Nepi Rockcastle, which is part of the Resilient stable of companies being investigated for share-price manipulation, has bought a mall in Budapest, in a €254m cash deal that positions the company as the largest shopping centre owner in the capital city of Hungary.
The company said on Thursday it had secured a controlling interest in the Mammut shopping centre, which attracts about 15.6-million people a year.
"This is a quality asset in a strong catchment area," said Evan Robins, portfolio manager at Old Mutual Investment Group. "Budapest is a fairly big city."
Nepi, a commercial property investor and developer, has long identified Central and Eastern Europe as its key markets to grow its portfolio, which stood at €5.3bn as of June 2018.
Retail makes up the biggest portion of the portfolio, followed by office and industrial assets.
Listed on the JSE and Euronext Amsterdam, the company already owns shopping centres in Romania, Poland, Bulgaria and Slovakia, among other EU countries.
It has a pipeline development of about €1.3bn, of which €259m was spent by June.
Nepi has said it invests in developments that strengthen the property portfolio and contribute to growth in distributable earnings per share, its key performance measure.
A year ago Nepi acquired the second-largest retail centre in Budapest in a separate €275m transaction. Hungary’s capital city has more than 1.7-million residents, which makes it the most populous and wealthiest city in the country.
Nepi Rockcastle was formed in 2017 out of a merger between Romanian group Nepi and Polish-focused Rockcastle.
Nepi Rockcastle, Fortress and Greenbay, as well as Resilient, are being investigated by the Financial Sector Conduct Authority (FSCA).
Some of SA’s largest institutional investors, such as the Public Investment Corporation, Old Mutual and Coronation Fund Managers, have also called for an independent forensic probe into the matter.
The investigation by the FSCA’s market abuse department is twofold: it is studying possible insider trading and price manipulation in the companies’ shares, as well as false and misleading reporting about the group of companies.
Nepi has lost a third of its value so far in 2018, giving it a market value of R79.7bn.
The investigation and calls for a forensic probe have also negatively affected the overall performance in the listed property index, which is down 25% so far in 2018.