TLG IMMOBILIEN experiences FFO and EPRA NAV growth and initiates merger with Aroundtown

- Rental income has increased by 4.0% to EUR 173.0 m and FFO has increased by 6.9% year-over-year to EUR 107.7 m

- The occupancy rate is high and stable at around 97% with an average WALT of almost 6 years

- EPRA NAV per share at EUR 30.25

- FFO forecast revised upwards to around EUR 147 m

- TLG IMMOBILIEN has signed a term sheet for a potential merger with Aroundtown

Berlin, 6 November 2019 - TLG IMMOBILIEN AG (ISIN: DE000A12B8Z4) has closed the first three quarters of 2019 successfully. The strong operating earnings of TLG IMMOBILIEN reflect its successful active portfolio, asset and property management as well as the continuously positive developments in the real estate sector and especially the office lettings markets. The value of the property portfolio was around EUR 4.6 bn as at the end of the quarter and will be updated regularly at the end of the year. Compared to the first three quarters of 2018, rental income has increased by around 4.0% to EUR 173.0 m. The funds from operations (FFO) have increased by 6.9% to EUR 107.7 m or EUR 1.01 per share (previous year EUR 0.98). As at 30 September 2019, the EPRA NAV of the Group was EUR 30.25 per share (31/12/2018: EUR 26.27) and therefore surpassed the EUR 30.00 threshold for the first time.

The portfolio of TLG IMMOBILIEN comprised 389 properties as at 30 September 2019. Although no further acquisitions were made in the third quarter, two properties were disposed of as part of the optimisation of the portfolio. As at the reporting date, the EPRA Vacancy Rate was 3.1% and the weighted average lease term (WALT) of the rental agreements was 5.8 years. Both indicators reflect the high demand from tenants and the yield stability of the portfolio of TLG IMMOBILIEN. The annualised in-place rent has increased by 2.6% to EUR 233.1 m.

TLG IMMOBILIEN SIGNS TERM SHEET WITH AROUNDTOWN - BOTH COMPANIES ARE WORKING TOWARDS A MERGER
TLG IMMOBILIEN is striving for a potential merger with Aroundtown and is being supported in its efforts by the management of Aroundtown as well as the largest shareholders of both companies. On 26 October, both companies therefore signed a term sheet which fixes the key parameters of a potential merger. The two companies agreed that the best possible way from an economic, financial, operational, legal and tax standpoint would be a voluntary public offer by Aroundtown for all shares in TLG IMMOBILIEN. The share swap ratio is to be calculated on the basis of the EPRA NAV of both companies. Furthermore, the agreement sets out the intention to operate the merged company under a new name, although the operating headquarters would remain in Berlin. The management structure has also been fixed depending on the shareholding threshold reached, with consideration for good corporate governance. As soon as Aroundtown holds more than 50% of the shares of TLG IMMOBILIEN, the company is to be operated by a management body whose activities will be supervised by a separate board of directors serving as a supervisory body. In this case, TLG IMMOBILIEN would appoint the chairman of the board of directors as well as the CFO. If the 66% threshold is surpassed, TLG IMMOBILIEN can appoint another member to the management body and elect one of its representatives co-CEO (see here for more details).

TLG IMMOBILIEN now holds around 15.0% of the shares of Aroundtown and is therefore the largest shareholder of the company. The Supervisory Board of TLG IMMOBILIEN has nominated its Vice-chairman Mr Ran Laufer as the representative for the board of administration of Aroundtown; his appointment to the board will follow soon.

A POSITIVE RATINGS OUTLOOK
After the planned merger was announced, the rating agencies S&P and Moody's confirmed their ratings for TLG IMMOBILIEN (BBB from S&P and BAA2 from Moody's) and described the outlook of the company as positive. Both agencies justified their decisions by stating that a successful merger would improve the risk profile due to the larger property portfolio and stronger portfolio diversification.

SUCCESSFUL FINANCING MEASURES
In September 2019, TLG IMMOBILIEN issued senior unsecured bond worth EUR 600 m and a perpetual subordinated hybrid bond with a nominal value of EUR 600 m. A significant portion of these funds has been used to refinance payment obligations resulting from the purchase of the shares of Aroundtown.

As at 30 September 2019, the average costs of borrowed capital recognised in profit or loss were 1.50% (1.83% as at 31/12/2018) with an average remaining term of 4.4 years. For 99.6% of the interest-bearing liabilities, the interest rate is fixed over the term of each liability by fixed interest rate agreements or secured by interest rate hedges.

VIEWS OF THE MANAGEMENT BOARD
Barak Bar-Hen, Chief Executive Officer of TLG IMMOBILIEN AG: 'With these successful steps towards a potential merger with Aroundtown in recent months, we have paved the way to being able to generate significant additional value for our shareholders. A merger would provide us with numerous advantages such as improved ratings and therefore better access to finance, synergies on an operational level and accelerated realisation of the development projects in our portfolio.'

