TAG Immobilien AG reports strong operating results for the 2014 fiscal year, with FFO of EUR 74.5 million and book profits of EUR 43.1 million from sales of residential real estate in the fourth quarter of 2014
TAG Immobilien AG / Key word(s): Final Results
TAG Immobilien AG reports strong operating results for the 2014 fiscal year, with FFO of EUR 74.5 million and book profits of EUR 43.1 million from sales of residential real estate in the fourth quarter of 2014.
- Funds from Operations (FFO I) of EUR 74.5 million or EUR 0.63 per share
- Year-end sales of residential properties led to net inflow of cash of approximately EUR 115 million, and book profits of EUR 43.1 million
- Vacancy in the residential units reduced to 8.1%
- FFO I guidance for 2015 of EUR 0.67 to EUR 0.69 per share is confirmed
- Proposed dividend payment for the 2014 financial year remains unchanged at EUR 0.50 per share
Key operational indicators
The Group's total rental revenues increased from EUR 251.0 million to EUR 257.4 million at year-end 2014, resulting in increased net rental income of EUR 209.5 million (previous year: EUR 199.1 million). With a margin that now exceeds 80%, this demonstrates the portfolio's increased operating profitability. New rentals increased across the Group, so that vacancy in the residential sector- not including acquisitions during the year - fell to 8.1% at year-end (previous year: 8.9%). In Salzgitter, vacancy was reduced from 18.6% to 15.5% within 12 months, and at the end of February vacancy was down to 15.0%. Average actual rents per square metre in the residential units increased over the year from EUR 4.97 to EUR 5.00. This was fuelled especially by higher rents for new rentals, which at year-end averaged EUR 5.23 per square metre. This development confirms the effectiveness of the rental concepts and measures in the TAG regions.
At EUR 83.1 million, the Group's earnings before taxes (EBT) were well above the previous year's EBT (EUR 23.1 million). This increase is mainly due to valuation gains on investment properties totalling EUR 46.8 million (previous year: EUR 15.9 million of valuation loss) as well as the strong proceeds from sales. Meanwhile, earnings were impacted by the complete impairment of the deferred purchase price component from the sale of the commercial real estate portfolio amounting to EUR 35.6 million, and a valuation loss of EUR 8.9 million for a commercial property still owned by the Group. These valuation adjustments represent a deliberately conservative and extensive risk provisioning on the balance.
Net financial income was EUR -118.0 million, slightly below the previous year (EUR -105.7 million), mainly due to prepayment penalties of EUR 10.4 million for bank financing of the residential real estate sold at year-end.
At the end of the fourth quarter of 2014 the Group's consolidated net income was EUR 29.0 million (previous year: EUR 27.0 million). Non-cash deferred tax expenses of EUR 54.1 million had a negative impact on results. The actual tax expense for fiscal 2014 was almost to zero, in contrast to the previous year.
FFO I (funds from operations) as an indicator of operating performance according the new definition introduced in the third quarter of 2014 is EUR 0.63 per share (previous year EUR 0.47). For fiscal 2015, a further increase in FFO I is forecast to EUR 0.67 and EUR 0.69 per share.
Total assets at 31 December 2014 were virtually unchanged at EUR 3.7 billion and the value of the real estate volume at the end of the fourth quarter 2014 was EUR 3.4 billion. The LTV (loan to value) ratio was nearly constant year-on-year at 62.2% (excluding convertible bonds) and 65.3% (with convertible bonds). Despite the dividend payment of EUR 0.35 per share in 2014 and the impairments made at year-end, the NAV (Net Asset Value) per share increased to EUR 10.10 at the end of 2014, after EUR 9.96 at the end of the previous year.
Strategic focus: total return per share and capital recycling through selective sales followed by reinvestment
TAG's corporate strategy centres on total return on a per share basis. In September and October 2014, approximately 10% of the outstanding share capital was purchased in a share buyback at a price of EUR 9.30 per share. This acquisition - below the NAV - created additional value for shareholders, and the own shares can now be flexibly used for other purposes given the sharp rise in their price since the buyback. For instance, in February 2015 TAG acquired 3,600,000 shares of Colonia Real Estate AG in exchange for two million of its own shares, thereby increasing its stake in the company from 79% at 31 December 2014 to currently 87%.
In addition, in 2014 sales opportunities in high-priced regions were systematically exploited and the proceeds reinvested in locations with development potential, at significantly lower purchase prices. In this connection, at the end of 2014 TAG sold 3,500 units in Berlin at 18 and 19 times the annual rent, realising net cash inflow of approximately EUR 115 million. At the same time, approx. 3,150 residential units with higher initial returns were purchased (on average at 10 or 11 times the annual rent). Although these new acquisitions fully offset the decline in FFO from the disposals, after refinancing the new acquisitions, there is still around EUR 65 million of available liquidity that can be used for further acquisitions.
"We will continue on our path as a company of high returns and high dividends, and continually increase the portfolio's profitability. So we reaffirm our FFO guidance of between EUR 0.67 and EUR 0.69 per share for 2015. We will also stick to our attractive dividend policy, and subject to the approval of the Supervisory Board will propose a dividend payment to the shareholders of EUR 0.50 per share," said Martin Thiel, Chief Financial Officer of TAG Immobilien AG.
For details about today's presentation of the preliminary results for 2014, please refer to http://www.tag-ag.com/investor-relations.
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|Company:||TAG Immobilien AG|
|Phone:||040 380 32 0|
|Fax:||040 380 32 390|
|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|
|End of News||DGAP News-Service|