By Nell Mackenzie
LONDON (Reuters) – Hedge fund Muddy Waters is shorting the bonds of Luxembourg-based real estate investment company Vivion Investments, it said in a report published on its website on Wednesday.
Vivion Investments raises money from outside creditors to fund property transactions.
Muddy Waters said in the report that it suspected these real estate portfolios were over-valued and not based on actual occupancy rates.
Approached by Reuters for a comment, Vivion said that it would publish a response in due course.
The price on Vivion’s 3% bond maturing in 2024 fell to 77.356 from 88.228 after the news of the Muddy Waters’ short position.
Graphic: The Vivion 3% bond maturing in 2024, https://www.reuters.com/graphics/GLOBAL-HEDGEFUNDS/lgpdkklrlvo/chart.png The Muddy Waters report alleged that Vivion has exaggerated the occupancy rates of its German properties in order to justify the value of its assets and “the perception that it has strong cash flows.”
Vivion’s UK hotel portfolio was over-valued, the Muddy Waters report also said.
The report also alleges that the controlling shareholders made loans to Vivion and its subsidiaries for varying amounts, but that the loan values in subsidiary filings do not always match the main company, Muddy Waters’ report said.
When the company raised debt from external investors in 2019, this money was used to pay back the loans which, Muddy Waters alleges in its report, were incorrectly valued.
Vivion did not immediately respond to a Reuters request for information on that allegation.
($1 = 0.9400 euros)
(Reporting by Nell Mackenzie; editing by Jason Neely and Jon Boyle)
