Tag Immobilien Ag U/Adr

Ladies and gentlemen, welcome to the TAG Immobilien Public Publication of Interim Report Q2 2025 Conference Call. I am Valentina, the Corvus Call Operator. I would like to remind you that all participants will be list in only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing STA and 1 on your telephone. For operator assistance, please press STA and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Martin Thiel, CFO. Please go ahead.

Martin Thiel Yeah, many thanks, and good morning, everyone. Welcome to TIGE's H1 2025 call. Many thanks for dialing in. As always, I will start with a quick overview on page number four of the presentation, and after that, I will try to point out some main highlights on the following slide, and as always, afterwards, we have, of course, enough time for Q&A. So let's start with page number four and the highlights of the first half of 2025. FFO1 saw a quite decent development. It was up 4% year-on-year. And even quarter-on-quarter, we saw quite significant increase. So in the second quarter of 2025, FFO1 came up at 46.7 million after 44.9 million in the previous quarter. And as said, in a comparison year-on-year, there was an increase by 4%. Main driver of this positive development was the quite strong operational development. So also the EBITDR from the rental business was up even a little bit stronger at 5%, and we had quite strong rental growth again in Germany with 2.9%. And also in Poland, the rental growth was even higher than in the previous quarters, which ended up at 3.3%. So good FFO1 growth driven by an even little bit stronger growth from adjusted EBITDR. Looking at our safe business in Poland, also here we have a positive development. So results-wise, we saw in the second quarter of 2025 a stronger quarter compared to the previous one. And we had a result here from 11.6 million euros compared to 5 million in the first quarter. Please remember, and I think you're definitely already aware of this, the results in the Polish safe business is realized when we send over the apartments. For this year, for 2025, we expect that especially, as always, more or less, in the fourth quarter of the year, we will have a higher number of apartments handed over. So, therefore, you will see a strong uptick in the sales results when we hand over the apartments in the course of the year. So, all in all, we had, as I said, a positive development quarter on quarter, but you will see a stronger increase coming during the year. So that's the results side and looking at the sales numbers. And also here we had a positive development. So we saw more units in the first half of 2025 compared to the previous year. If you look at our guidance for the full year, which stands at 2,800 units, we are still somewhat behind, but we are very positive on this. We see the Polish sales market is still in good condition. As you perhaps have realized, interest rates in Poland have come down. So, we see more buyers now coming to the market. Sales prices are still on a good level. So, therefore, we are positive that we see a stronger or even stronger sales result in the second half of 2025. Look at the valuation results. This was definitely an important event in this quarter, and we think we can report here quite positive results. So the German portfolio saw, again, a value increase by 1.4% in H1 2025. That was even a little bit stronger than in the previous relation. So in H2 2024, we already had a positive relation uplift by 0.9%. Now even a little bit stronger at 1.4% in H1 2025. I think a number more or less in line with peers. And that should be really an assuring sign that the trend that we had for several years valuations in the past of falling values is now behind us, and we see at least a slight valuation increase in German residential, which would be a positive signal. The Polish portfolio saw a strong valuation uplift by 91 million, and this was because finally the strongly increased sales prices in Poland are now in the valuation, and we had a lot of discussions with valuers in the past that we are selling at much higher prices compared to where our valuation stands in the rent portfolio. Now, finally, we have this approach, as in Germany, directly linked to potential safe prices. And this 91 million increase is simply the result of the continuous growth in safe prices in the past. So, therefore, the Polish portfolio saw quite a strong valuation uplift. It stands now at a 5.2 gross yield and 3,200 euros per square meter. And I can also give you the values for the German valuation. So, that's more unchanged compared to the previous valuation, 1,050 euros per square meter, and still a 6.6 gross yield. This positive valuation result, but also the good results from the operational business led to a quite significant increase in APRA NTA per share. So, we saw a 10% year-on-year increase, even taking into account the dividend payment of 40 cents per share. So excluding this dividend statement, the NAV increase here would have even been 12%. And this positive development from the valuation from the operational cash flow plus one transaction that closed disposal in Germany, I think it was 30 or 40 million in the first quarter of 2025 already, led to a quite strong reduction in LCV. So we're now at 45.3%, so that's effectively our LCV target, coming from 46.9% at the beginning of the year. All other financing metrics like ICR remains very strong, so 5.6 times is the ICR and 10.4 times is the EDDR, and we're very happy with this positive development It's seen by rating agencies that Moody's upgraded our outlook from stable to positive for our BA3 investment rate rating in June. And that's, of course, for us something very good to see. For the details on the numbers you'll find on the pages five and six, as always. I'm coming now to page number eight. We have seen some more details on EBITDA, FFO, and FFO2. Perhaps we don't need to go through this line by line, but again, important to say that in the key metrics like EBITDA and FFO1, quarter on quarter, as well as H1 2025 in comparison to H1 2024, we had a positive development. That is, of course, good to see for us. If you look at the FFO1 for the first half, we're already at 91.6 million, comparing that to our guidance, which stands there between 172 and 176 million. I think here we're on a very, very good way. So, therefore, we should be very, very positioned for the second half of the year to achieve at