TAG Immobilien AG reports strong results in Q3 2017 - FFO forecast to increase by 13% to EUR 135-137 million and in dividend by 11% to EUR 0.70 per share in 2018
TAG Immobilien AG reports strong results in Q3 2017 - FFO forecast to increase by 13% to EUR 135-137 million (EUR 0.93 per share) and in dividend by 11% to EUR 0.70 per share in 2018
- FFO I of EUR 33.9 million in Q3 / EUR 93.2 million in the first nine months of 2017
- Vacancy in the Group's residential units decreased to 5.3% as of 30 September 2017, after 6.1% at the beginning of the year
- Like-for-like rental growth at 3.0% p.a. including effects from vacancy reduction
- Acquisition of around 330 residential units in Chemnitz in October 2017 brings total acquisitions in 2017 to nearly 4,500 residential units
- Placement of the new convertible bond 2017/2022 in the amount of EUR 262.0 million, and repurchase of a tranche of the corporate bond 2013/2018 will lead to significant interest savings in future
Hamburg (07 November 2017) - In the third quarter of 2017, TAG Immobilien AG (TAG) generated funds from operations (FFO I not including net revenue from sales) of EUR 33.9 million, after EUR 30.9 million in the previous quarter and EUR 25.0 million in the same period of the previous year. FFO for the first nine months of 2017 was EUR 93.2 million or EUR 0.64 per share, reflecting a significant increase by 33% and 23%, respectively, over the previous year (EUR 69.9 million or EUR 0.52 per share).
Positive development of operative key figures Rental income increased to EUR 74.7 million in the third quarter of 2017, after EUR 71.8 million in the previous quarter. In addition to operative rental growth, this increase was due to the acquisitions made in the first half of 2017 effective as at 30 June 2017. In the first nine months of 2017, rental income amounted to EUR 218.0 million, compared to EUR 205.2 million in the same period of the previous year. Net rental income increased disproportionately to EUR 183.6 million in the first nine months of 2017 - vs. EUR 164.9 million at 30 September 2016 - as a result of TAG's increased provision of services to tenants.
Group-wide residential unit vacancy in TAG regions fell from 6.1% at the beginning of the year to 5.3% at the end of the third quarter of 2017. Like-for-like rental growth in the last twelve months amounted to 1.9% p.a. as at 30 September 2017. Taking the effects of vacancy reduction into account resulted in attractive overall rental growth of 3.0% p.a. (31 December 2016: 2.0% and 3.7%, respectively). Expenditure for maintenance and capex remained at a very moderate level of EUR 11.02 per sqm up to the end of September 2017 (EUR 15.41 sqm in the full 2016 financial year).
EPRA NAV (Net Asset Value) per share amounted to EUR 11.85 at the end of the third quarter of 2017 after EUR 11.65 in the previous quarter and EUR 11.53 as at 31 December 2016 (or EUR 9.95 on a like-for-like basis for the adjusted property valuation in 2017 in relation to the deduction of transaction costs). The loan-to-value (LTV) ratio decreased slightly to 57.0% as at 30 September 2017 compared to the previous quarter (57.5%) and beginning of the year (57.1%).
Further acquisition of around 330 residential units and successful capital recycling In October 2017, another portfolio with around 330 residential units was acquired in Chemnitz for a purchase price of EUR 11.25 million. The current annual net cold rent is EUR 0.77 million. Vacancy currently stands at 31.4%, offering considerable potential for appreciation. With this in mind, a purchase multiplier of 14.6 on the current annual net cold rent was paid. The transfer of ownership rights, benefits and obligations is expected on 31 December 2017. So in total, nearly 4,500 residential units were acquired in the 2017 financial year, with an average gross initial yield of 8.2% p.a. (12.2 times annual net cold rent).
Also in October 2017, on the disposal side, a portfolio in Berlin with approximately 270 residential units was sold for a price of EUR 36.1 million, which corresponds to 31.1 times the current annual net cold rent. The transfer of ownership rights, benefits and obligations is expected on 31 March 2018. Including sales during the first nine months, the total sales volume in 2017 so far amounts to around 1,600 residential units, which were sold at an average gross initial yield of 5.0% (20.0 times the annual net cold rent).
Placement of a new convertible bond 2017/2022 and repurchase of a tranche of the corporate bond 2013/2018 Immediately following the extensive refinancing of bank loans with a new total volume of EUR 560.7 million (original loan sum: EUR 416.9 million) that was announced with the Q2 2017 results, and the receipt of the Investment Grade rating in August 2017, a new convertible bond with a total nominal value of EUR 262.0 million and a ,maturity of five years was placed on the capital market. The interest coupon on this convertible bond is just 0.625% p.a., despite an effective conversion premium of more than 50% on the reference price of EUR 13.79 per share at the issue date.
Further to this step, in order to further optimise the capital and financing structure, the holders of the corporate bond issued in 2013 with a total nominal value of EUR 310.0 million and an effective interest rate of 4.83% p.a., whose term ends in August 2018, were offered the early repurchase of the corporate bond against cash payment. The offer was accepted in the amount of EUR 116.1 million of the nominal value, so that only EUR 193.9 million of this corporate bond is still outstanding.
Both of these refinancing activities will lead to significant interest savings in the future. The annual interest owed to banks, based on the original loan amount of EUR 416.9 million, has been reduced by approximately EUR 7.4 million. With regard to the refinancing of the corporate bond, the annual interest savings in relation to the volume of the new convertible bond, EUR 262.0 million, is around EUR 11.0 million p.a. These interest rate reductions will successively have a positive impact on the result in 2017 and especially in 2018.
FFO and dividend guidance for 2018 In the 2017 financial year, due to the very positive operating performance, we were already able to raise our guidance twice - in February and August of this year. This remains valid. The new guidance for FFO and dividend in the 2018 financial year is as follows:
- FFO 2018: EUR 135-137 million (guidance 2017: EUR 119-121 million)
- FFO per share 2018: EUR 0.93 (guidance 2017: EUR 0.82)
- Dividend per share for 2018: EUR 0.70 (guidance for 2017: EUR 0.62)
This means that significant increases are again expected in a year-on-year comparison of 2017 and 2018, of +13 % and +11 %, respectively. CFO Martin Thiel explains: "Based on the extremely positive operating rental and vacancy trends, the acquisitions already made in the 2017 financial year, and the refinancing that has now been implemented, we can forecast another significant increase in FFO for the 2018 financial year. In line with our business model, where a high-yield portfolio results in steadily growing cash flows, we can then raise our dividend for 2018 to an attractive EUR 0.70 per share."
Please refer to the Quarterly Report as at 30 September 2017, posted at http://www.tag-ag.com/investor-relations/finanzberichte/quartalsberichte/, for further details.
TAG Immobilien AG Dominique Mann Head of Investor & Public Relations Phone +49 (0) 40 380 32 300 Fax +49 (0) 40 380 32 email@example.com
07.11.2017 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.deLanguage: English Company: TAG Immobilien AG Steckelhörn 5 20457 Hamburg
Germany Phone: 040 380 32 0 Fax: 040 380 32 388 E-mail: firstname.lastname@example.org Internet: http://www.tag-ag.com ISIN: DE0008303504, XS0954227210, DE000A12T101 WKN: 830350, A1TNFU, A12T10 Indices: MDAX Listed: Regulated Market in Frankfurt (Prime Standard), Munich; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Stuttgart, Tradegate Exchange End of News DGAP News Service