PRESS RELEASE

TAG Immobilien AG achieves another increase in quarterly earnings and forecasts 9% increase in FFO and dividend for 2020

• FFO rises to EUR 41.2m in Q3 2019 after EUR 40.8m in the previous quarter and EUR 37.5m in Q3 2018
• FFO increases 12% year-on-year to EUR 121.5m in the first nine months 2019
• Total like-for-like rental growth of 2.7% p.a. as of 30 September 2019, after 2.6% p.a. in the 2018 financial year
• Vacancy in residential units at 4.9% in September 2019, after 5.2% at the end of the previous quarter and 5.0% at the beginning of the year
• NAV per share at EUR 18.82 (31 December 2018: EUR 17.32)
• LTV continues to decrease to 45.5%, after 47.3% as of 31 December 2018
• FFO forecast for 2020 of EUR 168m to 170m or EUR 1.15 per share
• Dividend forecast for 2020: EUR 0.87 per share

(Hamburg, 30 October 2019)

Strong operative key performance indicators

At EUR 78.6m, the Group's net rent in the third quarter of 2019 was at previous quarter's level of EUR 78.7m, despite the sales that took effect in Q3 2019. Compared to the prior-year period, rents increased by EUR 9.7m or 4.3% in the first nine months of 2019. In addition to the acquisitions that became effective, the good like-for-like rental growth, which amounted to 2.7% p.a. as of 30 September 2019, also contributed to this increase. Excluding the effects of vacancy reduction, like-for-like rental growth amounted to 2.0% p.a. as of 30 September 2019 (2018 financial year: 2.3%).

Net rental income increased to EUR 64.9m in the third quarter of 2019 from EUR 64.4m in Q2 2019 due to slightly lower expenses from property management in the third quarter of 2019. Net rental income for the first nine months of 2019 amounted to EUR 192.9m, compared to EUR 184.9m as at 30 September 2018.

In Q3 2019, vacancy in TAG's residential units reduced by 0.3 percentage points to 4.9%, down from 5.2% in the previous quarter and 5.0% at the beginning of the year, as a result of the successful implementation of modernisation programmes to reduce vacancy. Across the entire portfolio, i.e. including the Group's commercial units and the current financial year's acquisitions that had already become effective, vacancy dropped to 5.2% from 5.3% as of 31 December 2018.

At EUR 19.79 per sqm as of 30 September 2019, total investment - maintenance and modernisation cost (capex) - in the residential units, projected to a period of 12 months, was on par with the EUR 19.24 per sqm invested in the 2018 financial year.

Besides the aforementioned increase in Funds from Operations (FFO), Adjusted Funds from Operations (AFFO), i.e. FFO after deduction of all capex, increased in the first nine months of 2019 to EUR 74.6m after EUR 66.3m at 30 September 2018. Net income for the first nine months of 2019 amounted to EUR 267.9m, compared to EUR 248.6m in the prior-year period.

Net asset value (NAV) per share increased to EUR 18.82 at 30 September 2019, after EUR 17.32 at the end of 2018. Excluding the dividend of EUR 0.75 per share paid to shareholders in Q2 2019, NAV growth was nearly 13%.

The loan-to-value (LTV) debt ratio reduced to 45.5%, after 46.2% at the end of the previous quarter and 47.3% at the end of the previous year. The average interest rate for total financial debt continued its downward trend, falling to just 1.76% at 30 September 2019, after 1.92% at year-end 2018. The average remaining maturity of total financial debt as of 30 September 2019 remained unchanged at a high level at 7.3 years (31 December 2018: 8.1 years).

Acquisitions and disposals during the 2019 financial year to date

In the 2019 financial year to date, 1,331 residential units have been acquired at a total purchase price of EUR 50.1m in various transactions in Thuringia, Saxony-Anhalt, and Mecklenburg-Western Pomerania. These acquisitions have an average vacancy rate of c. 11%. The average acquisition multiplier was 12.1 times the current annual net rent, which corresponds to an initial gross yield of 8.3%. These transactions are expected to close until the end of the current financial year.

On the disposal side, 279 residential units, most of which are no part of TAG's long-term core portfolio due to their location, were sold for a price of EUR 10.0m and a book profit of EUR 0.6m in the nine-month period ended 30 September 2019.

FFO and dividend forecast for 2020

The FFO and dividend forecast for the financial year 2020 published today is as follows:

• FFO 2020: EUR 168m-170m (2019 forecast: EUR 154m-156 Mio.)
• FFO per share 2020: EUR 1.15 (2019 forecast: EUR 1.06)
• Dividend per share for 2020: EUR 0.87 (forecast for 2019: EUR 0.80)

Compared to the forecast for the 2019 financial year, which remains unchanged, this leads to an expected increase in FFO of around EUR 14.0m. The main reason for this increase, which also includes a positive effect of around EUR 2.4m from new IFRS accounting rules on leases, is the increase in rental income of around EUR 13.3m expected for the 2020 financial year.

Martin Thiel, CFO of TAG, commented: "We expect a significant 9% year-on-year increase in FFO and dividend from 2019 to 2020, based on the positive operational developments in rent and vacancy. Our business model offers our tenants affordable as well as attractive homes in neighbourhoods under our long-term management, including B locations and especially Eastern Germany. This is also in the best interests of our shareholders, to whom we announce a further increase in the dividend for the 2020 financial year, to EUR 0.87 per share."

Further details regarding the third quarter of 2019 can be found in the Interim Statement published at https://www.tag-ag.com/en/investor-relations/financial-statements/quarterly-reports/.

Press enquiries:
TAG Immobilien AG
Dominique Mann
Head of Investor & Public Relations
Phone +49 (0) 40 380 32 0
Fax +49 (0) 40 380 32 390
[email protected]