TAG Immobilien AG TAG approves extensive share buy-back - Plans to move Rolf Elgeti from Executive Board to Supervisory Board
TAG Immobilien AG / Key word(s): Share Buyback
TAG approves extensive share buy-back - Plans to move Rolf Elgeti from Executive Board to Supervisory Board
Hamburg (11 September 2014) - The Executive Board and Supervisory Board of TAG Immobilien AG ('TAG') - given the company's high cash position and recent developments in the German housing market - today resolved to repurchase own shares worth up to 10% of the share capital. This corresponds to as many as 13,129,831 shares at a price in the range from EUR 8.35 to EUR 9.35 per share.
TAG's transformation into a stable, efficient housing company has been completed. This implies that the task profile for the management has changed. CEO Rolf Elgeti regards his mission as completed and has therefore requested to be released early from his duty as CEO with effect from 31 October 2014. The Supervisory board has accepted his request. Mr Elgeti is prepared to take a seat on the Supervisory Board.
Upon successfully completing the buyback process, TAG will host an extraordinary General Meeting to propose to its shareholders a new authorization for additional share repurchases and - provided more than 25% of shareholders support this - Mr Elgeti's election to the Supervisory Board.
The TAG Executive Board and Supervisory Board today decided to submit to all TAG shareholders a public offer to repurchase for cash as many as 13,129,831 own shares, representing 10% of the share capital, at a price ranging from EUR 8.35 to EUR 9.35 per share. This offer will be executed as a modified 'Dutch auction'. The offer price, which will be the same for all shares, is calculated based on the total number of shares tendered by the shareholders, and the price determined by the shareholders within the offer price range. It is the lowest price within the offer price range correspond to the TAG can purchase up to 13,129,831 shares. The Acceptance Period is currently scheduled to begin on 15 September 2014 and to end on October 14, 2014. TAG has appointed Kempen & Co. N.V. as the settlement agent for the technical implementation of the share buyback, and Kempen & Co. NV and the Close Brothers Bank AG as Information Agent for the offer. The offer document, which is expected to be published in the Federal Gazette on 15 September 2014, the first day of the Acceptance Period, contains additional provisions of the buyback offer. It will also be posted on the company's homepage at www.tag-ag.com/investor-relations.
TAG currently has cash & cash equivalents of more than 250 million euros. Although the company acquired more than 7,000 units in the past twelve months, during the same period, in addition to the commercial portfolio, it also sold residential units at a significant margin above book value, so that TAG will have a strong base of liquidity going forward.
Given the developments observed in the German residential real-estate sector in the past few quarters, the TAG Management Board - as already communicated in previous quarterly reports - has come to believe that the market has now reached a level in some sectors and regions where holding certain assets can no longer be brought into congruence with the cost of equity. The Board is therefore continuously reviewing the sale of selected parts of the portfolio under the premise that the expected selling price is significantly higher than the book values and would therefore increase the NAV per share if realized. In addition, these sales would release disproportionate amounts of equity.
The planned share repurchases are another consequence of the Board's conclusions and intent to continue using the company's capital to create shareholder value. "For several months now, we have observed that as the cycle progresses, the sales opportunities appear ever more attractive," says CEO Rolf Elgeti. "Capital discipline is an important factor for succeeding in the real estate business. We began buying much earlier in this cycle than many of our competitors, in the process creating significant value for our shareholders." Despite a respectable acquisition pipeline, it is becoming increasingly difficult for TAG to reallocate the capital released from sales to new portfolio investments and acquisitions whose pricing appears justified.
Elgeti continues: "Simply put, our capital base is too strong at the moment, and with a dividend yield that is significantly above our marginal costs of interest, a share buyback seems the obvious course of action. It is in line with our company's DNA to recognize at an early stage that investment risks have increased significantly in this phase of the cycle - and then to act on this recognition." Martin Thiel, Chief Financial Officer, adds: "By reducing the capital by 10%, we could also increase our dividend more steeply than planned in the years ahead. Thanks to our long-term and very solid financing, our balance sheet structure would of course remain very strong. At the same time, the share buyback would have an immediate positive effect on our key indicators and would increase shareholder value. This is evident not least from the price range of the announced share buyback, which is aimed at securing a medium-term appreciation in the NAV per share for our shareholders."
TAG also intends to take all appropriate steps necessary with regard to its investment and financing strategy in order to maximize its flexibility for acting on further developments in the current market cycle. The focus is on growth and the sustainability of the value - per share - that is created and will be created for shareholders. The TAG Boards have undertaken not to sell any shares in this buyback programme.
In the event that the share buyback is successfully concluded, TAG will host an Extraordinary General Meeting to create the conditions needed for further potential share repurchases by way of a renewed authorization.
Following a period of high growth and successful integration of acquisitions, the Executive Board now regards TAG as a stable and efficient housing company of sufficient magnitude and with the operational and financial strength to compete effectively. This implies that the task profile for the management has changed. Rolf Elgeti, CEO of TAG, regards his mission as completed and has therefore today requested to be released early from his duty as CEO with effect from 31 October 2014 in order to devote himself to a new professional challenge beyond the publicly listed residential property sector. His duties on the Board will be taken over by his board colleagues Claudia Hoyer, Martin Thiel and Dr Harboe Vaagt.
To be able to continue to rely on Mr Elgeti's strategic expertise for the benefit of TAG, the Supervisory Board supports his move to the Supervisory Board, provided sufficient shareholders support this.
Supervisory Board Chairman Lothar Lanz comments: "Of course I respect Mr Elgeti's decision. The shareholders should take a positive view of his move to the Supervisory Board and support it. My personal wish would be that Mr. Elgeti takes the Chair of the Supervisory Board going forward."
Rolf Elgeti adds: "After more than five very busy years, TAG has firmly established itself on the property and capital markets. A very strong management team has evolved, one that I am personally also very proud of. My three fellow board members are perfectly attuned to each other and do a brilliant job. My thanks go out to all my colleagues and our shareholders for their cooperation and support during the past five years.
Provided a majority of the shareholders approve my election to the Supervisory Board, I look forward to working on this board once again, having already sat on it before my time on the Executive Board. I have invested a great deal of time and passion into TAG's development over the past few years, and would feel privileged to continue to actively support and shape the company going forward."
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|TAG Immobilien AG
|040 380 32 0
|040 380 32 390
|DE0008303504, XS0954227210, DE000A12T101
|830350, A1TNFU, A12T10
|Regulierter Markt in Frankfurt (Prime Standard), München; Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, Stuttgart
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