TAG Immobilien AG starts with a good operating result and FFO of EUR 18.1 million in the first quarter of 2015

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

2015-05-07 / 07:30


TAG Immobilien AG starts with a good operating result and FFO of EUR 18.1 million in the first quarter of 2015

- Capital recycling strategy systematically continued with the sale of 972 residential units in Berlin at 17x annual net cold rent at the beginning of April 2015

- Further improvements in net rental income and vacancy reduction

- Increase in NAV per share to EUR 10.24

- Dividend of EUR 0.50 per share to be distributed in June 2015

Hamburg (7 May 2015) - TAG Immobilien AG ("TAG") performed favourably in the first quarter of 2015 as planned, with FFO coming to EUR 18.1 million or EUR 0.15 per share. With the continuation of the capital recycling strategy commenced in 2014 - opportunistic selling in high-price markets and targeted acquisitions in TAG's core regions with higher initial returns - TAG is focusing on additionally optimizing portfolio returns. This strategy forms the basis of a further increase in FFO and for additional liquidity for future investments. On 31 March 2015, TAG's real estate portfolio comprised more than 75,000 units.

Total rental revenues came to EUR 64.1 million in the first quarter of 2015 and were thus unchanged over the previous quarter (EUR 64.5 million). However, at EUR 52.7 million, net rental income was substantially up on the fourth quarter of 2014 (EUR 51.4 million). As in the previous quarters, net rental income grew more quickly than rental income. In this connection, it should be noted that the roughly 2,850 units which were acquired at the end of 2014 were not added to TAG's portfolio until February 2015 and did not make any contribution to earnings until that date. At the same time, however, roughly 3,500 units were sold and transferred effective 31 December 2014, meaning that they no longer had any effect on TAG's income statement.

Although the Group-wide vacancy rate notionally rose from 8.1% at the end of 2014 to 8.9% at the end of the first quarter of 2015, this is solely due to the fact that the new acquisitions of 2014, which at 12.4% had a substantially higher vacancy rate than the rest of TAG's portfolio, were included in the calculation for the first time. On a like-for-like basis, the vacancy rate dropped by 0.1 percentage points. It continued to decline after the reporting date, coming to only 8.8% in April 2015. It should also be noted that vacancies in Salzgitter again dropped by 0.5 percentage points to 15.0% in the first quarter of 2015. At EUR 4.98, the Group-wide average net in-place rent per square metre remained stable (EUR 5.00 at the end of 2014), although the net in-place rent of EUR 4.79 from the portfolios acquired in 2014 exerted pressure on the average.

Earnings before taxes (EBT) came to EUR 34.3 million in the first quarter of 2015, up from EUR 8.2 million in the first quarter of the previous year. This sharp rise is chiefly due to net fair value gains of EUR 21.5 million from the revaluation of the newly acquired residential portfolios. Consolidated net profit climbed to EUR 28.0 million in the first quarter of 2015, up from EUR 7.9 million in the first quarter of 2014.

Funds from operations (FFO) as an indicator of operating profitability stood at EUR 18.1 million net of sales (FFO I) at the end of the first quarter of 2015, compared with EUR 18.2 million and EUR 17.1 million in the previous two quarters. AFFO, i.e. FFO I less portfolio investments, rose sharply to EUR 11.3 million, up from EUR 8.3 million and EUR 10.1 million, respectively, in the previous two quarters of last year.

Total assets dropped slightly from EUR 3,734 billion at the end of 2014 to EUR 3,709 billion on 31 March 2015. On the other hand, total real estate volume increased from EUR 3,371 billion to EUR 3,507 billion at the end of the first quarter of 2015 due to the new acquisitions effective 1 February 2015. The equity ratio widened to 28.2% (31 December 2014: 26.9%). The loan-to-value (LTV) ratio came to 62.4% or 65.2% (including convertible bonds) and was thus unchanged over 31 December 2014 (62.2% and 65.3%, respectively). Net asset value (NAV) per share climbed from EUR 10.10 at the end of 2014 to EUR 10.24 at the end of the first quarter of 2015.

In 2015, TAG has been systematically continuing the capital recycling strategy commenced in 2014. At the beginning of April 2015, a total of 972 residential units in the Berlin districts of Marzahn and Hellersdorf were sold at a price of EUR 59.8 million, equivalent to a multiple of around 17 of the current annual net cold rent. In addition to a book profit of around EUR 10 million, the sale will generate net cash proceeds of over EUR 34 million, which will be available for new acquisitions. Ownership rights and obligations under this transaction are expected to be transferred effective 30 June 2015.

"Capital recycling also allows us to further reduce our leverage. Since a number of loans are maturing, the Company has high cash holdings and our convertible bonds are deep in the money, this opens up a number of options for us to reduce leverage while further increasing the return per share," explains Martin Thiel, Chief Financial Officer of TAG Immobilien AG. "Given the strength of our operating earnings, we will be able to propose as planned a dividend of EUR 0.50 per share for approval by the shareholders at the annual general meeting on 19 June 2015. This is equivalent to a dividend yield of more than 4% at the moment for our shareholders."

Further details can be found in the interim report for the quarter ending 31 March 2015 published on today's date at http://www.tag-ag.com/investor-relations/finanzberichte/quartalsberichte

Press inquiries:
TAG Immobilien AG
Head of Investor & Public Relations
Dominique Mann
Tel. +49 (0) 40 380 32 0
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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354087  2015-05-07