PRESS RELEASE

TAG Immobilien AG reports significant increase in FFO for Q1 2020 - Business activity is very stable even in times of the Covid-19 pandemic

- No significant impact from Covid-19 pandemic on TAG's business activities to date

- Voluntary abstention from rent increases since March 2020; community involvement in TAG's residential quarters strengthened

- FFO increases to EUR 42.0m in Q1 2020 from EUR 39.2m in Q4 2019; FFO up 6.3% YoY (Q1 2019)

- Vacancy in the portfolio's residential units at 4.9% at 31 March 2020, vs. 4.6% on a comparable basis at the beginning of the year

- Total like-for-like rental growth in Q1 2020 at 2.3% after 2.4% in the financial year 2019

- Forecasts for the financial year 2020 remain unchanged; dividend of EUR 0.82 per share to be paid out as planned following the virtual Annual General Meeting on 22 May 2020

Hamburg, 14 May 2020

Impact of the Covid-19 pandemic on TAG's business activities

TAG Immobilien AG's (TAG) business model, which consists of the long-term letting of affordable housing, has proved to be very stable even in these past weeks. Neither in the course of the first quarter of 2020 nor after the reporting date did any material negative effects arise, such as higher vacancy rates, rent receivables, or deferrals of rents. Though the ongoing development of the Covid-19 pandemic in Germany continues to be fraught with considerable uncertainty, TAG's business continues to progress according to plan - not least thanks to the strong and committed efforts of all TAG employees.

Claudia Hoyer, COO of TAG, says: "The ongoing corona crisis presents us all with unprecedented challenges and, as a housing company, we bear a special responsibility. This applies especially to our tenants, to whom we want to offer a secure home and the good service they are accustomed to in these difficult times. For several weeks now, we have voluntarily abstained from increasing rents by matching them to the comparable rent customary in the area, from terminations due to loss of income as a result of the Covid-19 pandemic, and from related evictions from occupied apartments. The provision of affordable housing has always been our core business. So sustainability is traditionally anchored in our business conduct. We feel that community involvement, which we have engaged in for years in many of our residential neighbourhoods, is more important than ever at this time".

TAG CFO Martin Thiel adds: "We see our situation as positive and very solid on the financing side as well. In March and April 2020, we were able to take out new bank loans with a total volume of EUR 143.5m from various banks, at an average interest rate of 1.17% and with an average term of 10 years. As of March 31, 2020, we had cash and cash equivalents of EUR 196.8m and fully undrawn credit lines with banks of EUR 120.0m. No further major refinancings are necessary for the financial years 2020 and 2021".

Positive business performance in Q1 2020

TAG's net rent of the portfolio rose to EUR 79.6m in the first quarter of 2020, up from EUR 79.1m in Q4 2019 and EUR 78.6m in Q1 2019. This positive operating performance was based on a total like-for-like growth of 2.3% p.a. in the first quarter of 2020. (FY 2019: 2.4% p.a.) or, as in financial year 2019, 1.9% excluding the effects of vacancy reduction. As a result of the previous year's acquisitions, which on average had higher vacancy rates than the existing portfolio, and modernisation programmes to reduce vacancies, the vacancy rate in the residential units rose slightly from 4.6% at the beginning of the year to 4.9% in March 2020. For the total portfolio, vacancy was 5.3% compared to 4.9% at the beginning of the year.

Across the total portfolio net income at the end of Q1 2020 amounted to EUR 32.1m, after EUR 188.5m in the previous quarter, which included EUR 203.1m in valuation gains from the property valuation carried out at 31 December 2019. In the same period of the previous year (Q1 2019), net income was EUR 33.3m.

Funds from operations (FFO, defined as FFO I without net income from sales), which is calculated solely based on the rental business operated by TAG in Germany, increased by EUR 2.5m or 6.3% year-on-year in the period under review. Adjusted funds from operations (AFFO), which is calculated from FFO less all modernisation expenses, also increased in Q1 2020 and stood at EUR 21.3m, after EUR 19.4m in Q4 2019 (EUR 24.3m in Q1 2019).

Net asset value (NAV) per share, now calculated as 'EPRA Net Tangible Assets' (NTA) per share, i.e. after deduction of all intangible assets, was EUR 20.23 on a fully diluted basis, compared to EUR 20.15 at 31 December 2019. The loan-to-value (LTV) debt ratio of 44.6% was again at a lower level than at the end of the prior quarter (44.8%).

Development of business activities in Poland

As of the beginning of the 2020 financial year, TAG geographically expanded its portfolio to Poland and acquired all shares in Vantage Development S.A. (Vantage). Vantage had an excellent business year in 2019. It sold a total of 941 residential units and handed over 866 units. Revenues from sales in the 2019 financial year totalled EUR 84.1m, and net income was EUR 11.3m.

In Q1 2020, which is usually a weaker quarter in the project development business due to seasonal factors, this positive business development continued with 205 residential units sold and 115 handed over; revenues from sales amounted to EUR 11.4m, with a roughly balanced net income.

As of 31 March 2020, TAG's contractually secured pipeline for the construction of apartments in Poland comprises approximately 5,700 units, of which roughly 4,600 units are located in Wroclaw, and about 1,100 units are in Poznan.

According to current plans, c. 2,300 units are to be let upon completion, thereby forming the basis for the c. 8,000 to 10,000 units that are to be built-to hold as a rental portfolio in Poland within a period of three to five years. The first rental income is expected in Poland upon completion of the first rental projects in the course of the 2021 financial year. Prior to this, business activities will continue to be in the sale of residential units.

Forecasts for the financial year 2020 remain unchanged - dividend payment of EUR 0.82 per share planned for FY 2019

The previously published forecasts for the 2020 financial year, in particular the FFO I and dividend guidance of EUR 168-170m (EUR 1.16 per share) and EUR 0.87 per share, remain unchanged. With respect to TAG's business activities in Poland, revenues from sales are expected to amount to EUR 80-85m, with FFO II contribution at EUR 9-11m or EUR 0.07 per share, in 2020.

At the virtual Annual General Meeting to be held on May 22, 2020, a dividend of EUR 0.82 per share for the 2019 financial year, up 9% on the previous year, will be proposed to shareholders as planned. As this dividend payment will be made from the equity reserves from a tax perspective, no capital gains tax and solidarity surcharge will be retained.

Further details on the first quarter of 2020 can be found in the presentation and the interim statement published today at https://www.tag-ag.com/en/investor-relations/financial-statements/quarterly-reports/.

Press enquiries:
TAG Immobilien AG
Dominique Mann
Head of Investor & Public Relations
Tel. +49 (0) 40 380 32 300, Fax +49 (0) 40 380 32 388
[email protected]