TAG Immobilien AG surpasses the FFO forecast for the 2017 financial year and increases the dividend for 2017

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

22.02.2018 / 07:00
The issuer is solely responsible for the content of this announcement.


TAG Immobilien AG surpasses the FFO forecast for the 2017 financial year and increases the dividend for 2017

- FFO in the 2017 financial year increases by 31% to EUR 127.4m or - per share - by 21% to EUR 0.87 (forecast: EUR 119.0-121.0m / EUR 0.82 per share)

- Strong valuation result at end of 2017 increases NAV per share to EUR 13.80, resulting in LTV of just 52.3%

- Successful capital recycling continued in 2017: nearly 5,000 residential units acquired at an average purchase multiplier of 12.2 times the current annual net cold rent and approximately 2,000 residential units sold at a multiplier of 18.7

- Vacancy in TAG's residential units continues to improve, falling by 1.3 percentage points over the course of 2017 to 4.8% - below 5% for the first time

- Dividend forecast for 2017 to be raised from EUR 0.62 to EUR 0.65 per share

Hamburg (February 22, 2018) - Today TAG Immobilien AG (TAG) publishes preliminary figures from its IFRS consolidated financial statements for the 2017 financial year. With a portfolio that grew by around 3,000 residential units in 2017 to more than 83,000 units, the company delivered a strong operating result, and also benefited from its refinancing activities, some of which already began to have an effect in 2017.

Strong key indicators based on excellent operational performance

Rental income increased from EUR 275.2m in the previous year to EUR 293.0m in the 2017 financial year. This resulted in a significant improvement in net rental income of EUR 235.9m (previous year: EUR 219.4m), which, in addition to the higher net revenue from services of EUR 15.3m (previous year: EUR 7.6m), contributed significantly to the positive earnings performance. Across the Group, new rentals increased in all of the Group's ten regions, so that vacancy in the residential units fell below the 5% mark for the first time at year-end - to 4.8% after 6.1% in the previous year. Vacancy across the total portfolio was 5.8% in December 2017, compared with 6.5% at the end of the previous year. Growth in rents from the Group's residential units amounted to 3.1% p.a. on a like-for-like basis including the effects of vacancy reduction, or 2.0% p.a. without these effects. Compared to the previous year (3.7% and 2.0% p.a.), these increases were comparatively high given the continuing moderate overall investment they necessitated, of just EUR 15.12 per sqm (previous year: EUR 15.41 per sqm).

At EUR 396.5m, Earnings before taxes (EBT) were significantly above the previous year's EBT of EUR 246.7m. Besides the positive operating performance and reduced financing costs (decrease in average cost of debt during the course of 2017 from 3.15% p.a. to 2.34% p.a.), this increase was due to valuation gains on the real estate portfolio, which amounted to EUR 549.7m (previous year: EUR 163.1m) for the full year, before taking into account the adjustment of the valuation to reflect the full deduction of transaction costs. Therefore, the valuation of the real estate portfolio increased by around 14% year-on-year in 2017, which underscores the price dynamics and positive economic development in the regions managed by TAG. All in all, with an average of c. EUR 845 per sqm or 14.1 times the current annual net cold rent, the real estate valuation remains at a conservative level.

In addition to the significantly increased FFO, the AFFO, i.e. FFO minus total expenditure on modernisation, also improved disproportionately by EUR 34.1m year-on-year, to EUR 84.6m (+68%), or - per share - by EUR 0.21 to EUR 0.58 per share (+57%). Consolidated net income increased by 56%, from EUR 200.7m in the previous year to EUR 313.7m in 2017.

At the end of 2017, the net asset value (NAV) per share increased to EUR 13.80 after EUR 11.85 at the end of the previous year, despite the dividend payment of EUR 0.57 per share in May 2017. The loan-to-value (LTV) ratio was down by 4.8 percentage points to 52.3% in 2017, after 57.1% at 31 December 2016.

Already-adjusted FFO forecast 2017 exceeded, dividend proposal increased once again for 2017

In August 2017, the FFO forecast for the full year 2017 had already been lifted by more than 8% to around EUR 119.0-121.0m or EUR 0.82 per share. This assessment has now been significantly exceeded with EUR 127.4m, or EUR 0.87 per share thanks to strong results in Q3 2017 (FFO of EUR 33.9m) and Q4 2017 (FFO of EUR 34.1m). A dividend payment per share of EUR 0.65 (previously EUR 0.62) is now planned for the 2017 financial year, which represents a 14% year-on-year increase and a pay-out ratio of 75% of FFO. A dividend of EUR 0.70 per share is still planned for the 2018 financial year.

Martin Thiel, CFO of TAG, comments: "With our focus on acquisitions in the 'B locations' in Eastern Germany and our strategy of capital recycling, we are achieving attractive returns and strongly growing cash flows. At this point, more than 70% of our total portfolio is in the former East German states. Targeted investment and dedicated neighbourhood management form the basis for our excellent rental and vacancy performance. These operational successes as well as significant effects from 'yield compression' are also reflected in the sharp rise in the valuation result. Against this backdrop, and given the savings from the refinancing measures taken in 2017, we are delighted to be able to propose to our shareholders a 14% year-on-year increase in dividend."

Further details on the results of the 2017 financial year can be found in the presentation published today at https://www.tag-ag.com/en/investor-relations/presentations/. The information above is based on preliminary figures. The final results of the 2017 financial year will be announced with the publication of TAG Immobilien AG's 2017 Annual Report on 22 March 2018.

Press inquiries:
TAG Immobilien AG
Dominique Mann
Head of Investor & Public Relations
Tel. +49 (0) 40 380 32 300, Fax +49 (0) 40 380 32 388

22.02.2018 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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