CPI Property Group S.A.(CPI PG)Part 5With Dubai Properties,Vitek "Repaid"CPI's Loan withby Saddling CPI with Off-Balance Sheet DebtMUDDYWATERSJune3,2024RESEARCHMUDDY WATERS RESEARCHDisclaimerPerson.herein.MUDDY WATERS RESEARCH2Introduction to Part V:Vitek's gonna Vitek.In the closing minutes of 2023,CPI PG announced a new acquisition from Radovan Vitek.CPI PGexchanged E273 million of Vitek's personal debt for a portfolio of 20 luxury properties in Dubai held in hisnewly formed company,Rising Falcon Holdings.CPI PG reported that the portfolio was worth E349million.We almost didn't look into this transaction.This was a few weeks after our initial report on CPI PG,andwe considered for a moment that with the increased scrutiny and a new CEO seemingly hoping toestablish credibility,Rising Falcon was probably a clean transaction.But then we remembered that"Vitek's gonna Vitek".The reality is that in "repaying"the loan from CPI PG,we estimate that Vitek has saddled the companywith over ~E220 million in off-balance sheet debt.Our investigators identified 20 properties that theybelieve comprise the Rising Falcon portfolio,the vast majority of which are under construction and shouldrequire significant additional milestone payments.We estimate that Vitek's real cash investment was onlyapproximately ~E154 million inclusive of tax,meaning that he likely pocketed a difference ofapproximately ~E118 million in cash.In short,Vitek extracted cash loans and appears to have repaid withmuch less valuable interests in partially completed apartments and villas,conveying more in unfundedobligations than cash equity-and new CEO David Greenbaum sought to gloss over this behavior.MUDDY WATERS RESEARCHRising Falcon Soaring Bullshit"Repaying"loans by saddling CPI PG with an estimated over E220 million ofprogress payments,enabling Vitek to likely cream another E118 million frombondholders.MUDDY WATERS RESEARCHCPI PG Acquires Rising Falcon from Radovan VivekAt year end 2023,CPI PG announced the transfer of Rising Falcon Holding Ltd to CPI PG in exchange for an offsetof E273 million against Radovan Vitek's personal debt owed to the Group.Rising Falcon is an Abu Dhabi holding company that owns a portfolio of 20 residential properties in Dubai,UAE.CPI PG initially claimed that the properties were "recently valued at E349 million"and the purchase price ofE273 million represented a 22%discount.1Today,CPIPG's subsidiary Endurance Hospitality Finance S.a.r.I ("EHF)entered into an agreement with ourprimary shareholder,Radovan Vitek,concerning the transfer of all the issued share capital of Rising FalconHolding Limited ("Rising Falcon"),an Abu Dhabi Global Market free zone company,to EHF.Rising Falcon owns 20 residential properties in Dubai,United Arab Emirates which were recently valued atEUR 349 million.The purchase price for the Rising Falcon portfolio was EUR 273 million,or a discount ofabout 22%.No cash consideration was paid for the transaction;the purchase price has been offset againstshareholder loans previously provided to Mr.Vitek.As a result,the year-end shareholder loan balance for2023 will show a meaningful reduction versus previous reporting periods.The Group intends to benefitfrom the strong market in Dubai and will gradually dispose of the assets.MUDDY WATERS RESEARCH