Real estate is proving a sure investor bet amid record low and negative interest rates: the Swiss bank is leading the second property listing in Switzerland this year.
Epic is the third initial public offering on Switzerland's stock exchange this year and tellingly, its second real estate-based one. While Ina Invest was spun out of Swiss construction firm Implenia in June, Epic is an actual IPO.
The 16-year-old company plans to soak up as much as 200 million Swiss francs ($219 million) in fresh capital by issuing shares in coming days, it said in a statement on Tuesday. The move, led by UBS, would value Epic at as much as 800 million francs.
UBS' Extra Portion
Zurcher Kantonalbank and Germany's Berenberg nabbed roles as bookrunners in the IPO, which is prices at between 66 and 77 francs a share. Epic assigned UBS an over-allotment of up to ten percent of the issue, which is potentially worth 20 million francs according to the price range.
The Swiss bank is ranked third in equity capital markets at home, behind market leader Credit Suisse as well as ZKB, which led last year's listing of Stadler Rail in Switzerland. Epic is an active manager of a 1.3 billion franc portfolio of properties, mainly along Lake Geneva and as well as greater Zurich.
Major Investors Committed
Its first-half rental income stood at 27.3 million francs, which translates to an annualized yield of 4.2 percent, when including properties it is currently developing. The founders and main shareholders, Chairman Roni Greenbaum and his family as well as director Alfred Alrov, don't plan to sell shares.
The IPO's proceeds are slated for the financing of future acquisitions, funding current developments, general spending and other corporate purposes, and debt redemption and shareholder loans, Epic said.
Unscathed by Corona
A property IPO amidst the corona crisis illustrates how real estate investments have boomed with institutional as well as private investors, who aren't getting the failsafe yields they are accustomed to from bond markets, for example. Massive central bank interventions to cushion from economic shocks have rendered interest rates persistently in low or negative territory.
With the recurring nature of income, real estate companies are filling some of the need. Epic also pledged an «attractive» payout policy, including 2.60 per share this year and more than 80 percent of funds from operations from then on. The company said none of its portfolio properties defaulted since the pandemic's outbreak.
