TAG Immobilien AG increases Funds from Operations (FFO) to EUR 19.0 million and net profit to EUR 67.0 million in the third quarter of 2015
DGAP-News: TAG Immobilien AG / Key word(s): Quarter Results
TAG Immobilien AG increases Funds from Operations (FFO) to EUR 19.0 million and net profit to EUR 67.0 million in the third quarter of 2015. Strong performance pushes net asset value (NAV) to EUR 10.38 per share, Loan to-value (LTV) ratio excluding convertible bonds drops to 61.9%.
- Acquisition in early November 2015 of approximately 3,100 residential units in the city of Brandenburg and North Rhine-Westphalia/Lower Saxony with average gross yield above 10%
- Sale of a mixed-use commercial property in Stuttgart at the end of October 2015 for EUR 87.5m, crystallizing a book profit (including valuation gain 30 September 2015) of around EUR 18.0 million
- Significant further vacancy reduction in residential units of the portfolio, from 9.0% at the beginning of the year down to 8.4% in September and 8.1% in October 2015
- Revised FFO guidance for financial year 2015 to currently around EUR 74 million to EUR 75 million, or approximately EUR 0.60 per share based on the weighted number of shares outstanding
- FFO forecast for financial year 2016 of around EUR 84 million to EUR 85 million, or approximately EUR 0.67 per share
- Dividend forecast for 2015 at EUR 0.55 per share, dividend increase to EUR 0.57 per share planned for 2016
Hamburg (5 November 2015) - At the end of Q3 2015, TAG Immobilien AG ('TAG' in the following) had achieved further operational growth in its portfolio, which currently comprises nearly 75,300 units, through rent increases and vacancy reduction. FFO for the first nine months of 2015 is EUR 55.6 million or EUR 0.45 per share (based on the average number of shares outstanding), while total net income was EUR 115.2 million.
By way of a number of targeted property sales, TAG underlines its strategy of capital recycling, i.e. selling at the right time at attractive terms in order to generate proceeds to be deployed for new higher yielding acquisitions. Year to date, nearly 4,300 residential units were acquired at attractive prices in TAG's core regions, while a total of approximately 1,700 units in high-priced markets were sold. Through the sale of its large commercial property in Stuttgart, TAG is able to benefit from the current market environment whilst setting another milestone in implementing its strategy to focus on residential properties.
At EUR 64.5 million, rental income in Q3 2015 was roughly on par with the previous two quarters (EUR 64.1 million in Q1 and EUR 64.8 million in Q2). Due to the successful vacancy reduction and lower maintenance costs, net rental income was EUR 52.3 million, up from EUR 51.5 million in the previous quarter. The group-wide vacancy rate in the residential units of the portfolio was significantly improved from 9.0% at the beginning of the year to 8.4% in September 2015 and 8.1% in October 2015. Once again, vacancy reduction was steepest in Salzgitter, where vacancy has been brought down by more than 2 percentage points since the beginning of the year, from 15.5% to 13.4% in September and 13.1% in October 2015. Like-for-like rental growth over the past twelve months in TAG's residential units was 1.5%; taking into account the effects of the vacancy reduction, overall rental growth on a like-for-like basis was 2.6% per year. Earnings before taxes (EBT) amounted to EUR 143.8 at the end of Q3 2015, compared to EUR 82.9 million for the same period in the previous year. This significant increase is mainly due to strong net revenues from sales of EUR 12.1 million (prior-year period: EUR -0.6 million) and higher valuation gains of EUR 94.1 million (prior-year period: EUR 51.5 million), most of which result from the annual revaluation carried out as of 30 September 2015. Group net income at the end of the third quarter 2015 was EUR 115.2 million (prior-year period: EUR 63.5 million).
FFO (FFO I without sales) at the end of the third quarter 2015 came to EUR 19.0 million, after EUR 18.6 million and EUR 18.1 million in the previous two quarters. At 61.9% and 63.9% (including convertible bonds), the LTV ratio was significantly below the 63.2% and 65.7% at 30 June 2015. As a result of the strong net income, NAV per share increased to EUR 10.38 at 30 September 2015, compared to EUR 9.78 at 30 June 2015.
