PRESS RELEASE

Stable rental result, increased sales result in H1 2024; annual forecast fully confirmed

• Rental income (FFO I) of EUR 88.1 million in H1 2024 at previous year’s level (EUR 89.1 million) despite real estate sales in Germany
• Rent growth in Germany rises to 2.7% (financial year 2023: 2.3%)
• Sales result in Poland increases to EUR 34.1 million in H1 2024 (H1 2023: EUR 23.2 million)
• Value adjustment in the German real estate portfolio is significantly slower at -2.7% in H1 2024 after -4.1% in H2 2023 and -7.4% in H1 2023 – no further significant value adjustments expected
• Around 880 residential units sold in Germany in the first half of 2024; net cash proceeds of EUR 66.2 million expected
• LTV at 46.6% as of June 30, 2024 and approximately 46.3% pro forma taking into account disposals completed after the reporting date
• Interest coverage ratio and net financial debt to adjusted EBITDA are at a strong level at 6.7 and 9.0 times respectively; TAG once again has two stable investment grade ratings (‘Baa3’ from Moody’s and ‘BBB-‘ from S Global)

Hamburg, 13 August 2024

Good operational development in the first quarter continues in the first half of 2024

In the first half of 2024, FFO I, which includes the Group’s entire rental business in Germany and Poland, amounted to EUR 88.1 million. Compared to the same period last year, this represents only a slight decrease of EUR 1.0 million or 1%, despite the disposals of residential units in Germany in the 2023 financial year and the first half of 2024. Total like-for-like rental growth in the German portfolio increased to 2.7%, up from 2.3% pa ​​in the last full financial year of 2023. The vacancy rate of the Group’s residential units in Germany improved year-on-year from 4.7% in June 2023 to 4.2% as of June 30, 2024.

In the rental business, around 2,630 apartments have now been completed in Poland and further rental units are under construction. The number of completed rental apartments will amount to around 3,350 by the end of 2024, and in the medium term the portfolio is expected to have around 10,000 rental units by the end of 2028.

Although some of the Polish rental units were only completed in the last few months, the occupancy rate in the overall portfolio was already 92.6% as of the reporting date due to the strong demand for residential units; the vacancy rate for residential units that have been on the rental market for more than one year is 2.8%. The comparable rent growth for residential units that have been on the market for more than one year was 4.5% pa as of June 30, 2024. After two exceptionally strong financial years in 2022 (22.0%) and 2023 (10.8%), rent growth has thus normalized somewhat, as expected.

FFO II, which includes FFO I as well as sales business, increased by EUR 9.8 million or 9% to EUR 121.4 million compared to the same period last year. This is mainly due to TAG’s increased sales result in Poland (EUR 34.1 million in H1 2024 after EUR 23.2 million in H1 2023). In the reporting period, 1,330 (previous year: 863) residential units were handed over to buyers and thus recorded in profit or loss.

In the first six months of 2024, sales of 1,056 (previous year: 1,817) residential units were signed in Poland. Despite the reduced number of apartments, the total sales volume (cumulative sales prices) remained at a high level in H1 2024 at EUR 198 million, up from EUR 222 million in H1 2023, due to the average increase in sales prices of around 20% over the last twelve months.

Claudia Hoyer, COO and Co-CEO of TAG, comments on the results for the first half of 2024 as follows: “We can be very satisfied with our operational development so far in 2024. The increased rental growth in Germany shows that the affordable residential units we offer are also meeting strong demand in B locations. At the same time, our Polish rental portfolio is growing and sales in Poland continue to deliver good results. On this basis, we can fully confirm the guidance for the full year 2024, including the FFO I and FFO II forecasts.”

Only moderate market value adjustment of the real estate portfolio in Germany

As in previous years, an external full valuation of the real estate portfolio was carried out on June 30, 2024. This resulted in a loss in value of 2.7% or EUR 144.3 million for the German portfolio. The devaluation trend has thus slowed significantly compared to the two previous half-year valuations. Based on the new valuation levels of around EUR 1,040 per square meter and a gross yield of 6.5%, no further significant value adjustments are to be expected.

The valuation of the rental portfolio in Poland resulted in a profit of EUR 9.5 million, compared to EUR 15.6 million in the same period last year. The gross yield of the approximately 2,630 Polish rental apartments already completed as of June 30, 2024 is 5.7%, which corresponds to a value of approximately EUR 2,800 per square meter.

Sales of around 880 residential units in Germany in the first half of 2024

Following the sale of approximately 1,400 residential units in the 2023 financial year, purchase agreements for approximately 880 residential units were signed between January and June 2024. The cumulative sales price was EUR 78.4 million, corresponding to an average gross yield of 5.2%. The expected net cash proceeds after repayment of the bank loans are EUR 66.2 million.

For around 720 residential units, the closing will take place after the reporting date, with around 500 residential units already closing in July 2024. These around 720 residential units, which had not yet been transferred as of the reporting date, account for net cash proceeds of EUR 58.8 million.

Continued strong financial figures, LTV decreased over the course of the year, further LTV reduction after the balance sheet date

Despite the valuation losses in Germany, the loan-to-value (LTV) ratio was reduced to 46.6% as of June 30, 2024 compared to December 31, 2023 (47.0%). In addition to the good operating result and the suspension of dividend payments for the 2023 financial year, this was particularly due to the strong inflow of liquidity from sales in Poland.

Taking into account the pro forma sales of around 720 residential units in Germany that had already been signed but not yet transferred as of the reporting date, this results in an LTV of around 46.3% as of June 30, 2024. This means that even after the recorded valuation loss, TAG is still very close to its LTV target of around 45.0%.

Other KPIs such as interest coverage ratio (ICR) and net financial debt to adjusted EBITDA remain strong at 6.7x and 9.0x respectively (4.2x and 13.1x excluding the Polish distribution business).

TAG once again has two stable investment grade ratings from Moody’s and S

In May 2024, the rating agency Moody’s raised TAG’s long-term credit rating from ‘Non-Investment Grade, Ba1, outlook stable’ to ‘Investment Grade, Baa3, outlook stable’. According to Moody’s, the rating upgrade reflects TAG’s continued strong operating performance and the company’s disciplined financial policy in a market environment challenged by rising interest rates. With the upgrade, Moody’s is drawing a comparison with the rating agency S Global, which had already raised the ‘negative outlook’ of the existing investment grade rating BBB- to ‘stable’ in March 2024.

Martin Thiel, CFO and Co-CEO of TAG, adds: “We are pleased to once again have two stable investment grade ratings. This expands the scope for attractive financing options to strengthen our capital structure and for further growth. At the same time, despite the overall challenging environment of the last few quarters, we have almost achieved our LTV target. This underlines TAG’s financial stability and financing capacity.”

Further details on the first half of 2024 can be found in the interim report published today and in a summary presentation at https://www.tag-ag.com/de/investor-relations.

The most important financial figures at a glance

contact

TAG Real Estate AG

Dominique Mann

Head of Investor Public Relations

Phone +49 (0) 40 380 32 305

(email protected)