TAG Immobilien AG records substantial increase in FFO and NAV as at 30 June 2020; already more than 4,200 residential units acquired in the 2020 financial year

DGAP-News: TAG Immobilien AG / Key word(s): Interim Report/Half Year Results
20.08.2020 / 06:55
The issuer is solely responsible for the content of this announcement.


TAG Immobilien AG records substantial increase in FFO and NAV as at 30 June 2020; already more than 4,200 residential units acquired in the 2020 financial year

- FFO increases to EUR 44.5m in Q2 2020 after EUR 42.0m in the previous quarter; FFO growth of more than 9% year-on-year

- NAV per share rises to EUR 20.77 after EUR 20.15 at 31 December 2019 and dividend payment of EUR 0.82

- Business results remain virtually unaffected by the Covid-19 pandemic

- Strong acquisition performance in the course of the financial year to date: contracts for the acquisition of more than 4,200 apartments signed

- TAG's sustainable business model recognised in Sustainalytics ESG risk rating

- Guidance for the 2020 financial year confirmed; possible raise in the course of the year

Hamburg, 20 August 2020

Higher net rental income and net income from services lead to significant increase in funds from operations (FFO)

TAG Immobilien AG's (TAG) net actual rent of the portfolio stood at EUR 80.0m in Q2 2020, up from EUR 79.7m in Q1 2020 and EUR 78.7m in Q2 2019. With net rental income rising at a disproportionately high rate to EUR 67.0m in Q2 2020, up from EUR 66.0m in Q1 2020 and EUR 64.4m in Q2 2019, thanks to reduced operating costs.

As in the previous quarter, there were hardly any rent losses as a result of the Covid-19 pandemic in Q2 2020. As of 30 June 2020, the share of residential tenants who were unable to pay their rent due to loss of income as a result of the Covid-19 pandemic was only around 0.1%. At 5.1% in June 2020, the vacancy rate in TAG's residential units was also only slightly higher than in March 2020 (4.9%) and had already fallen to 5.0% after the reporting period by August 2020.

Due to the Covid-19 pandemic, TAG voluntarily refrained from increasing rents by adjusting them to local comparable rents from March to June 2020. Against this backdrop and as a consequence to a reduced number of tenant changes during the pandemic, total like-for-like rental growth stood at 1.5% p.a. as of 30 June 2020, after 2.4% p.a. at 31 December 2019. Adjusted for the effects of vacancy reduction, rental growth was 1.4% p.a., after 1.9% p.a. as of 31 December 2019.

Beyond the increased net rental income, net income from services made a significant contribution to the operating success. At EUR 6.9m, it represented an increase of EUR 1.1m compared to the previous quarter and of EUR 1.9m compared to Q2 2019.

The combined EUR 2.2m increase in net rental income and net income from services was also the main reason for the EUR 2.5m increase in FFO compared with the previous quarter. At EUR 44.5m (EUR 0.30 per share), FFO increased by over 9% compared to Q2 2019 (EUR 40.8m or EUR 0.28 per share).

Property valuation as at 30 June 2020 leads to valuation gain of 3.3%, half-yearly increase in value of the portfolio by 4.0%

TAG's total real estate portfolio was revalued as at 30 June 2020. The valuation result amounted to EUR 172.4m, after EUR 202.7m in the last half-yearly valuation at 31 December 2019. This represents a valuation gain of 3.3% and, taking into account the modernisation measures of EUR 37.9m in Germany in the first half of the year (previous year: EUR 30.0m), an overall increase of 4.0% in the value of the portfolio.

As a result of the excellent operating and valuation results, net asset value (NAV) per share rose to EUR 20.77 on a fully diluted basis, compared with EUR 20.15 on 31 December 2019, despite the dividend payment of EUR 0.82 per share in May 2020. The loan-to-value (LTV) debt ratio was 44.9% on 30 June 2020, on par with the 44.8% LTV at year-end 2019.

