TAG Immobilien AG reports strong operational successes in vacancy reduction and lowers financing costs long-term in Q2 2015

TAG Immobilien AG / Key word(s): Half Year Results

2015-08-06 / 07:30


TAG Immobilien AG reports strong operational successes in vacancy reduction and lowers financing costs long-term in Q2 2015

- Continued very positive development in reducing vacancy, especially at the Salzgitter location;

- Like-for-like rental growth of 1.3%, or 2.3% including the effects from vacancy reduction;

- Significant reduction in financing costs thanks to conversions and early repayment of bank loans in July 2015

- Payment of a tax-free dividend of EUR 0.50 per share in June 2015 corresponds to attractive dividend yield of around 4.5%.

Hamburg (6 August 2015) - TAG Immobilien AG ('TAG' in the following) reported second-quarter FFO of EUR 18.6 million, after EUR 18.1 million in the previous quarter. FFO for the entire first half of the year amounted to EUR 36.7 million or EUR 0.30 per share. The capital recycling strategy was consistently pursued in the first half of 2015. An opportunistic sale of 972 units in Berlin resulted in a book profit of EUR 10.7 million and net cash proceeds of EUR 34.6 million. At the same time, a total of 1,174 units in TAG's core regions were acquired at attractive prices in the months of May to July 2015.

At EUR 64.8 million, total rental income for the second quarter 2015 was above the previous quarter (EUR 64.1 million). Apart from effects from the rental growth and vacancy reduction, the previous year's acquisitions of around 2,850 units, which came into effect in February 2015, also contributed to this increase. Mostly due to higher maintenance costs compared with the previous quarter, net rental income was EUR 51.5 million, down from EUR 52.7 million in Q1 2015. Rental income for the entire first half of 2015 came to EUR 128.9 after EUR 130.5 million in H1 2014, which still included the commercial portfolio sold in May 2014.

Across the Group, and taking into account the previous year's acquisitions and disposals, vacancy in the residential units decreased from 9.0% at the beginning of 2015 to 8.7% at the end of the second quarter. Vacancy continued to decline after the reporting date, and in July 2015 was at just 8.6%. It is particularly noteworthy that vacancy in Salzgitter was once again significantly reduced in the second quarter of 2015, down from 15.5% at the beginning of the year to 14.6% in June 2015 and 14.0% in July 2015. Average net cold actual rent per square meter across all residential units was EUR 5.00 at 30 June 2015, with like-for-like rental growth of 1.3% over the past twelve months. Taking the effects from the vacancy reduction into account, rental growth was 2.3%.

Group net income at the end of H1 2015 came to EUR 48.3 million after EUR 14.2 million at 30 June 2014. This significant increase is mainly due to strong results from sales totalling EUR 11.3 million (prior-year period EUR - 0.8 million) and the positive valuation results of newly acquired residential portfolios at EUR 21.2 million (prior-year period EUR 6.9 million).

At the end of Q2 2015, Funds from Operations (FFO) as an indicator of operating performance came to EUR 18.6 million not including disposals (FFO I), after EUR 18.1 million in the previous quarter. Taking into account the results from property sales (FFO II) there was a quarter-on-quarter increase from EUR 17.9 million to EUR 30.1 million

TAG's equity ratio at 30 June 2015 increased to 27.5% (31 December 2014: 26.9%). At 63.2% and 65.7% (including convertible bonds), the LTV (Loan to Value) ratio was on par with the levels at 31 December 2014 of 62.2% and 65.3%. NAV (Net Asset Value) per share, following payment of a tax-free dividend of EUR 0.50 to the shareholders, was EUR 9.78 at the end of Q2 2015, after EUR 10.10 at 31 December 2014.

In 2015, TAG has systematically continued the capital recycling strategy adopted in 2014. In May, June and July 2015, real estate portfolios comprising a total of 1,174 residential units in Saxony and Saxony-Anhalt, the city of Brandenburg and on the island of Rügen were purchased for between 7.9 and 11.9 times their current annual net cold rent. The transfer of the newly acquired inventory is expected to occur in Q3 2015. The sale of 972 units in the Marzahn and Hellersdorf districts of Berlin in April this year, at a selling price of EUR 59.8 million or approximately 17 times the current annual net cold rent, resulted in a book profit of EUR 10.7 million at 30 June 2015, and net cash proceeds of EUR 34.6 million. Following these purchases and disposals, TAG's real estate portfolio continues to comprise around 75,000 units.

"By early termination in July 2015 of a convertible bond with an original maturity at the end of this year, that carried interest of 6.5% p.a. and whose book value still amounted to EUR 32.2 million at the beginning of the year, TAG will reduce both its financing costs and its LTV. Also in July 2015, we carried out an early repayment of bank loans with interest rates between 4.0% and 5.4% p.a. in a total volume of around EUR 46.5 million, thereby achieving annual interest savings of approximately EUR 2.1 million. This, coupled with our successful capital recycling strategy, forms the basis for further increasing the return per share for our shareholders," explains Martin Thiel, Chief Financial Officer of TAG Immobilien AG.

Please refer to the Quarterly Report to 30 June 2015, published today, for details: http://www.tag-ag.com/en/investor-relations/financial-reports/interim-reports.

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

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Company:TAG Immobilien AG
Steckelhörn 5
20457 Hamburg
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
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383949  2015-08-06