Acquisition of approximately 3,100 residential units in two transactions in November 2015
At the beginning of November 2015, TAG acquired approximately 1,800 apartments in Brandenburg an der Havel for a purchase price of around EUR 41.5 million. The annual net cold rent is about EUR 4.1 million. The portfolio, with a rentable area of approximately 97,200 m² and a vacancy rate of around 18.6%, was acquired by means of an asset deal. The value-add potential is to be exploited in the years ahead through targeted investments and asset management concepts. Due to the existing good local infrastructure, TAG is able to efficiently manage and develop the portfolio, which was taken over from complex ownership and administrative structures. The transfer of ownership rights, benefits and obligations is scheduled for 31 December 2015.
Also in early November 2015, a portfolio in North Rhine Westphalia and Lower Saxony with around 1,300 units and a rentable area of around 84,600 m² was acquired at a purchase price of about EUR 36.75 million as part of an asset deal. The portfolio's current annual net cold rent is approximately EUR 4.0 million. The residential units are mainly concentrated around the cities of Bochum, Eschweiler and Goslar. The current vacancy rate is approximately 11.3%. The transfer of ownership rights, benefits and obligations is scheduled for 31 December 2015.
TAG sells commercial property in Stuttgart at the end of October 2015
In late October 2015, a contract for the sale of a mixed-use commercial complex in Stuttgart that TAG developed and built in 2010 was signed with an institutional investor following a structured bidding process. The sale is structured as a share deal and reflects a property value of EUR 87.5 million.
The transfer of ownership rights, benefits and obligations has been agreed for 31 December 2015. Even after accounting for EUR 10.3 million of profit from the annual revaluation recorded on 30 September 2015, TAG expects to realize an additional book profit from the sale, net of transaction costs and before taxes, of approximately EUR 7.5 million. After deducting bank liabilities transferred with the sale, net cash proceeds, net of transaction costs and before taxes, amount to approximately EUR 40.0 million.
By selling this almost fully let property, which accommodates a hotel as well as residential, retail, office and restaurant space, generating annual rental income of around EUR 4.1 million, TAG is consequently pursuing its focus on the management of residential property in the TAG core regions.
FFO and dividend forecast for 2015 and 2016
As a result of the acquisitions and sales of financial year 2015, that lead to a shift of approximately EUR 3 million in profits to the following year due to delayed closing dates of the transactions, as well as around EUR 1 million higher cash taxes due to higher than expected net revenues from Single Unit Sales and an effect of approximately EUR 1.5 million from a temporarily reduced net rental income margin, which we expect to be compensated by the current strong vacancy reduction in the following year, TAG expects FFO (FFO I without sales) of around EUR 74 million to EUR 75 million for the 2015 financial year compared to previously around EUR 79.5 million to EUR 81.8 million. Based on the weighted number of shares outstanding, this corresponds to an increase in FFO per share from EUR 0.58 in the previous year to currently around EUR 0.60. As a result, a significant increase in FFO to approximately EUR 84 million to EUR 85 million is expected for financial year 2016. Based on the current number of shares at 30 September 2015, this corresponds to a further increase in FFO per share to approximately EUR 0.67 at that time.
Following a dividend payment of EUR 0.50 per share for 2014, it is planned to increase the dividend to EUR 0.55 per share for financial year 2015, with a further increase to EUR 0.57 per share planned for 2016.
"The acquisitions signed at the beginning of November 2015 will further increase the return of our portfolio. At the same time, by selling the commercial property in Stuttgart at a very attractive price, we reconfirm our strategy to focus on residential real estate. Against the background of these transactions which add to the strength of our operating business, we will be able to expand our already attractive dividend payments on a sustainable basis," says Martin Thiel, Chief Financial Officer of TAG Immobilien AG.
For details, please refer to the quarterly report published today, September 30, 2015 at http://www.tag-ag.com/en/investor-relations/financial-reports/interim-reports.
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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|