Last week, EPH announced that the bulding permit for its Tegernsee project has been granted. This marks an important milestone, as it was the key condition precedent of the February term sheet, so signing of the final purchase agreement is expected shortly, with implementation to follow immediately. The project is partly financed through the new secured bond, whose security package includes the shares of the Tegernsee project company. The project moves from agreement in principle to a permitted site, which is a clear de-risking step.
300 bed, 5-star resort project in Burgenland adds nice optionality. Via its 100% subsidiary EPH BGL GmbH, EPH signed purchase agreements with five landowners for a c. 26,363 sqm plot in a well-known wine region. The planned wine, gourmet, golf and spa resort is to be run by an international operator. The total purchase price is just € 263,630 (c. € 10/sqm) and only becomes due once the land is rezoned and a final building permit is granted. Yet, as this is a greenfield development, we do not expect any contribution before FY29/30e. Importantly, EPH can withdraw if no permit exists by 31 December 2030. The structure is textbook capital-light with minimal upfront cash, while the value uplift from rezoning and permitting accrues to EPH but the flip side being the long timeline.
The wider pipeline in a nutshell. With ten projects in Austria and Germany, EPH has built a broad pipeline within three years, led by the 49%-owned Oberndorf resort in the Kitzbühel Alps, where the state and municipality have signalled that the rezoning application can now be filed and an international hotel brand has expressed interest in operating. Three land-for-equity projects (Großglockner, Ossiacher See and Kalkalpen National Park) have signed purchase agreements and already have zoning in place, with sellers' claims of c. € 3m to be contributed against new EPH shares at € 92.50, although closing still depends on assuming or repaying the bank debt on the plots. Further projects include a 300-bed resort in Hochrindl, a 499-bed resort in Vorarlberg that already has a building permit and is paid for with parking spaces rather than cash, and a 200-bed golf resort (Pure Place) on leased land. Entry prices are low, but some projects still hinge on rezoning, permits and operator contracts, so value realisation depends on execution and timing rather than on demand.
Financing. The subscription of the new secured 2026/2033 bond (up to € 50m, 10% coupon, monthly interest payments) runs until 25 November. The offer period of the cash capital increase (up to 142,858 new shares) runs until 30 November. Both measures are intended to fund the further development of the existing projects.
Share price not reflecting operations. The share price has fallen by 89% in the past six months on extremely low trading volume. The same holds true for the two corporate bonds that trade at 61% and 38% respectively. Such moves in an illiquid stock are driven by technical factors and a handful of small orders rather than by fundamentals, so the weakness is not justified in our view. It does not reflect operational performance which, is pointed out above, was highlighted by a couple of positive data points in recent months.
Overall, Tegernsee shows tangible progress, while Burgenland adds a very cheap land option with significant upside after rezoning. The wider pipeline offers visibility, with execution and permitting as the key variables. We reiterate our BUY rating with a PT of € 83 (old: € 102) based on DCF.
ISIN: AT0000A34DM3