TAG Immobilien AG: Strong operating business performance in the second quarter of 2022 for TAG Immobilien AG across all metrics. LTV reduced below 45% through capital increase in July 2022
DGAP-News: TAG Immobilien AG / Key word(s): Half Year Results/Quarterly / Interim Statement
Strong operating business performance in the second quarter of 2022 for TAG Immobilien AG across all metrics. LTV reduced below 45% through capital increase in July 2022
Hamburg, 23 August 2022
Key operating figures and earnings trend
Despite a challenging macroeconomic environment, TAG Immobilien (TAG) successfully continued its positive operating performance in the first half of 2022. FFO I (funds from operations excluding net income from sales and excluding the result from operations in Poland) increased to EUR 48.5m in Q2 2022 compared to EUR 47.8m in Q1 2022 and EUR 45.9m in Q2 2021. Considering the entire first half of 2022, FFO I amounted to EUR 96.2m compared to EUR 91.5m in the same period of the previous year, which corresponds to an increase of 5.1%.
Like-for-like rental growth amounted to 1.5% p.a. in Q2 2022 and to 2.0% p.a. including effects from vacancy reduction. Vacancy in the Group's residential units declined to 5.2% in Q2 2022, from 5.7% in March 2021 and 5.5% at the beginning of the year. After the reporting date, the vacancy rate was further reduced and is currently only around 5.0% in August 2022.
TAG continued to perform a valuation of its real estate portfolio on a semi-annual basis. Based on the 30 June 2022 valuation, the total valuation gain was EUR 273m (of which EUR 256m relates to the portfolio in Germany and EUR 17m to the portfolio in Poland, which is still being developed), corresponding to a valuation uplift of 4.0% in the first half of 2022, following 5.2% H1 2021. As a result, TAG's portfolio in Germany is now valued at around EUR 1,270 per sqm, with gross initial yield at 5.1%.
The loan-to-value (LTV) ratio was 47.0% as at 30 June 2022 compared to the year-end 2021 LTV level of 43.2%. Following the EUR 202m capital increase completed post the reporting date in July 2022, LTV has been reduced on a pro forma basis to 44.5%, which is already below the LTV target of c. 45%.
EPRA NTA per share slightly decreased to EUR 25.17 at 30 June 2022 from EUR 25.54 at 31 December 2021, reflecting the dividend payment of EUR 0.93 per share made in May 2022. Pro-forma the capital increase in July 2022 (c. 29m new shares issued at EUR 6.90 per share) EPRA NTA per share stood at EUR 22.11.
Update on Poland operations and materially reduced capex requirements
Amid the ongoing war in the Ukraine, disruptions in global supply chains as well as elevated financing costs, TAG has successfully navigated its operations in Poland and adapted to the new business environment.
The results from operations in Poland amounted to EUR 5.1m in H1 2022 compared to EUR 4.5m in H1 2021. Following the first-time consolidation of ROBYG S.A. at 31 March 2022, TAG expects a strong increase of this result in the second half of the year as the majority of the apartments will be handed over in the third and fourth quarter 2022. Nearly all of these apartments (c. 97% as of 31 July 2022) have been sold already.
In the past months, more than five million Ukrainians have fled to Poland, of which a major part is expected to remain in Poland for the medium to long term. Thus, TAG expects a further growing demand for housing in particular in urban agglomerations such as Warsaw and other major Polish cities. In addition to the c. 500 rental apartments that are already on the market, with a vacancy rate in June 2022 of only 0.6% and an average rent per sqm of more than 10% above the planned level at the start of the renting activities, further rental units will be completed in the next quarters to arrive at a rental portfolio in Poland of c. 2,000 units at YE 2022 and of c. 3,000 units at YE 2023.
In the last weeks, TAG has calibrated the development pipeline in Poland to currently prioritise the build-to-sell assets, thereby generating cash inflows from apartment pre-sales, which counterbalances construction costs for rental apartments. Given the flexibility in the pipeline’s building schedule, the majority of the build-to-hold projects has been shifted backwards into subsequent years. As a result, the capex requirements (net financing needs by TAG) for the operating business in Poland until YE 2023 have been materially reduced to only EUR 50m to EUR 75m in total. This includes all development costs for rental units, which are currently under construction.
EUR 202m rights issue completed in July 2022 and other refinancing activities
On 26 July 2022, TAG announced the successful completion of its capital increase with subscription rights resolved on 8 July 2022 with gross proceeds of EUR 202m and a take-up ratio of 97.7%. With the help of the proceeds from the rights issue and by using existing cash, the bridge facility for the ROBYG acquisition was already reduced from EUR 650m at 30 June 2022 to EUR 310m in July 2022. Furthermore, the maturity of the bridge facility has been extended until January 2024.
The repayment of the remaining amount of EUR 310m is planned to be financed mainly from targeted disposals of residential units in Germany in H2 2022. Additionally, TAG has already started early refinancing activities regarding mortgage secured German bank loans, originally maturing in FY 2023, and expects additional liquidity from these refinancing of c. EUR 120-140m in Q3/Q4 2022.
“Following intensive discussions held in the recent weeks, we highly appreciate the level of support and trust displayed by our shareholders. This capital increase, structured as a rights issue to best address the interests of existing shareholders, was not an easy decision and has been executed in a challenging market environment. Nevertheless, it was an important step for our refinancing plans regarding the ROBYG acquisition and to strengthen our equity base”, says Martin Thiel, CFO of TAG.
Guidance for FY 2022 confirmed; per share metrics adjusted to new number of shares following the capital increase
Based on the good operational development in H1 2022, the forecasts for FY 2022 in absolute amounts remain unchanged:
As a result of the capital increase in July 2022, the number of shares issued increased by 28,990,260 to 175,489,025 shares. Hence, an adjustment of the forecasts on a per share basis is necessary:
The weighted number of shares for the 2022 financial year used to forecast FFO I and FFO II per share is 158,711,763. The current number of shares of 175,489,025 was used for the forecast of the dividend per share
Further details on the second quarter of 2022 can be found in the interim statement published today and in the presentation at www.tag-ag.com/investor-relations.
TAG Immobilien AG
Head of Investor & Public Relations
Phone +49 (0) 40 380 32 305
Fax +49 (0) 40 380 32 390
23.08.2022 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
|Company:||TAG Immobilien AG|
|Phone:||040 380 32 0|
|Fax:||040 380 32 388|
|Listed:||Regulated Market in Frankfurt (Prime Standard), Munich; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Stuttgart, Tradegate Exchange|
|EQS News ID:||1425621|
|End of News||DGAP News Service|