File picture: James White
File picture: James White

NEPI Rockcastle’s Viceroy headache: Worst case scenario

By Corrie Kruger Time of article published Nov 29, 2018

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JOHANNESBURG – In the latest report released by Viceroy, incredible accusations are made.

The share price of NEPI Rockcastle, dropped by at least 9.87 percent by midday on Wednesday, shortly after the report was released.

The company track record over the last year shows a dramatic drop in value:

  • MARKET CAP – 66.661Bn
  • DAY RANGE on 28 November R10 320 to R11 794
  • 52-WEEK RANGE R10 301 to R22 020
By now investors are well aware of the Viceroy strategy. Investigate, make adverse findings, short the share, and publish the result for the market to drive the share price down to where it reflects value.

If the report is correct and that the results published is not a true reflection of the income and expenses, then perhaps there is more down side.

However, if the numbers as published in the results for the year to June hold true, then the bears are in for a proper hiding. 

  • The Property Portfolio shows some very sound numbers:
  • Vacancy Rate 3.8 percent
  • Collection rate 99.9 percent
  • Cost of Debt 2.3 percent
  • Net Asset Value Growth rate 6 percent
  • 99.4 percent of the Property Portfolio is invested in investment grade properties.
  • 75 percent Unencumbered Assets
  • They operate in 9 CEE countries of Eastern Europe
  • Total gross lettable trading space in excess of 1.8m² 
  • 28 percent loan-to-value ratio
  • Retail sales increased by 7.7 percent from to 2017 to 2018.
  • Investment Grade by Credit Rating Agencies:
  • Baa3 positive outlook from Moody’s
  • BBB stable outlook from Standard & Poor’s
  • BB stable outlook from Fitch

It would take a fool or a gambler to enter into a short sale at this point. The same would be true for an investor to go long at this level, unless they have absolute clarity of the facts. 

It is very disappointing in the light of the Steinhoff debacle that a listed entity with a market capitalisation of R66bn is trading under such a cloud.

Corrie Kruger is an independent correspondent for Business Report.


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