CPI PROPERTY GROUP - Latest Short Seller Report

EQS-News: CPI PROPERTY GROUP / Key word(s): Real Estate
CPI PROPERTY GROUP - Latest Short Seller Report

04.06.2024 / 23:23 CET/CEST
The issuer is solely responsible for the content of this announcement.

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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


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04.06.2024 CET/CEST Dissemination of a Corporate News, transmitted by EQS
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   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 04.06.2024 CET/CEST