Tag Immobilien Ag U/Adr

Ladies and gentlemen, welcome to the TAG Immobilien Publication of Interim Report Q2-2026 Conference Call. I am Valentina, the Chorus Call Operator. I would like to remind you that all participants will be listen-only mode and the conference is being recorded. The presentation will be followed by Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star 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 and Co-CEO.

Please go ahead. Good morning, everyone. This is Martin from TAG. Thank you for dialing in for our H1 2026 conference call. Let's start right away with the highlight slide, and I'm on page three of the presentation. I think it's fair to say that H1 2026 was a very strong half year with results strongly up. So in absolute terms FFO1 was 9% above the previous year level, came out at 100.2 million euros. Also our net income from sales in Poland was strongly up by 12% and FFO2 consisting of the FFO1 and the net income from sales in Poland saw quite strong growth at an 11% increase year-on-year. And perhaps you've already seen it in our press release, that led us to narrow the guidance for FFO1-2026 at the upper end of the guidance range, so therefore we expect FFO1 more to come up at the upper end of the previously announced range. Operations were well on track, and we saw increasing portfolio values with the half-year valuation, So like for sequential growth in Germany was quite strong at 3%, in Poland was 2.4%, excluding the newly acquired S4N portfolio, so just for the existing portfolio that we even owned before. Sales numbers were quite good in Poland. We sold 1,350 units in the first half of 2026 compared to a bit more than 1,150 in the previous year. Value increase in H1 in the German portfolio was at 1.5%, so that's quite similar to what we've seen in the two previous relations, which were 1.4% in H2 2026 and 1.7% in H1 2025. So a trend or a continuation of the positive trend we've seen in the two previous semi-annual relations. As we've already announced, the Versiforent transaction closed on 27th of May, 2026, after an antitrust approval without any conditions. So we had to wait for this, as you know, for quite a long time, but finally it came without any conditions. And therefore, we are right now in the process of integrating this portfolio into our platform, into the Vantage platform, and we can tell you that this process is proceeding quite smoothly and will be completed shortly. The final purchase price came out at $575 million. That is a 7.5% implied gross yield based on the expected net actual range in 2026. And the portfolio was for the first time valued also like the remaining part of the portfolio at the end of the half year. And we saw a 7% value uplift compared to the original purchase price. So that means the Polish rental portfolio after this completion of the Reservoir Rent Transaction has now materialized with more than 9,100 units, which was, of course, then an important strategic step for us. Another important strategic step was for sure the Robic IPO, completed to the largest part after the balance sheet date, so in July 2026, so therefore please be aware that most of the impact from this IPO is not in the H1 numbers, but we will give you some performer numbers. As a short overview, after stabilization measures, we had total cross proceeds for the group of 282 million euros, Out of which 188 million was cross proceeds on TARG level and the remaining 94 million was a cross proceeds on HOBIC level. We still are a majority shareholder of HOBIC, so we are retaining a 67% stake and we are clearly committed to hold this stake also for a longer time. As I already said, the IPO transactions are not reflected in the H1 numbers because most of that was effective after the balance sheet date. But just as a quick overview, we're expecting an NTA uplift of around $55 million, so roughly $0.30 per share, and a quite strong ATV reduction through the inflow of the gross proceeds from the IPO by around 320 basis points. That means on a performer level, including the OVIC IPO, the ATV to present. Yeah, these cross proceeds are clearly now something that we will use for further investments. And if you ask us about our capital allocation strategy for this year, the main focus, and that's basically unchanged, will be on the further growth of the rental business. We have now not only the liquidity, but also the equity basis to invest. And we have basically two markets where we're investing, as in the past, Poland and Germany. As you know, we have a kind of natural growth by construction of rental apartments in Poland via our own platform, Robic, on the own land bank that we own, and therefore we'll have natural growth from simply carrying out this construction of apartments in Poland. But we're also looking for acquisitions of rental portfolio in Germany and in Poland, so that will provide us additional growth. So that's the rental business, but now Moreless for the first time, also the Polish bridge to sell business, meaning Robic, has more opportunities to grow through the IPO proceeds. So that means even though we saw the stake in Robic, we expect that quite shortly we will have higher results from Robic through the growth, through the IPO proceeds, So that bottom line, our proportionate result from Orbic will also grow despite this partial, this board of shares. So therefore, the Orbic IPO, to make it short, from our point of view, a win-win outcome for all segments at TRG. That's the overview. Let's look a little bit more into the details. That's just one short comment on page number four, and you see all the detailed figures. But what I want to mention is the acquisitions in Germany. We acquired basically until the last days roughly 900 units in Germany at a quite good pricing, so a gross yield of around 7.1%. There's some vacancy reaction. Potential to the average vacancy rate in these portfolios around 4.3%. Nearly all units are located in East Germany in regions that we know very well. And these acquisitions will close perhaps more towards the end of the year. So we will continue also to acquire in Germany. We are clearly a buyer of apartments, but please be aware we will be here selective and disciplined. So we will not look for growth at any price. But here we see opportunities of selective acquisitions in Germany will be part of the future growth. And now on page number seven, it shows a bridge from net actual rent to FFO1. As I already mentioned, FFO1 in H1 2026 was up by 9% compared to the previous year. APDR, so the operational result, was up by 5% year-on-year. That means we also had a positive impact from the net financial result, which was roughly 1.4 million euros better, as we had for a longer time a quite strong cash position. where we have been waiting for the closing of the HESIFORENT acquisition so we had the cash already in the balance sheet so therefore you see some interest income so perhaps in H2 you will see a contrary picture so more stronger EBITDA growth whereas perhaps then the net financial result is a little bit