TAG lightens up on Berlin holdings in end-of-year sale
The MDAX-listed TAG Immobilien AG has been taking advantage of frothy prices in German residential to lighten up on part of its Berlin holdings in an end-of-year balance-sheet cleaning-up operation. It recently sold 2,600 apartments to housing association Howoge, and has now followed that up by selling a further 920 residential properties in Berlin totalling €76m to local housing associations, for a book profit of about €6m.
At the beginning of December, TAG sold a portfolio of 218 residential units totalling 16,300 sqm in Berlin’s Staaken district for €21.5m. The price equates to 18 times the current annual net ‘cold’ rent. TAG had managed the properties for several years, and the vacancy rate was 1.8%.
Last week, the Hamburg-based TAG sold another 702 residential units in the Neukölln, Lankwitz and Charlottenburg districts with a total area of approximately 43,000 m², for a price of €54.5 million, or roughly 19 times the current annual net cold rent. The buyer was Stadt und Land Wohnbauten Gesellschaft. The portfolio has an average vacancy rate of 5.3%. TAG said it expects about €30 million in net cash inflow from these two transactions.
Given the high price rises over the last few years in Berlin, TAG said that both portfolio sales were well above the book value of the properties. The released equity is to be reinvested in further acquisitions with higher initial returns in TAG's core regions with development potential. Based on the acquisitions and sales, the company confirmed its FFO forecast for the financial year 2015 is confirmed, as the portfolios newly acquired in recent weeks compensate the FFO reductions from sales.
TAG Immobilien’s COO Claudia Hoyer commented: “We were able to significantly reduce vacancy in our residential units again towards the end of fiscal 2014. While vacancy at year-end 2013 was 8.9%, and 8.6% at the end of Q3 2014, vacancy in December 2014 is down to 8.1%. Further vacancy reduction successes were achieved especially in the Salzgitter region where vacancy is now 15.5% (Q3 2014: 16.6%; previous year: 18.6%).”