PRESS RELEASE

Operationally successful FY 2023 for TAG; sales results in Poland exceed guidance; significantly increased net liquidity from disposals in Germany; LTV stable despite portfolio devaluation  

• FFO I guidance met at EUR 171.7m after EUR 189.4m in the previous year; vacancy rate of the residential portfolio in Germany reduced to just 4.0%
• FFO II guidance exceeded due to strong sales business in Poland: EUR 255.6m after EUR 247.3m in the previous year
• New rental projects launched in Poland; first successful refinancing in the Polish rental portfolio
• Residential property sales in Germany with a total volume of EUR 213.5m; almost 1,400 apartments sold; net cash proceeds of EUR 187.4m
• Valuation adjustment in the German property portfolio of -4.1% in the second half of 2023 and -11.6% in 2023 as a whole
• LTV remains stable at 47.0% despite portfolio devaluation, due to sales results achieved and dividend suspension in 2023
• Gabriela Gryger to be proposed as a new member of the Supervisory Board at next Annual General Meeting

Hamburg, 12 March 2024

Forecasts for the 2023 financial year achieved or exceeded

From an operational perspective, the financial year 2023 was a very successful year for TAG Immobilien AG (TAG). At EUR 171.7m, FFO I, which includes the Group’s rental business, was within the forecast range of EUR 170-174m. While adjusted EBITDA from the rental business increased by EUR 2.9m year-on-year despite the property sales in Germany, higher financing costs led to a decline in FFO I compared to 2022.

In Germany, vacancy in the Group’s nearly 85,000 residential units fell from 4.5% at the beginning of the year to 4.0% in December 2023. Based on a comparable portfolio (like-for-like), total rental growth, including the effects from vacancy reduction, was 2.3% (FY 2022: 2.7%) p.a.

The Polish rental portfolio comprised around 2,400 apartments at year-end 2023. Another c. 1,400 rental apartments are under construction, of which around 1,000 will be completed in 2024. Like-for-like rental growth for rental units in operations for more than one year totaled 10.8%, compared to 22.0% in the previous year. The vacancy rate for these apartments was 2.2% at the end of the year, after 3.9% at the end of 2022.

Strong sales results in Poland in 2023 ensured that the guidance of EUR 240-246m was exceeded with FFO II, which includes TAG's sales activities in addition to the rental business, totalling EUR 255.6m. While a roughly balanced sales result of EUR 1.1m was achieved in Germany (previous year: EUR -1.4m), the sales result in Poland amounted EUR 82.8m after EUR 59.3m in 2022.

In total, more than 3,800 (previous year: c. 3,500) apartments were handed over to buyers in Poland in 2023 and thus recognised in profit or loss. In addition, an improved financial result as a result of high cash inflows from buyer prepayments and currency translation effects led to a better result than planned.

All forecasts for the 2024 financial year, as published in November 2023, remain unchanged. As already communicated, the Management Board and Supervisory Board plan to propose that the dividend payment for the 2023 financial year at the next AGM also be suspended. The liquidity remaining in the company as a result will be used to further strengthen the capital base and to finance new projects in Poland with high returns.

Rising sales figures and sales prices in Poland

In the course of 2023 financial year, TAG sold nearly 3,600 apartments in Poland, a strong increase compared to the previous year, in which, including ROBYG S.A. for a full twelve months, c. 2,400 apartments were sold.

The total sales volume of EUR 479.0 m increased significantly in 2023 compared to the previous year (EUR 264.2 m). Sales prices for residential units in Poland's major cities rose by between c. 15% and 20% over the course of the year. Demand for new-build apartments in Poland is also expected to remain strong in 2024.

Successful refinancing in the Polish rental portfolio generates additional liquidity for investments

After the Polish rental portfolio, with a book value of EUR 295.7m in terms of completed apartments at year-end 2023, was built up in recent years using shareholder loans from TAG, the first external refinancing was signed in March 2024: a mortgage secured loan of EUR 90.0m with a fixed interest rate and a term of five years.

Further refinancing will follow in the course of the 2024 financial year. The resulting liquidity can be used to build new rental projects. The construction of a further 430 rental apartments in Wroclaw and Gdansk was already started at the end of 2023.