Over 4,200 apartments already acquired in Germany in the 2020 financial year to date

From January to August 2020, a total of 4,218 apartments at a total purchase price of EUR 162.7m were signed in several transactions. These acquisitions are all located in TAG's core regions in Eastern Germany, primarily in Saxony-Anhalt and Saxony. On average, a multiplier of 14.7 times the annual net actual rent was paid as purchase price, which results in an annual gross yield of close to 7%. The average vacancy rate of the acquired portfolios is currently 20.8% and thus offers further value creation potential. All purchases are expected to close at the latest by the end of 2020.

Positive development of business activities and further acquisitions in Poland as well

TAG's business activities in Poland have also been only marginally affected by the Covid-19 pandemic to date. Although the number of apartments sold in the second quarter of 2020 declined to an average of 20 apartments per month (Q1 2020: 68 apartments per month), it was already evident in July - with 57 apartment sales - that this was only a temporary effect.

In line with its business model in Germany, TAG's future business activities in Poland will focus on the long-term rental of apartments as well. In the medium term, i.e. in the next 3 to 5 years, it is planned to build or acquire a total of 8,000 to 10,000 apartments. The construction activity required for this purpose was able to proceed without significant delays even during the Covid-19 pandemic.

As of 30 June 2020, TAG's contractually secured pipeline in Poland comprises around 5,800 apartments, of which c. 4,500 units are located in Wrocław, c. 1,100 units in Poznań and 240 units in Łódź as a new location purchased in the second quarter of 2020.

TAG's Sustainalytics ESG risk rating among the top 5% in the global real estate sector

TAG's specific focus on a sustainable business model is acknowledged and recognised by rating agencies. In a report published on 26 June 2020 by Sustainalytics, a leading environmental, social and governance (ESG) research, ratings and data firm, TAG is ranked 41st out of a total of 905 Real Estate companies analysed worldwide, putting it in the top 5% of all companies in this sector.

Claudia Hoyer, COO of TAG, says: "This rating is a clear recognition of our long-term sustainability policy and the ESG programs embedded across our growth strategy. As a large housing company, we bear a responsibility for society and want to fulfil this responsibility. This is only possible by acting sustainably, especially during the Covid-19 pandemic, which has not been an easy time for our tenants or our staff, either."

Guidance for the 2020 financial year confirmed; possible increase in FFO and dividend forecast in the course of the year

The previously published guidance for the 2020 financial year, in particular the FFO and dividend forecasts of EUR 168-170m (EUR 1.16 per share) and EUR 0.87 per share, remain unchanged for the time being. With respect to TAG's business activities in Poland, sales revenues of EUR 80-85m and an FFO II contribution of EUR 9-11m or EUR 0.07 per share are still expected for the 2020 financial year.

Due to the very successful course of business in the 2020 financial year to date, in which FFO of EUR 86.5 million was already achieved in the first six month, there is a possibility that the FFO and dividend forecast for FY 2020 will be raised - depending, among other things, on the timing of the closing of previous acquisitions in the 2020 financial year. Further details are expected to be published with the interim report for Q3 2020, which will also include the FFO and dividend forecast for the 2021 financial year.

Commenting on the figures for the second quarter of 2020 published today, Martin Thiel, CFO of TAG, said: "We were able to achieve excellent results in the first half of 2020. Our business model, which consists of the long-term letting of affordable housing, has proven stable even during the Covid-19 pandemic. We are particularly pleased that we were very successful on the acquisitions side, both in Germany and Poland, and have thus already managed to secure further profitable growth for our shareholders for the future."

Please refer to the presentation and Interim Report published today at https://www.tag-ag.com/en/investor-relations/financial-statements/quarterly-reports/ for further details on the second quarter of 2020.

Press enquiries:
TAG Immobilien AG
Dominique Mann
Head of Investor & Public Relations
Phone +49 (0) 40 380 32 305
Fax +49 (0) 40 380 32 390

20.08.2020 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
EQS News ID:1120753

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