TAG Immobilien AG lifts FFO forecast for financial year 2016

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

2016-08-11 / 07:00
The issuer is solely responsible for the content of this announcement.


TAG Immobilien AG lifts FFO forecast for financial year 2016

- FFO of EUR 23.3 m in Q2 2016 and EUR 44.9 m in H1 2016 leads to new full-year forecast of EUR 92-93 m (previously EUR 84-85 m) and EUR 0.68 per share (previously EUR 0.67 per share)

- Vacancy in the Group's residential units fell to 7.1% in June 2016 compared to 7.7% at beginning of 2016

- Like-for-like rental growth was 1.9%, or 3.9% including effects of vacancy reduction, after 1.6% or 3.3% at 31 December 2015

- Significant reduction in financing costs and optimisation of the capital structure through successful early conversion of a convertible bond in July 2016

Hamburg (11 August 2016) - TAG Immobilien AG (TAG) generated EUR 23.3 m in FFO after EUR 21.6 m in the preceding quarter. FFO for the entire first half of the year amounted to EUR 44.9 m or EUR 0.35 per share (H1 2015: EUR 36.7 m or EUR 0.30 per share). The extremely positive operating performance has prompted the Management Board to lift its FFO forecast for financial year 2016 from EUR 84-85 m to EUR 92-93 m and EUR 0.68 per share (previously EUR 0.67).

Operational performance show positive development

Total rental revenues in Q2 2016 further increased to EUR 68.3 m compared to the previous quarter (EUR 67.7 m). Net rental income increased to EUR 55.3 m compared to EUR 53.1 m in Q1 2016. Rental revenue for the first six months of 2016 amounted to EUR 136.0 m after EUR 128.9 m in H1 2015; while first-half net rental income rose to EUR 108.4 m in 2016, up from EUR 101.1 m at 30 June 2015.

Vacancy in the Group's residential units fell across the Group - after taking the previous year's acquisitions and sales into account - from 7.7% at the beginning of the year to 7.1% at the end of Q2 2016. After the reporting date, vacancy fell further and in July 2016 was at just 7.0%. It is particularly worth noting that vacancy in the Salzgitter region was significantly reduced again this year, and was down from 12.1% at the beginning of the year to 9.6% in June 2016. Average actual net cold rent per square metre of the residential units amounted to EUR 5.05 at 30 June 2016, reflecting like-for-like rental growth of 1.9% in the previous twelve months (1.3% at 30 June 2015). Taking the effects of the vacancy reduction into account, rental growth was strong at 3.9% compared to 2.3% at 30 June 2015.

Consolidated net income at the end of the first half of 2016 amounted to EUR 40.1 m after EUR 48.3 m at 30 June 2015. This decrease resulted primarily from a reduced first-half valuation result of EUR 4.4 m, after EUR 20.8 m (mainly from new acquisitions) in the same period of the previous year. By contrast, funds from operations (FFO I not including sales), a definitive indicator of operating profitability, increased to EUR 23.3 m at the end of Q2 2016 after EUR 21.6 m in the preceding quarter. First-half FFO increased year-on-year to EUR 44.9 m for H1 2016 after EUR 36.7 m in H1 2015.

FFO forecast is raised

In the second half of 2016, a continuation of the positive operating performance is expected, and thus further increases in FFO; in particular, there will be further reductions in financing costs. Therefore, the FFO forecast for the 2016 financial year can already be increased significantly by around 10% from previously EUR 84-85 m to EUR 92-93 m. On a per-share basis, too - despite the increased number of shares through a share placement in March 2016 and the early conversion of a convertible bond in July 2016 - we expect FFO to increase to EUR 0.68 per share compared to the original forecast of EUR 0.67 per share.

Capital structure strengthened further

TAG increased its equity ratio to 30.1% at 30 June 2016 (31 December 2015: 29.5%). At the balance sheet date, the loan-to-value (LTV) ratio was 60.4% or 62.4% (including convertible bonds), after 60.7% or 62.7% at 31 December 2015.

Thanks to the early conversion of our last outstanding convertible bond (2012/2019 convertible bonds) with a coupon of 5.5% per annum in July 2016, TAG will already be able to reduce its LTV by around 1.7% percentage points in the next quarter. In addition, there are future annual interest cost savings of EUR 4.1 m. 94% of the convertible bond holders accepted the early conversion offer. The remaining EUR 4.4 m nominal value of the bond is expected to be converted into equity in August 2016 with the clean-up call.

After payment of a dividend of EUR 0.55 per share in June 2016, net asset value (NAV) per share amounted to EUR 10.40 at the end of the second quarter 2016, after EUR 10.64 at 31 December 2015.

"The operating performance of recent quarters has been more than positive and exceeded our expectations", says Martin Thiel, Chief Financial Officer of TAG Immobilien AG. "Falling vacancy and rising rents mean growing rental revenues. Due to the historically low interest rates, real-estate financing is more attractive than ever before. Against this backdrop, we are pleased that we can already significantly increase our FFO for financial year 2016. And with the recently completed early conversion of a convertible bond, we have proven our ability to carry out innovative capital market transactions for the benefit of our shareholders."

For details, please refer to the quarterly report to 30 June 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

2016-08-11 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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