TAG Immobilien AG accelerates vacancy reduction, generates first-half FFO of EUR 41.7 million with good operating results, and reconfirms its FFO forecast of EUR 90 million for the full year 2014

TAG Immobilien AG / Key word(s): Quarter Results

07.08.2014 / 07:30


TAG Immobilien AG accelerates vacancy reduction, generates first-half FFO of EUR 41.7 million with good operating results, and reconfirms its FFO forecast of EUR 90 million for the full year 2014

- Further vacancy reduction across the entire residential portfolio

- Vacancy in Salzgitter significantly reduced again

- Further success in growing rents and rental profit

- Sale of TAG Gewerbeimmobilien GmbH finalises complete focus on the residential segment and reduces LTV

- Funds from Operations (FFO I) in H1 2014 total EUR 41.7 million

Hamburg (7 August 2014) - In the first half of 2014 TAG Immobilien AG ("TAG") achieved profitability as planned in its portfolio - which currently consists of around 74,500 units - by increasing rents and reducing vacancy. The sale of TAG Gewerbeimmobilien GmbH at the end of May 2014 finalised the company's complete focus on the residential segment. The good operating results reconfirm the FFO I forecast of EUR 90 million for the full year 2014. For the rest of the year, the focus will be on integrating the two newly acquired portfolios so that rental income and FFO I can be further increased and further boost profits in the second half.

Total rental revenues rose from EUR 125.6 million in the first half of 2013 to EUR 130.5 million in H1 2014. With respect to continuing operations, which almost exclusively involve residential property, rental income increased from EUR 115.1 million in the previous year to EUR 122.0 million. This results in a rental income of EUR 100.5 million as of 30 June 2014 compared to EUR 90.9 million in the previous year. As in the previous quarters, net rental profit increased more strongly than rental income - by more than 10% - demonstrating both the efficiency of TAG's inventory management and its solid cost structure.

Group-wide vacancy in the residential sector improved slightly to 8.7% at the end of June 2014 compared to 8.8% at the end of 2013, even though the new portfolio acquired in December 2013 had a much higher vacancy rate than the Group average (12.6%). It is particularly gratifying that the vacancy rate in Salzgitter was lowered once again. Following a 0.6% improvement in the first quarter, the vacancy rate in this region was further reduced by 0.7% to 17.3% at 30 June 2014. This underscores the positive trend being set with the right rental concepts in Salzgitter. Average actual net rent per square meter in the Group's residential portfolio also increased slightly to EUR 5.06 at the end of the second quarter (EUR 5.04 at year-end). This was primarily due to higher new leases, as by the end of June 2014 no significant rent increases had been made in the inventory. Organic rental growth in the core portfolio across all TAG Group regions was about 1% for the first half of the year, or 2% if extrapolated for the full year.

At the end of the second quarter 2014, earnings before taxes (EBT) from the continued residential real-estate business came to EUR 26.0 million after EUR 21.7 million in the same period last year. Net interest income in the continued business in the first half of 2014 was EUR -49.2 million, slightly below last year's level (EUR -46.8 million). Net profit as of the end of the second quarter 2014 for the group was EUR 14.2 million (previous year EUR 26.4 million).

Funds from Operations (FFO) as an indicator of operating performance profitability amounted to EUR 41.7 million at the end of the first half of 2014 excluding sales (FFO I) - or EUR 49.3 million including liquidity from property sales (FFO II).

The balance sheet total was down slightly from EUR 3.763 billion at year-end 2013 to EUR 3.686 billion at 30 June 2014. Parallel to this, the real estate volume at the end of Q2 2014 was EUR 3.347 billion. The equity ratio remained unchanged at 30% at 31 December 2013 and the LTV (Loan to Value) ratio was reduced to 61.5% compared to the end of the year (62.1%). After a tax-free dividend of EUR 0.35 per share, NAV (Net Asset Value) was EUR 9.17 at the end of the second quarter 2014, versus EUR 9.45 at year-end 2013.

At a strategic level, a complete focus on the residential segment was achieved through the sale of an 80% stake in TAG Gewerbeimmobilien GmbH in late May 2014. Partly due to this sale, but also by the placement of another EUR 125 million corporate bond in June 2014, about EUR 250 million in cash and cash equivalents are now available and can be used among other things for new acquisitions in future.

"Based on the continued strong operating results through successful vacancy reduction and rising rental income, we reconfirm our FFO forecast of EUR 90 million for the full year 2014 despite the disposal of our commercial real estate business. The integration of around 4,000 units in Thuringia and Saxony, which will be merge into the business at the beginning of the third quarter, will provide a strong boost in achieving this goal," said Martin Thiel, Chief Financial Officer of TAG Immobilien AG.

For details, please refer to the quarterly report to 30 June 2014, published today, at http://www.tag-ag.com/en/investor-relations/financial-reports/interim-reports.

Press enquiries:
TAG Immobilien AG
Head of Investor & Public Relations
Dominique Mann
Phone +49 (0) 40 380 32 0
Fax +49 (0) 40 380 32 390

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Company:TAG Immobilien AG
Steckelhörn 5
20457 Hamburg
Phone:040 380 32 0
Fax:040 380 32 390
ISIN:DE0008303504, XS0954227210, DE000A12T101
WKN:830350, A1TNFU, A12T10
Listed:Regulierter Markt in Frankfurt (Prime Standard), München; Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, Stuttgart
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