Radovan Vítek contributed around EUR1.4
billion to CPIPG on a net basis between 2013 and 2022. Since the Group was founded more than 30 years ago, consistent
with the practices of other closely held companies, CPIPG has provided loans to our shareholder, which were regularly
repaid with proceeds from annual share buybacks or through asset contributions. All the loans were accurately
disclosed, and the topic was regularly discussed with our banks, bondholders, and other stakeholders.
CPIPG understands that the practice of providing shareholder loans is not ideal for a company of our size and scale of
public market activity. Therefore, the Group has committed to ending the practice and plans to rely only on share
buybacks going forward.
In Q4 2023, CPIPG approached our shareholder about a capital contribution to strengthen the Group's balance sheet and
repay loans before year-end. Radovan Vítek proposed the contribution of the Dubai assets, which were acquired over the
past few years as a personal investment. From a business perspective, CPIPG believed the assets had excellent potential
for both quick sales and long-term price appreciation, considering the vibrant demand for luxury homes in the UAE.
Valuation and Disclosure
The valuation of the Dubai properties was subjected to multiple levels of scrutiny. The first level of valuation was
conducted by Cavendish Maxwell, which is a highly respected expert in the UAE, in accordance with the RICS Red Book
Global Standards. PwC reviewed the transaction, and Dentons provided legal advice. Finally, as an extra step the Group
received an initial valuation from CBRE that was consistent with the original. The transaction was then reviewed and
approved by CPIPG's board of directors.
CPIPG disclosed that the properties were in various stages of development and that progress payments were being made.
The valuation was based on recent sales of comparable units and was conducted on a net basis, e.g., net of any future
capital expenditure required to complete the units. On that basis, CPIPG calculated that the EUR273m acquisition price
represented a 22% discount to a net valuation of EUR349 million, generating equity of EUR76 million. However, CPIPG decided
to record a more conservative valuation of EUR298 million for year-end 2023, meaning that the transaction generated
equity of EUR25 million.
The total expected capital expenditure associated with the Dubai assets is EUR233 million. Approximately EUR50 million per
year is scheduled in 2024 and 2025, about EUR120 million at the end of 2026, and the balance in 2027. As capital
expenditure is spent, the value of the properties would naturally increase. The properties can be sold prior to
completion (e.g., before the capital expenditure is spent) or after completion.
Notably, capital expenditure related to the Dubai assets can be self-funded via sales of completed Dubai assets or
through loans. CPIPG has already engaged in discussions with several UAE banks about financing the remaining payments
with either a conventional or Islamic loan.
The Group's total capital expenditure was EUR376 million in 2023 and EUR382m in 2022. Future levels of capital expenditures
should not deviate significantly from the past. Historically, about 25-30% of the Group's capital expenditures related
to maintenance (e.g., repairing basic fixtures), about 30% was for refurbishment (including investments in
environmental performance), with the remaining 40-45% for new development (partly for sale). In general, most new
developments of the Group are fully financed with development loans from local banks.
Our short seller appears unable to differentiate between debt and capital expenditures. Future payment obligations are
included as capital expenditures contracted (see Note 9 of CPIPG's 2023 Financial Statements), in line with IFRS
accounting standards. The book value reflects the deduction of committed capital expenditure from the gross development
value, and thus future payments are not considered debt. Finally, the Dubai assets were reported as "investment
property" in the development segment of CPIPG's 2023 management report.
Recent Sales
CPIPG recently completed the sale of one of the smaller completed units, The Address Residence at Sky View, above book
value (sale price of AED25.5 million or EUR6.3 million, relative to the book value of EUR5.8 million). CPIPG expects to
announce additional sales in the coming months.
For further information, please contact:
Investor Relations
Moritz Mayer
m.mayer@cpipg.com
For more on CPI Property Group, visit our website: www.cpipg.com
Follow us on X (CPIPG_SA) and LinkedIn
2024-06-04 CET/CEST Dissemination of a Corporate News, transmitted by EQS News - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
The EQS Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.

Archive at www.eqs-news.com  
Language:     English 
Company:      CPI PROPERTY GROUP 

40, rue de la Vallée
L-2661 Luxembourg
Luxemburg

Phone:        +352 264 767 1 
Fax:          +352 264 767 67 
E-mail:       contact@cpipg.com 
Internet:     www.cpipg.com 
ISIN:         LU0251710041 
WKN:          A0JL4D 
Listed:       Regulated Market in Frankfurt (General Standard); Regulated Unofficial Market in Dusseldorf, Stuttgart 
EQS News ID:  1918047 

End of News EQS News Service
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1918047 2024-06-04 CET/CEST

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END) Dow Jones Newswires

June 04, 2024 17:23 ET (21:23 GMT)