least the guidance for FFO1. Page number nine gives you further details about the APRA NTA regulation. Clearly, APRA NTA per share was reduced by a dividend payment of 40 cents, but the portfolio valuation led also to an uplift of 69 cents. You see this on the small chart on the right side. But what is always, from my side, most important, if you look at what we call net profit and other effects, you can also say basically the operational business really also led to a quite strong growth of 74 cents per share. only the first half of the year. And this is something we try to point out again and again regarding APRA NTA growth and also the reduction of LTV. We've got a very natural path driven by the very strong cash flow that we have from our operational business, from the rental business, plus the sales business in Poland. We're here in both metrics on a simply very natural growth slash reduction path. Page 10 gives you an overview about our financing structure. I already mentioned the outlook change by Moody's, and we can tell you that we, of course, are also in discussion with S&P and also here in a good way and in fruitful discussions. So the outlook is still stable, but I think when we continue like we did in the past one or two years, also here we will see a positive trend. The average interest rate for the total financial debt stands now at 2.5%. And yes, if you refinance something today, it's more expensive, but it's not a completely different world. So we know that our bond is trading for roughly five years at perhaps 3.6%, 3.7%. New bank financing in Germany is perhaps 3.2%, 3.3%. So yes, with every refinancing, we have a slight uptick, but, you know, it doesn't change the picture completely. So that's, of course, also for us a good basis for further growth. Maturity profile is shown on page number 11. Basically, there's just one larger upcoming maturity. That's next year, the convertible bonds. Exactly one year, which we repay, which is $470 million. The cash position at the moment is very strong, $870 million in the balance sheet. That's $215 million of unused credit facilities, so any refinancing should not be really an issue. Page number 13 shows some more details on the German portfolio regarding rental growth at the CapEx. CapEx and maintenance, you see this on the top right of the presentation or of this slide, is really exactly in line with the previous three years. Rental growth 10 bps lower than in the previous quarter. Don't read too much into that. So that's not a new trend that we are now expecting a reduction in rent. So we still see very good fundamentals I mean, our guidance is perhaps somewhat conservative for the total like-for-like rental growth that was between 2.5 and 3%. That stands already at 2.9%. But, yeah, again, we reassured that we are really here to see strong fundamentals in our general portfolio rental growth, but that should be nothing surprising. Edge 14 shows the vacancy reduction. If you look at the development in the first two quarters of 2025, we are now at 3.9% vacancy rate at the end of the first half. That's very similar to what we have seen 2024 to 2023. So small uptick in the first quarter, then stable in the second quarter, same development 2025. So from here on, as we're now finishing more modernization projects, for vacancy reduction we expect vacancy rate reduction and reduction means reduction in comparison to where we started in the year. So not only a reduction from the currently 3.9%, our target and I think also our guidance was that we reduce the vacancy from 3.6% at the beginning of the year by roughly I think at least 20 basis points so we should end up more towards the 3.4% at the end of the year. On page 15, there are some more details on the portfolio valuation in Germany. Again, good to see that we have the second value increase in the German portfolio in a row. And of course, we have no valuation results for the second half of the year yet. But if we talk to valuers, if we look into the market, we see this trend of a slight valuation increase, so something between 1%, perhaps a little bit more. also is a kind of base case for second year. You have also heard this from market participants, often that everyone expects something around 2 or 3% value growth for a German portfolio for the year 2025, and the half-year relation basically confirms this. Let's come to the Polish portfolio, and I'm now on page number 17. We have now 3,349 units completed. The vacancy rate in the apartments that are on the market for at least one year is still very low, so it was 2.1%. I think the previous quarter we had 1.9%. So, effectively, since we are on the Polish rental market, every apartment that is on the market or every building that is on the market for more than one year is a full occupancy. So, we're talking about for these stabilized units of around 2%, and that's more than the natural expectation. And this, of course, has a great confirmation for the big demand that is for our products in the Polish market. Total like-for-like venture growth was 3.3% in the portfolio, so good to see that it increases, and the increase, the rate of the operation that I mentioned, stands now at 5.2%. On a per-square-meter level, it's some 13,000 slot fees, so that's 3,200 units. That's a price that we're really confident with, that we could sell that at these price levels in the market. Pages number 18 and 19 show some more details on the sales results. That's on page number 18. And on the revenue recognition, meaning the handover of apartments, that's on page number 19. I already mentioned that you should expect basically as similar in 2022 and 2023 that we will have higher sales results towards the end of the year. And again, for the sales numbers, we're quite optimistic. that we have a stronger H2 compared to the first half of 2025. And finally, a quick look on the guidance, which is on page number 21. We are confirming all guidance for the full year 2025, so the guidance remains unchanged, but again, we feel very comfortable when we look at the first half of 2025, look where we stand today, also including the Polish state's business that we are in a good way to achieve this guidance that we present here. Yeah, that's it from me as a quick overview. Thank you so far, but I'm of course now happy to answer your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and 1 at this time. The first question comes from Marius Fassol from Berstein. Please go ahead.