(Bloomberg) -- Czech real estate billionaire Radovan Vitek is doubling his asset-sale target, in a bid to curb debt after a buying spree that made him one of Europe’s largest landlords.

The global property industry has been in turmoil in the past few years, with high interest rates pressuring valuations and forcing landlords to raise funds by divestments. Vitek’s CPI Property Group SA will need to navigate the turbulent market with a new disposal pipeline worth about €2 billion ($2.1 billion) over the next two years. 

That amount would match sales completed or agreed since 2022 as the company seeks to avoid a credit score downgrade to junk. The conglomerate, which owns a portfolio of mostly offices and retail space valued at €19.5 billion, has been selling non-core assets, such as a hotel group in Croatia and a ski resort in Switzerland. 

The deals have been so far priced at around book value on average, according to Chief Executive Officer David Greenbaum. “We’ve been able to choose things that sell well,” he said in an interview in Prague. “The next €2 billion of disposals is about saving the ratings.”

A former Deutsche Bank AG investment banker, Greenbaum has played a key role in growing the real estate company that he joined in 2018 as chief financial officer. In the era of low interest rates and quantitative easing, he led one of Europe’s most creative bond issuance sprees, tapping markets in multiple currencies and selling green and sustainability debt.

The 46-year-old took over as CEO five months ago. Just hours after his promotion, he had to square off with short seller Carson Block, whose Muddy Waters Capital LLC accused CPIPG of overstating the value of its assets and making unprofitable deals with Vitek. 

While the real estate company categorically rejected the claims, most of its bonds briefly tumbled to all-time lows, with a perpetual hybrid note touching 22 cents on the euro. The bond has since recovered to around 60 cents as more disposals and an equity injection from Vitek outweighed a negative outlook published by S&P Global Ratings in December and a fresh attack from Muddy Waters in January.

Greenbaum said the short seller failed to demonstrate “any systemic problems,” but he saw the episode as a reason to make the company even more transparent. 

“I think we will take things away from the experience that may change the way that we do things as a company,” he said. “And I think that’s healthy.”

One of the largest office owners in Berlin, Prague and Warsaw, CPIPG is focusing on improving debt metrics after the acquisitions of Austrian competitors in 2022 drove its loan-to-value ratio to 52% from 36%.

The new asset sales — mostly in Germany, Austria, Italy and the UK — should help reduce the net LTV toward CPIPG’s preferred level of around 40%. Greenbaum is hoping to preserve the lowest investment-grade rating, which now has a negative outlook from both S&P and Moody’s Investors Service.

Besides divesting individual properties, the company aims to sell a stake in its GSG Berlin subsidiary to Apollo Global Management Inc., which is already CPIPG’s minority shareholder, for as much as €450 million. It’s also in advanced talks with potential minority investors in its Polish and Italian units, according to Greenbaum.

“It would be really cool if we could get a minority equity investment of a couple hundred million euros into Poland,” said the CEO. “It would show a lot of confidence around our portfolio.”

Greenbaum said that while such equity deals would show CPIPG’s ability to fund itself outside the bond market, they would also further complicate its capital structure.

The company is the majority owner of Vienna-traded S Immo AG and Immofinanz AG, which it bought following years of messy takeover battles among Austrian landlords. CPIPG, which itself is listed in Germany and where Vitek owns about 88%, would ideally become a holding company with full ownership of all of the assets in the longer term, the CEO said. 

“I would also prefer to have investment-grade rated senior unsecured financing predominantly and less secured financing,” said Greenbaum. “That for me is the best, cleanest, simplest capital structure. So I hope we’ll get back there.”

--With assistance from Andrea Dudik, Jack Sidders and Libby Cherry.

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