Report hits out at Nepi Rockcastle

Nepi Rockcastle shares slumped the most in nine months in Johannesburg after short sellers Viceroy Research accused the real estate fund of overstating its profits from Romania.

Viceroy said in a report published yesterday that it had uncovered “numerous inconsistencies within Nepi Rockcastle’s financial reporting”.

Even without taking those into account, the Isle of Man-based investor is “fundamentally overpriced when compared with peers”, it wrote.

“The report is misrepresenting the figures,” Nepi CFO Mirela Covasa said.

“We are not overstating profits, there are specific accounting reasons for the numbers.”

NEPI’s Romanian portfolio generated pre-tax profit of €284.9 million (about R4.47 billion) in 2017, according to its financial statements.

Yet the assets really operate at annual losses of more than €40 million, according to Viceroy, citing local account filings.

Viceory rose to prominence just over a year ago when it published a report on Steinhoff International just after the company reported accounting irregularities that triggered a share-price collapse.

Nepi shares declined 9.5% to R104.40 as of 12.21pm in Johannesburg, extending the drop for the year to 51%. – Bloomberg

Report misrepresents the figures. Mirela Covasa Nepi Rochcastle CFO