TAG Immobilien AG exceeds FFO forecast for 2018 and increases dividend

DGAP-News: TAG Immobilien AG / Key word(s): Annual Results

06.03.2019 / 06:50
The issuer is solely responsible for the content of this announcement.



TAG Immobilien AG exceeds FFO forecast for 2018 and increases dividend

- FFO increases by more than 15% in 2018, to EUR 146.5m or EUR 1.00 per share (2017: EUR 127.4m or EUR 0.87 per share)

- Increased dividend of EUR 0.75 per share for 2018 proposed to Annual General Meeting, after EUR 0.73 per share (2017: EUR 0.65 per share)

- Strong valuation result at year-end 2018 (+10% year-on-year) increases NAV per share to EUR 17.32; LTV consequently now just 47.3%

- Vacancy in TAG residential units falls below 5% mark again to 4.7% at year-end 2018, total like-for-like rental growth in 2018 at 2.6%

- More than 2,700 residential units acquired in 2018 with an average gross yield of almost 8%

- Second Sustainability Report published in accordance with GRI standard

Hamburg (6 March 2019) - TAG Immobilien AG (TAG) publishes its 2018 Annual Report today. With a portfolio that has grown to over 84,000 units, the company achieved a strong operating result and also benefited from the refinancing measures implemented in 2017 and 2018.

Excellent operating performance accounts for strong financials

The Group's net rents increased from EUR 293.0m in the previous year to EUR 302.2m in 2018, resulting in a strong net rental income of EUR 246.1m (previous year: EUR 236.6m), which along with the increased net income from services of EUR 17.7m (previous year: EUR 14.9m) contributed significantly to the positive operating performance.

The occupancy rate was further increased in almost all regions, with the result that vacancy in the residential units once again fell below the 5% mark at year-end, to 4.7% after 5.3% at the beginning of the financial year. Vacancy across the total portfolio was 5.3% in December 2018, down from 5.8% at year-end 2017. On a like-for-like basis, rental growth in TAG's residential units was 2.6% p.a. including the effects of vacancy reduction, and 2.3% p.a. excluding these effects. So compared with the previous year (3.1% and 2.0% p.a.), these indicators once again reached a high level, while total investments continued to be moderate at an average of EUR 19.24 per sqm (previous year: EUR 15.12 per sqm).

At EUR 542.2m, earnings before taxes (EBT) were significantly higher than the previous year's EBT of EUR 396.5m. Besides the positive operating performance and reduced cost of debt (decline in average cost of debt over the course of 2018 from 2.3% p.a. to 1.9% p.a.), this increase resulted from valuation gains on the real estate portfolio, which totalled EUR 430.0m for the full year (previous year: EUR 293.0m). This represents a 10% year-on-year increase in the value of the real estate portfolio, underlining the price dynamics and positive economic development in the regions managed by TAG. As a result, however, the real estate valuation remains at a conservative level at an average of just c. EUR 940 per sqm or an in-place yield of 6.5%, and thus still offers potential for further appreciation.

Net asset value (NAV) per share increased by 26% to EUR 17.32 at the end of 2018 compared to EUR 13.80 at the end of the previous year, despite the dividend payment of EUR 0.65 per share in May 2018. Due to the strong valuation result, the loan to value (LTV) ratio dropped to 47.3% at year-end 2018, down 5 percentage points year-on-year.

Besides the significant increase in FFO, AFFO, which results from FFO minus the total capex, also improved year-on-year to EUR 88.4m or EUR 0.60 per share (+5%). Consolidated net income increased by 56% from EUR 313.7m in the previous year to EUR 488.2m in 2018.

Another approximately 1,200 residential units were acquired in the fourth quarter of 2018, bringing the total acquisition volume in 2018 to over 2,700 residential units. All the acquisitions were made in regions in Eastern Germany that are already managed by TAG and at an average gross yield of 7.8%, which is still very attractive. On the disposals side, the sale of approximately 1,600 residential units was signed during the year under review. The vast majority of these are non-core assets which, due to their locations, do not form part of TAG's strategic core portfolio and were sold at their book values.

Increased dividend proposal for the 2018 financial year; forecasts for 2019 financial year remain unchanged

Back in August 2018, the FFO and dividend forecasts for the 2018 financial year were increased to EUR 141m to EUR 143m (EUR 0.97 per share) or EUR 0.73 per share due to TAG's very positive business development. At EUR 146.5m or EUR 1.00 per share due to the continuing strong results in Q3 (FFO of EUR 37.5m) and Q4 (FFO of EUR 37.8m) of 2018, this estimate was exceeded once again. A dividend of EUR 0.75 per share is therefore now planned for the 2018 financial year, representing an increase of 15% compared to the previous year and an unchanged pay-out ratio of 75% of FFO.

For the 2019 financial year, the following figures apply unchanged to the forecast published last November:

- FFO: EUR 154m to EUR 156m or EUR 1.06 per share

- Dividend: EUR 0.80 per share

Martin Thiel, CFO of TAG, explains: "As in the previous year, in 2018 we again exceeded our forecasts, which had already been increased during the year. Our business model, which focuses on the long-term management of high-yield properties in so-called 'B locations', especially in Eastern Germany, has proven very successful for years now. Specifically, this will benefit our shareholders in the form of a 15% year-on-year increase in the dividend. Our strategy continues to consist of restoring the attractiveness of portfolios and neighbourhoods for existing and new tenants, in regions that do not receive sufficient attention from many market participants and that suffer from a lack of investment and rising vacancy."

Sustainability Report 2018 published simultaneously with Annual Report 2018

As a complement to the Group's financial reporting, the Sustainability Report - also published today - provides information on non financial aspects that are essential to TAG's business model. Following on from last year's report, TAG provides information on the progress and development of its environmental, economic and social sustainability management, e.g. in Döbeln-Nord, and renovation measures in a neighbourhood in Borsdorf that contribute to resource conservation and climate protection. The present Sustainability Report documents the extent to which measures initiated in the past have been continued and intensified, and what new sustainability targets TAG has set for itself. As in the previous year, the report follows the GRI standards and has been certified by the initiative as being in accordance with the 'Core' option.

Further details on the results and activities of the past financial year can be found in the presentation published today, in the 2018 Annual Report, and in the 2018 Sustainability Report at http://www.tag-ag.com/investor-relations.

Press enquiries:
TAG Immobilien AG
Dominique Mann
Head of Investor & Public Relations
Phone +49 (0) 40 380 32 300, Fax +49 (0) 40 380 32 388

06.03.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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Company:TAG Immobilien AG
Steckelhörn 5
20457 Hamburg
Phone:040 380 32 0
Fax:040 380 32 388
Listed:Regulated Market in Frankfurt (Prime Standard), Munich; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Stuttgart, Tradegate Exchange

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