TAG Immobilien AG
Martin Thiel - TAG Immobilien AG
‘Residential rents in many cities there are around €5 per sqm, compared to €15 somewhere like Munich. Also, 'Warmmiete' (rent + charges) is typically only 20% of your salary in many Eastern German cities, compared to between 30% and 45% in Berlin.’
Like other listed German housing companies featured in this issue (LEG, Ado Properties), the Hamburg-headquartered TAG Immobilien is reaping the benefits of rising rent levels and lower vacancies across Germany's housing markets, particularly in the bigger cities. For the first nine months it has exceeded its expectations and again revised full year expectations upwards.
In common with its peers, the MDAX-listed TAG saw rental price growth of 1.9% on a like-for-like basis, and 3.8% when taking lowered vacancies into account. The company owns and manages 78,300 residential units. The vacancy rate, 8.4% last year, is now down to 6.7%.
The company's main housing clusters are Hamburg and Berlin, the area around Salzgitter, the states of Thuringia and Saxony, and North Rhine-Westphalia.
Forecast for the full year FFO, the key performance indicator for real estate companies, is now expected to be €93m, up from last year's full year €76m. Next year TAG expects €104-106m, based largely on rental growth and interest rate savings. This year's dividend of €0.57 per share is expected to rise to €0.59 per share (a dividend yield of 4.88% rising to €5.07 next year, with the current share price at €11.80).
Presenting the most recent third quarter figures, CFO Martin Thiel said he was confident of securing loweer intereest payments on the company's loans. TAG is currently paying 3.2%, down from last year's 3.5%, while a big loan of €604m due for repayment in 2018 is costing 3.6%. A bond due for repayment in 2018 is currently costing 4.8%.
