TLG Immobilien streamlines assets under new management team
REFIRE met with the new CEO of listed Berlin commercial property investor TLG Immobilien, Jürgen Overath, to catch up with developments at the company after a somewhat turbulent year which saw recent boardroom spats and the departure of the old top management team last year.
It doesn’t seem to have affected results too badly. The group achieved its 2018 profit target with a 30.5% increase in FFO to €134m, or €1.30 per share. The dividend to shareholders is being increased to €0.91, or 70% of FFO. This, together with the increase in the adjusted EPRA-NAV from €20.71 to € 26.27, results in a total shareholder return of 30.8% (previous year: 15.8%). Focus will now be on this key figure, said Overath, with FFO now targeted to increase to €140m-143m for 2019.
TLG intends to continue the sale of non-strategic properties and portfolio appreciation through asset management and development activities. New office buildings are planned for Berlin’s Alexanderplatz and Dresden’s Postplatz. It will continue to seek “selective acquisitions” of office real estate in urban areas. The real estate portfolio’s value rose from €3.4bn to €4.1bn in 2018, contributing to the debt-to-capital ratio falling to 34.7% and giving TLG more than €1bn in firepower.
At end-December 2018 the company had 409 properties – offices, retail, hotels and other commercial - valued at €4.1bn, up by €589.5m on the previous year. The EPRA vacancy rate was 3.3%, the WALT was 6.1 years, and the in-place rental yield was 5.5%. EPRA NAV was €26.27, up 26.8% on the year. (The current share price is about €26.60). The company is paying 1.83% for its debt, with an average remaining term of 5.4%. Net loan-to-value is 34.7%, down from 39.2% a year earlier.
In a statement on recently-released result, CEO Overath said, “In 2018, we further reinforced the property portfolio of TLG IMMOBILIEN with strategic acquisitions of office properties. From 2019 onwards, we will spur on our growth with even more determination by investing in our portfolio; we see the potential for around EUR 820 m of value creation over the next decade. Office developments on space that is already in our portfolio, such as on Alexanderplatz in Berlin and Postplatz in Dresden, will make a significant contribution. We are also ready to launch two other projects in Berlin and Dresden. At the same time, we plan to acquire attractive properties when the opportunities present themselves. Having started in 2018, we will continue to optimise our portfolio by disposing of non-strategic properties in 2019.”
As reported elsewhere in this issue, TLG Immobilien recently disposed of a portfolio of 29 small retail properties to the Irish group Greenman Investments for €118m. TLG says the assets had become too expensive to manage due to their widespread non-strategic locations.