Successful property sales in Germany

In Germany, 1,373 (previous year: 1,589) apartments were sold in 2023 for a total purchase price of EUR 213.5m (previous year: EUR 102.3m). This resulted in total net cash proceeds of EUR 187.4m after EUR 86.3m in the previous year. The average gross initial yield of the units sold was 4.3% (previous year: 5.6%).

The sales business in Germany generated a positive result of EUR 1.1m (previous year: loss of EUR 1.4m), mainly due to an owner-occupied office building included in the sales being accounted for at historical cost.

Further valuation adjustment in the German property portfolio

After the German property portfolio had already been written down by 7.4% in the first half of the year, a further impairment loss of 4.1% was recognised in the second half of 2023. The reason for these write-downs was the significantly higher interest rate environment, which exceeded the increases in operating value.

This means that valuation levels in the German property portfolio have fallen by around 16% in the last 18 months, i.e. since their highest valuation level as at 30 June 2022. As at 31 December 2023, the portfolio is now valued at a gross initial yield of 6.3% or a capital value of c. EUR 1,060 per sqm.

Stable LTV; interest coverage ratio and ratio of net financial debt to EBITDA (adjusted) remain at a strong level

Despite the valuation losses recognised in Germany in 2023, the loan-to-value (LTV) ratio remained almost unchanged at 47.0% as at 31 December 2023 compared to 31 December 2022 (46.7%). In addition to the good operating results and the suspension of a dividend payment in the 2023 financial year, this was due in particular to the residential property sales realised in Germany and Poland.

Other KPIs such as the interest coverage ratio (ICR) or the net financial debt/EBITDA (adjusted) ratio remained strong at 6.0x and 9.3x, or 4.8x and 13.3x excluding the Polish sales business. These metrics also demonstrate TAG’s robust financial condition and debt service cover ratio.

Martin Thiel, CFO and Co-CEO of TAG, comments on the company’s performance as follows: “Since mid-2022, we have made significant value adjustments in the German portfolio due to the sharp rise in interest rates. With a total devaluation of around 16% during this period, the very significant part of the value adjustments should now be behind us. Thanks to the strong ongoing results, the successful sale of apartments and the dividend suspension, we have succeeded in keeping the LTV stable despite this extensive value adjustment. In this respect, TAG’s financing structure has proven to be very stable even in this challenging market environment.”

Planned change in the Supervisory Board to strengthen the competence profile in the Polish residential market and to further increase the proportion of women

At the Annual General Meeting scheduled for 28 May 2024, a resolution is to be passed on personnel changes on TAG’s Supervisory Board. At the beginning of October 2023, Mr Eckhard Schultz was appointed by the court as a member of TAG’s Supervisory Board following his selection by the Supervisory Board and at the request of the Management Board. Mr Schultz will stand for election by the shareholders at the Annual General Meeting.

The Supervisory Board further plans to propose Ms Gabriela Gryger for election as a new member of the Supervisory Board. Ms Gryger began her career at major investment banks in New York and London and has worked as an independent consultant in the Polish property market for almost 15 years. She lives in Warsaw and holds Polish and British citizenship. From 2018 to 2022, Ms Gryger already sat on the Supervisory Board of ROBYG S.A, now TAG’s Polish subsidiary. To enable the election of Ms Gryger, Dr Philipp Wagner, who has sat on the TAG Supervisory Board since 2013, has voluntarily offered to resign from the Supervisory Board at the end of the next Annual General Meeting.

Olaf Borkers, Chairman of TAG’s Supervisory Board, explains the planned change on the Supervisory Board as follows: “We are very pleased to be able to propose Gabriela Gryger to the Annual General Meeting as a candidate for the Supervisory Board. She has many years of proven expertise in the Polish residential market, and, if elected, would also increase the proportion of women on the Supervisory Board, both on the shareholder side and overall, to 50 percent. Our special thanks go to Dr Philipp Wagner for making this change possible by offering to step down. At the same time, we would like to thank him for his great and always competent commitment over more than ten years on TAG's Supervisory Board.”

Further details on the 2023 financial year can be found in the Annual Report published today and in a related presentation at www.tag-ag.com/investor-relations. TAG’s Sustainability Report for the 2023 financial year will be published on 25 April 2024.

Key financials at a glance

Contact

TAG Immobilien AG

Dominique Mann

Head of Investor & Public Relations

Phone +49 (0) 40 380 32 300

Fax +49 (0) 40 380 32 388

ir@tag-ag.com