(Bloomberg) -- CPI Property Group pushed back against accusations from short seller Muddy Waters, saying it has never obscured its dealings with its Czech billionaire owner or other related parties.

Last month, Carson Block’s Muddy Waters said it was shorting CPI’s credit, claiming the central and east European landlord was overstating the value of assets among other allegations. The issuer’s notes tumbled on the news, but recovered ground in past weeks.

“Muddy Waters attempted to create an impression that CPIPG was hiding related party transactions and overstating valuations without any basis,” the landlord said in a presentation on Friday. “Each of Muddy Waters’ allegations against CPIPG can be explained by a careful review of the facts.” 

CPI, whose portfolio includes properties in the Czech Republic, Germany and Poland, is the latest in a string of European real estate companies targeted by short sellers, including Vivion Investments Sarl, Germany’s Adler Group and Sweden’s Samhallsbyggnadsbolaget i Norden AB. 

‘Fishing Expedition’

Muddy Waters alleged that CPI’s Czech owner Radovan Vitek had benefited from undisclosed related-party transactions including two land portfolios that the company sold and bought back at a higher price. In its presentation, CPI said the 2014 sale was not to a related entity and that the price had increased in part due to the prospect of obtaining building permits. 

CPI highlighted a typo in its 2021 full-year report which had created “some confusion,” prompting Muddy Waters to miscalculate the price for a different transaction. The landlord also said that all of its valuations had been conducted annually by third parties. 

Since the shock of the short seller’s report, CPI notes issued have gradually recovered as bond investors welcomed signs of progress on asset disposals and debt repayments, as well as potential further support from Vitek, in third-quarter results. 

CPI said on Friday that Muddy Waters has indicated that a second part of their report would be published “soon,” after which the landlord would host a webcast presenting its response. 

“CPIPG is committed to strong corporate governance,” it said. “Muddy Waters went on a fishing expedition, recycling themes that have proven successful for them in the past.”

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