Strong operating performance as at 30 September 2024; growing results expected for 2025; dividend payment to be resumed

PRESS RELEASE

Strong operating performance as at 30 September 2024; growing results expected for 2025; dividend payment to be resumed

• FFO I of EUR 130.5m as at 30 September 2024 almost at prior-year level (-2%); significant increase of adjusted net income from sales in Poland to EUR 38.8m (+39%), causing positive development of FFO II to EUR 167.5m (+2%)
• Total like-for-like rental growth in German portfolio increases to 2.8% (9M 2023: 2.2%); vacancy in residential units in Germany fell below 4% in October 2024
• Rental growth in Poland remains attractive at 3.7% (9M 2023: 12.4%);
  more than 3,000 rental units completed; strong liquidity position enables further investments; c. 10,000 rental units planned by end of 2028, significant EBITDA and earnings growth expected
• Around 1,400 apartments (9M 2023: c. 2,900) sold in Poland in the reporting period, sales volume of EUR 262m (9M 2023: EUR 370m) achieved
• EPRA NTA up 2% in first nine months of 2024 to EUR 18.61 per share,
  LTV reduced to 46.1% (December 31, 2023: 47.0%); valuation result in Germany expected to be balanced at year-end
• Initial guidance for FY 2025: FFO I of EUR 172-176m (+ 1%), adjusted net income from sales in Poland of EUR 61-67m (+31%) and FFO II of EUR 233-243m (+8%); guidance for FY 2024 confirmed at upper end of range in each case
• Dividend payment of EUR 0.40 per share planned for 2024 financial year

Hamburg, 13 November 2024

Strong operating performance in Germany and Poland in first nine months of 2024

As in the two preceding quarters, TAG Immobilien AG (TAG) continued its positive operating performance in the third quarter of 2024. FFO I, which includes the Group’s entire rental business in Germany and Poland, amounted to EUR 130.5m in the nine-month period ended 30 September 2024 (prior-year period: EUR 132.6m). Based on a comparable portfolio (like-for-like), total rental growth of 2.8% (financial year 2023: 2.3%) p.a. was achieved in Germany. Vacancy in the Group’s residential units in Germany fell to 4.1% in the third quarter of 2024, compared with 4.6% as at 30 September 2023; in October 2024, the vacancy rate fell further to 3.9%.

TAG also delivered a successful performance in Poland. Vacancy in the rental portfolio was 3.9% at the reporting date, down from 7.2% at the beginning of the year. Like-for-like rental growth for units that have been on the market for more than a year amounted to 3.7% p.a. as of 30 September 2024, after 12.4% in the same period of the previous year.

In the first nine months of the year, 1,435 apartments were sold in Poland (prior-year period: 2,877). 1,581 apartments (same period of the previous year: 1,502) were handed over to the buyers upon completion. Adjusted net income from sales in Poland, which is a key component of FFO II alongside FFO I, amounted to EUR 38.8m in the first nine months of 2024, compared to EUR 28.0m in the same period of the previous year. As a result, FFO II increased year-on-year from EUR 164.8m to EUR 167.5m. A further increase in earnings in Poland is expected in the fourth quarter of 2024, as the majority of the apartment handovers planned for 2024 will take place in the final weeks of the year.

Further investments in Polish rental portfolio will lead to significant EBITDA and earnings contributions in the future

Following the successful issue of the EUR 500m benchmark bond in August 2024, TAG has a strong liquidity position of c. EUR 670m as of the reporting date. This forms the basis for further investments in the Polish rental portfolio.

As at 30 September 2024, the portfolio intended for rental in Poland comprised 3,039 residential units. The medium-term goal is to have a portfolio of c. 10,000 rental apartments by the end of 2028. Once these residential units have been completed, rental income in Poland is expected to amount to c. EUR 85m, with EBITDA from the rental business of c. EUR 65-70m. Based on the total EBITDA from the rental business in Germany and Poland expected for 2024, this would result in an EBITDA increase of more than 25% from the growth of the Polish portfolio alone.