Gerald Klinck, Chief Financial Officer of TLG IMMOBILIEN AG: 'The intended deal structure will ensure a rapid submission of an offer to our shareholders and thus reduce the duration of uncertainty regarding the merger of the two companies. A prerequisite for a successful merger is balanced governance, which we have agreed with the future composition of the board of directors and the management body.'

Instead of the previously forecast margin of between EUR 140 m and EUR 143 m by the end of 2019, the company now expects FFO growth of around EUR 147 m due to its 15% stake in Aroundtown and in consideration of the interest burden of the bonds issued in September 2019.
 

LATEST FINANCIAL REPORT
www.tlg.eu > Investor Relations > Financial Reports & Presentations

WEBCAST ON THE QUARTERLY FIGURES FROM AROUND 11 A.M. TODAY
www.tlg.eu

KEY GROUP FIGURES ACCORDING TO IFRS

1 Total number of shares as at 31 December 2018: 103.4 m, as at 30 September 2019: 112.0 m. The weighted average number of shares was 102.7 m in the third quarter of 2018 and 106.4 m in the third quarter of 2019.

2 Calculation: Net debt divided by real estate assets; see page 20 of the report for their composition and adjustment

3 In line with values disclosed according to IAS 40, IAS 2, IAS 16 and IFRS 5

4 The calculation does not factor in the invest asset class.

5 The annualised in-place rent is calculated using the annualised rents agreed as at the reporting date - not factoring in rent-free periods.

CONTACT

DISCLAIMER

THIS ANNOUNCEMENT DOES NEITHER CONSTITUTE AN OFFER TO EXCHANGE OR PURCHASE NOR THE SOLICITATION OF AN OFFER TO EXCHANGE OR PURCHASE ANY SECURITIES. MOREOVER, THIS ANNOUNCEMENT DOES NEITHER CONSTITUTE AN OFFER TO BUY NOR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN AROUNDTOWN SA. AROUNDTON SA HAS NOT YET MADE A DECISION ON ITS INTENTION TO MAKE ANY PUBLIC TAKEOVER OFFER AND ANY TERMS OF SUCH INTENTION TO LAUNCH A PUBLIC TAKEOVER OFFER WILL BE SUBJECT TO AN OFFER DOCUMENT TO BE APPROVED BY GERMAN FEDERAL FINANCIAL SUPERVISORY AUTHORITY (BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT). AROUNDTOWN SA MAY NOT MAKE A DECISION TO INITIATE A PUBLIC TAKEOVER OFFER AT ALL.

THE SECURITIES MENTIONED IN THIS ANNOUNCEMENT HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR IN IN ANY OTHER JURISDICTION, WHERE TO DO SO WOULD BE A VIOLATION OF APPLICABLE LAW. THERE WILL BE NO PUBLIC OFFERING OF SECURITIES OF AROUNTOWN SA IN THE UNITED STATES.

THIS ANNOUNCEMENT MAY CONTAIN PROJECTIONS OR ESTIMATES RELATING TO PLANS AND OBJECTIVES RELATING TO OUR FUTURE OPERATIONS, PRODUCTS, OR SERVICES, FUTURE FINANCIAL RESULTS, OR ASSUMPTIONS UNDERLYING OR RELATING TO ANY SUCH STATEMENTS, EACH OF WHICH CONSTITUTES A FORWARD-LOOKING STATEMENT SUBJECT TO RISKS AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND THE CONTROL OF TLG IMMOBILIEN AG. ACTUAL RESULTS COULD DIFFER MATERIALLY, DEPENDING ON A NUMBER OF FACTORS. IT IS POSSIBLE THAT TLG IMMOBILIEN AG WILL CHANGE ITS ASSUMPTIONS REFLECTED IN THIS ANNOUNCEMENTS.

ABOUT TLG IMMOBILIEN AG

For over 25 years, the listed company TLG IMMOBILIEN AG has owned and rented out commercial properties in selected promising locations in Germany. The company continuously develops its portfolio and actively generates value through strategic investments and selected property acquisitions. As at 30 September 2019, its portfolio contains properties worth EUR 4.6 bn. As at the same reporting date, the adjusted EPRA Net Asset Value per share amounted to EUR 30.25. The portfolio comprises office properties in cities including Berlin, Dresden, Frankfurt/Main, Leipzig and Rostock. It also contains a regionally diversified portfolio of retail properties, primarily in the neighbourhood shopping segment, in promising micro-locations as well as seven hotels in top central locations. The properties of TLG IMMOBILIEN AG stand out not only due to their excellent locations but also because of their long-term rental or lease agreements. Its highly qualified employees guarantee extensive local market expertise at its individual locations.

This publication contains forward-looking statements based on current views and assumptions of TLG IMMOBILIEN AG's management and made to the best of knowledge. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause TLG IMMOBILIEN AG's revenues, profitability or the degree to which it performs or achieves its targets, to materially deviate from what is explicitly or implicitly stated or described in this publication. Therefore, persons who obtain possession of this publication should not rely on such forward-looking statements. TLG IMMOBILIEN AG accepts no guarantee or responsibility regarding such forward-looking statements and will not adjust them to future results or developments.