TAG Immobilien AG increases FFO for Q3 2016 to EUR 25.0m and NAV per share to EUR 11.34

DGAP-News: TAG Immobilien AG / Key word(s): 9-month figures/Interim Report

2016-11-10 / 07:00
The issuer is solely responsible for the content of this announcement.


TAG Immobilien AG increases FFO (Funds from Operations) for Q3 2016 to EUR 25.0m and NAV (Net Asset Value) per share to EUR 11.34

- Vacancy in residential units reduced by 1.7 percentage points over past twelve months to 6.7% in September 2016

- Like-for-like rental growth at 1.9% p.a. or 3.8% p.a. including the effects of vacancy reduction

- NAV per share increases to EUR 11.34 following revaluation gain of EUR 159.3m in Q3 2016

- Loan to Value (LTV) ratio drops to 56.9% at 30 September 2016,

- FFO guidance for 2017 at EUR 104m to EUR 106m or EUR 0.74 per share (2016 guidance unchanged at EUR 92m to EUR 93m or EUR 0.68 per share)

- Dividend forecast for 2017 an attractive EUR 0.59 per share (unchanged EUR 0.57 per share for 2016)

Hamburg (10 November 2016) - At the end of the third quarter of 2016, TAG Immobilien AG (TAG) reports further operating successes in its portfolio - which currently comprises about 78,300 units - thanks to rent increases and vacancy reduction. FFO for the first nine months of the 2016 financial year amounted to EUR 69.9m or EUR 0.52 per share, after EUR 55.6m or EUR 0.45 per share for the same period of the previous year. In the nine-month period to 30 September 2016, consolidated net profit also rose significantly, to EUR 174.1m vs. EUR 115.2m in the first nine months of the previous year.

Strong operating performance and improvement in NAV per share as a result of the positive valuation result

Rental revenue for the third quarter of 2016 was EUR 69.2m, up again over the previous quarter (EUR 68.3m). Net rental income also improved significantly to EUR 56.5m, after EUR 55.3m in the previous quarter. Across the Group, vacancy in the residential units was reduced by 1.7 percentage points year-on-year, from 8.4% in September 2015 to 6.7% in September 2016. If one eliminates the acquisitions made at the turn of the year 2015/2016, which had higher vacancy than the existing portfolio, total vacancy reduction in the residential units during this period actually amounted to 1.9 percentage points. In the overall portfolio, vacancy dropped to 7.0% in September 2016 after 8.8% in September 2015. Like-for-like rental growth in TAG's residential units was 1.9% in the last twelve months, and 3.8% per annum if the effects from the vacancy reduction are additionally taken into account.

The annual revaluation of the entire real estate portfolio carried out at 30 September 2016 resulted in a valuation gain of EUR 159.3m. This result is well above the previous year's figure of EUR 73.3m, an increase mainly driven by 'yield compression', i.e. a further rise in market prices due to intense competition for residential properties. However, most of the valuation gain is again due to the fact that rents and vacancies in the TAG portfolio have developed better than expected in the last valuation. So TAG's above-expectation operating performance is also reflected in the valuation result.

Interest rate developments also contributed to the successful performance. At 30 September 2016, total cost of debt averaged 3.2%, compared to 3.5% at 31 December 2015. The years ahead will see further interest cost savings, as bank loans totalling EUR 604m become due or can be refinanced when their fixed-interest rate period ends by 31 December 2018. The average interest rate on these bank loans is 3.6%. Given the significantly lower current market rates, a further substantial reduction in cost of debt can be expected. The same is true for the EUR 310m corporate bond due in the 2018 financial year. It has an effective interest rate of 4.8%, which is high by today's standards.

At the end of the third quarter of 2016, consolidated net profit amounted to EUR 174.1m, compared to EUR 115.2m in the prior-year period. From the end of the third quarter of 2016, the Funds from Operations as the main indicator of operating profitability (FFO I excluding sales) amounted to EUR 25.0m after EUR 23.3m and EUR 21.6m respectively in the two preceding quarters. For the entire first nine months of 2016, the FFO rose by more than 25% to EUR 69.9m (previous year: EUR 55.6m).

Thanks to the strong Group result, NAV per share increased to EUR 11.34 at 30 September 2016, compared to EUR 10.40 at 30 June 2016, while the LTV ratio was reduced from 62.4% to 56.9%. Besides the positive valuation result, this was also attributable to the early conversion into equity of the last outstanding convertible bond totalling EUR 74.5m in July and August of this year.

Further significant FFO increase expected, another dividend increase planned for 2017

Due to the very positive performance, the FFO forecast for the 2016 business year was already raised significantly to between EUR 92m and EUR 93m, or EUR 0.68 per share, in August of this year. For the following year 2017, according to the forecast published today, another substantial rise in FFO is expected, to between EUR 104m and EUR 106m, or EUR 0.74 per share. This increase will mainly be driven by the ongoing rental growth and savings on interest costs. At the same time, a further dividend increase to EUR 0.59 per share is planned for the 2017 financial year. The dividend forecast for the year 2016 remains unchanged at EUR 0.57 per share.

"We continue to be optimistic regarding TAG's future economic development. We are seeing strong results from operations, and future refinancing will result in significant further savings on interest costs. And as not only the Housing Market Report for Eastern Germany published by us in October 2016 shows, the strategy that we have been pursuing for years now, of offering affordable housing in the 'B cities', puts us in a fast-increasing market environment. Our shareholders, too, can profit from this through the again planned dividend increase", said Martin Thiel, Chief Financial Officer of TAG Immobilien AG.

For further details, please refer to the quarterly report to 30 September 2016, published today at http://www.tag-ag.com/en/investor-relations/financial-statements/quarterly-reports/.

Press enquiries:
TAG Immobilien AG
Head of Investor & Public Relations
Dominique Mann
Phone +49 (0) 40 380 32 300
Fax +49 (0) 40 380 32 390

2016-11-10 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
ISIN:DE0008303504, XS0954227210, DE000A12T101
WKN:830350, A1TNFU, A12T10
Listed:Regulated Market in Frankfurt (Prime Standard), Munich; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Stuttgart, Tradegate Exchange
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