Claudia Hoyer, COO and Co-CEO of TAG, adds: “The continued high rental demand for our German properties and the excellent performance of our rental and sales activities in Poland give us a positive outlook for this year’s results. Furthermore, we can now increasingly exploit the opportunities for high-yield growth in Poland. We have the financial resources, the land bank, and a very experienced and competent local team to successfully implement our strategy.”

EPRA NTA per share increased, reduction in LTV achieved; roughly balanced valuation result expected in Germany at year-end

Despite the valuation adjustments made in Germany in the first half of 2024, TAG’s good operating results and the resulting strong cash flow led to an increase in EPRA NTA per share to EUR 18.61 as of 30 September 2024 (31 December 2023: EUR 18.31), and a decrease in the loan to value (LTV) ratio to 46.1% (31 December 2023: 47.0%).

Selective property sales in Germany also contributed to the LTV reduction. Sales contracts for 915 apartments were signed between January and September 2024. The cumulative sales prices amounted to EUR 81.0m, which corresponds to an average gross initial yield of 5.2%. The sales generated a roughly balanced sales result of EUR -1.8m.

Other KPIs such as the interest coverage ratio (ICR) and the ratio of net financial debt to adjusted EBITDA remain strong at 6.9 and 8.9 times respectively (4.2 and 12.9 times excluding the Polish sales business).

Though the results of the next property valuation, which will take place on 31 December 2024, are not yet available, a balanced valuation result is expected due to the positive development of the residential property investment markets in Germany in recent months. In Poland, on the other hand, further valuation gains should be realized, as was the case on the last valuation dates.

Guidance for the 2025 financial year show increasing results

The Group confirms its guidance for the current 2024 financial year. Due to the positive performance in the first nine months of 2024, the guidance are expected to be met at the upper end of the respective range.

The initial guidance for the 2025 financial year are as follows:

• FFO I: EUR 172-176m (+1%; 2024e: EUR 170-174m)
• Adjusted net income from sales Poland: EUR 61-67m (+31%; 2024e: EUR 46-52m)
• FFO II: EUR 233-243m (+8%; 2024e: EUR 217-223m)

FFO I is expected to increase slightly in 2025 compared to the previous year. While the operating result from the rental business (adjusted EBITDA) should increase further despite the property sales in Germany in the last two financial years, higher financing costs and income taxes are expected to have the opposite effect. With regard to FFO II, an increase of 8% is assumed in 2025 compared to the previous year, mainly due to a higher adjusted net income from sales in Poland (+31%).

Resumption of the dividend planned for the 2024 financial year

In contrast to the two previous years, in which the dividend was suspended in each case, TAG’s Management Board and Supervisory Board plan to propose a dividend payment of EUR 0.40 per share for the 2024 financial year at the next Annual General Meeting in May 2025. This corresponds to a payout ratio of 40% of FFO I.

Martin Thiel, CFO and Co-CEO of TAG, comments as follows: “The strong performance of the first nine months confirms our guidance for 2024. With the successful placement of our EUR 500m corporate bond in August 2024, TAG reinforced its institutional access to the capital market. At the same time, it was an important step towards the further growth of our Polish rental portfolio. After focusing on refinancing in the last two years, we are now planning to propose a dividend to our shareholders again due to the significantly improved market environment. In our view, a payout ratio of 40% of FFO I strikes a good balance between retaining cash for investments and allowing our shareholders to participate in TAG’s liquidity surpluses.”

Further details on the third quarter of 2024 can be found in the interim statement published today and in a presentation at https://www.tag-ag.com/en/investor-relations.

Key financials at a glance

Contact

TAG Immobilien AG

Dominique Mann

Head of Investor & Public Relations

Phone +49 (0) 40 380 32 305

Fax +49 (0) 40 380 32 388

ir@tag-ag.com