PRESS RELEASE

After a very successful financial year to date, TAG Immobilien AG is raising its guidance for 2020. 2021 is expected to see a further 5% increase in FFO and dividend per share, to EUR 178-182m and EUR 0.92 respectively.

• FFO growth of more than 8% year-on-year; FFO in Q3 2020 at EUR 44.6m, on par with the previous quarter
• Business results in Germany and Poland remain nearly unaffected by the Covid-19 pandemic
• Raised guidance for the 2020 financial year: FFO to EUR 170-173m (after EUR 168-170m), FFO per share to EUR 1.17 (after EUR 1.16); dividend per share raised by EUR 0.01 to EUR 0.88 (+7% vs. 2019 respectively)
• Guidance for 2021: FFO of EUR 178-182m, FFO per share of EUR 1.23, and dividend per share of EUR 0.92 (+5% vs. 2020 respectively)

Hamburg, 12 November 2020

Good operational rental growth and funds from operations (FFO) up 8% year-on-year

The net actual rent of TAG Immobilien AG (TAG) was EUR 80.1m in the third quarter of 2020, up from EUR 80.0m in Q2 2020 and EUR 78.6m in Q3 2019. The main reason for the increase was operational rental growth. As a result, the net rental income as of 30 September 2020 also improved to EUR 197.8m, compared to EUR 192.9m in the same period of the previous year. In the third quarter of 2020, net rental income was EUR 64.8m compared to EUR 67.0m in Q2 2020 and EUR 64.9m in the same period of the previous year. At EUR 6.3m, the net income from services also made a significant contribution to the operating success, and represented an increase of 5% compared to Q3 2019.

FFO (defined as FFO I without net income from sales), which is currently still calculated solely on the basis of TAG's rental business in Germany, increased by EUR 9.6m or 8% year-on-year in the nine-month period ending 30 September 2020. This increase was due in particular to a EUR 6.8m increase in adjusted EBITDA and a EUR 2.2m decline in cash income taxes.

In the third quarter of 2020 as in the previous quarter, there were hardly any rent losses as a result of the Covid-19 pandemic. As of 30 September 2020, the share of residential tenants who were unable to pay their rent due to loss of income as a result of the Covid-19 pandemic was only around 0.1%. At 4.8% in September 2020, the vacancy rate in TAG's residential units was also already significantly down again compared with June 2020 (5.1%).

Due to the Covid-19 pandemic, TAG voluntarily refrained from increasing rents by adjusting them to the local comparable rent in the period from March to June 2020, and afterwards continued to ensure that tenants' interests were taken into account in the event of Covid-19 related hardship. Against this backdrop and due to a reduced number of tenant changes, during the pandemic, total like-for-like rental growth stood at 1.5% p.a. as of 30 September 2020, vs 2.4% p.a. at 31 December 2019. Adjusted for the effects of vacancy reduction, rental growth stood at 1.4% p.a., after 1.9% p.a. as of 31 December 2019.

Over 4,300 apartments already acquired in Germany in the course of the 2020 financial year to date

In the period from January to October 2020, a total of 4,338 apartments were signed in several transactions, for a total purchase price of EUR 168.7m. The main locations of these acquisitions are all in TAG's core regions in East Germany, primarily in Saxony-Anhalt and Saxony. On average, the purchase price paid was 14.8 times the annual net actual rent, equivalent to an annual gross yield of close to 7%. The average vacancy rate of the acquired portfolios is currently c. 21% and thus offers further potential for value creation. Most of the acquisitions were already closed by October 2020.

Positive development of business activities and further acquisitions in Poland

TAG's business activities in Poland have been only slightly affected by the Covid-19 pandemic to date. Sales increased in the third quarter. Revenues from property sales amounted to EUR 25.3m in Q3 2020, up from EUR 4.4m in the previous quarter. In parallel, sales of 124 (Q2 2020: 61) apartments were signed in the third quarter of 2020.

In line with its business model in Germany, TAG's future business activities in Poland will also focus on the long-term letting of apartments. In the medium term, i.e. the next 3 to 5 years, the company plans to construct or acquire 8,000 to 10,000 apartments. Ongoing construction activity was able to continue without any significant delays even during the Covid-19 pandemic.

As of 30 September 2020, the contractually secured pipeline for the construction of residential units comprises a total of 7,644 units, of which 5,039 are in Wroclaw, 2,015 in Poznan, and 590 in Lodz. So compared to the end of Q2 2020, the pipeline has been expanded by 1,845 apartments. According to current plans, of the total of approx. 7,600 apartments as of 30 September 2020, around 3,500 apartments are earmarked for sale and around 4,100 apartments are to be rented upon completion, thereby forming the basis for the approximately 8,000 to 10,000 apartments that are to be built as a rental portfolio in Poland over a period of 3 to 5 years.

Guidance for the 2020 financial year raised, first-time publication of the FFO and dividend guidance for the 2021 financial year

TAG is able to increase its 2020 guidance for FFO I and dividend per share given the very successful financial year to date. They are now as follows:

• FFO I: EUR 170-173m (previously: EUR 168-170m; 2019: EUR 160.6m)
• FFO I per share: EUR 1.17 (previously: EUR 1.16; 2019: EUR 1.10)
• Dividend per share: EUR 0.88 (previously: EUR 0.87; 2019: EUR 0.82)

For the first time, we are publishing an FFO and dividend guidance for the 2021 financial year with the interim statement for Q3 2020. The guidance and the rates of increase compared with the figures expected for the 2020 financial year are as follows:

• FFO I: EUR 178-182m (+5%)
• FFO I per share: EUR 1.23 (+5%)
• Dividend per share: EUR 0.92 (+5%)

Commenting on the figures for Q3 2020 published today, Martin Thiel, CFO of TAG, said: "Even in these difficult times of the Covid-19 pandemic, our business model, which focuses on affordable housing outside major cities, has performed very well. In light of this, we are not only able to increase our FFO and dividend guidance for 2020, but can also offer our shareholders the prospect of continuous and profitable growth for 2021".

Please refer to the presentation and interim statement published today at https://www.tag-ag.com/en/investor-relations/financial-statements/quarterly-reports/ for further details on the third quarter of 2020.

Press enquiries:
TAG Immobilien AG
Dominique Mann
Head of Investor & Public Relations
Phone +49 (0) 40 380 32 305
Fax +49 (0) 40 380 32 390
ir@tag-ag.com