weaker but that's then a natural change because of the closing of the HESIFORENT transaction. Next page, page number eight, shows you the development of our build-to-sale business of the Polish sales results. It was quite strongly up year on year. We came out at 18.6 million euros. If you compare it with the full year guidance, which stands at 92 to 98 million, please don't be concerned that this is On a proportionate basis, quite low, but this is the very normal course of the business. So as last year, as basically all years before, you should expect that the main result is coming towards the end of the year, especially in the fourth quarter, when we hand over the largest part of our apartments. So therefore, we confirm also the guidance for FFO2 for this year, because you should expect a strongly growing sales result, especially towards the end of the year. Page number 9 shows the APRA NTA development. As said, the positive impact from the Robic IPO, which is roughly $0.30 per share, is not included yet. And still, we have a 6% growth year-on-year compared to H1 2025, even after the dividend payment, which was completely carried out in June 2026. So that's fully reflected. And after the capital increase in August 2025, which we carried out for the reservoir and acquisition. So therefore also the APRA NTA development should be on a good way. Let's take a quick look at page number 10 which shows the finance structure. Average cost of debt now at 2.7%. We're very happy that we received two upgrades in rating in the last month. Firstly in May 2026 we received an upgrade from Moody's from BA3 to BA2. and following the successful Robic IPO also from S&P Global, which upgraded us from triple B minus to triple B. Both upgrades should be a good proof for our very stable and very strong financial structure with, just to repeat this again, in the meanwhile, a quite low leverage. So pro forma, after the Robic IPO, the LTV stands, as said, at 42.2% only. Page number 11 shows the maturity profile looking into 2026. Basically, everything is refinanced already, so we will have a larger repayment at the end of this month of €470 million from a convertible bond that is becoming due. But the performer cash position is quite strong right now, so more than €1 billion So we had roughly half a billion euros in the balance sheet at the end of the second quarter, plus still an inflow net after our costs of around 255 million from the OBIG IPO, plus some bank loan refinances that we did after the balance sheet date. So one point. 0,5 billion euros roughly is the cash position deducting the maturities that we have this year of around 578 million that leaves us with more than 450 million euros of free cash that we can use for the investments as I mentioned at the beginning into our rental portfolio and on the public level to grow the birth to services in Poland as well. Page number 13 shows you the development of operational data in the German portfolio. So our vacancy rate in the portfolio stood at 3.8%. That's higher than the beginning of the year, but basically as it is before, we expect a further reduction in vacancy rate. If you compare that with the same period one year before, we are already lower. So we've been 10 basis points below H1 2025, and therefore we are optimistic that we can improve the vacancy rate as in last year's in the remaining part of the year. Like-for-like rental growth, including vacancy reduction, more or less unchanged at 3%, But quite strong was the like-for-like rental growth without a vacant reduction, which came out at 2.9%. And please be aware, as always, just a very small part, 0.3% monetization revenue. So that means we have a quite strong underlying like-for-like rental growth from rent increases for existing tenants and from tenant turnover without any cap expanding. And that should be definitely a good sign. Page number 14 shows the portfolio valuation. As I said, a total value increase of 1.5%. And just to make this clear, this is including CapEx, so that should be very much in line with what you have seen in the peer group. Without the CapEx, this value increase was around 0.7, 0.8%. And that's basically more or less the same valuation result that we had in the two Semi-annual variations before. Positive trend continues. We have no outlook yet for the full-year variation, so no indications from the valuers yet, but currently we expect a more or less perhaps unchanged variation at year-end. because our gross yield is already on a quite, let's say, reasonable level. So 6.6%, which has been now quite stable for the last valuations, should be a gross yield that is, even in this world of higher interest rate, something that still leads to positive cash flows. So therefore, from our point of view, that should be a quite resilient valuation despite the increasing interest rate levels in the past months. Page number 15 shows you more details on the portfolio valuation, but let's go more to page number 17, which shows you operational data from the Polish portfolio. Here on this slide you see the development in the vacancy rate and the like-for-like rental growth. Again, please be aware that this is the data for the like-for-like portfolio, meaning without the resi-for-rent transaction. saw the portfolio that we owned before, which comprises a little bit more than 3,500 units. Still quite low vacancy level, 2.1% for all the units that have been on the market for at least one year, so which are stabilized. Like for our rental growth, was a bit lower, 2.4% in H1 2026, compared to 3.4% in 2025. What we observe in the portfolio is that we have more longer-term rental contracts, that are linked to inflation, so more and more tenants are choosing a two- or three-year contract. As Polish inflation rates came down in the last month, also the rental growth therefore was a bit lower, So, yes, lower rental growth, but, of course, lower turnover also leads to a lower cost base and less vacancy between tenant changes. So, therefore, we are not concerned that the Polish rental growth is now going in the wrong direction. So, we will have also more volatility or more ups and downs in the vacancy rate, sorry, in the black-collar rental growth in the future. But still, we are very much convinced that we will see sustainable growth also in the coming years. Page number 18 shows you more data on the visit for rent acquisition. I think I already touched the most important points. So now also our rental portfolio in Poland has a significant size, 9,100 units. already in the portfolio. More than 1,000 units under construction. More will follow in the next months. So you should expect that in the next two to three years, we will definitely start construction of between 1,500 and 2,000 apartments a year. So the portfolio will grow step by step over the next years. This comes to page number 20, which shows the Polish sales business. As I said, quite good sales results in the first six months of 2026. So 1,350 units sold after 1,158 units in the same period of the previous year. And as you see in the slide, knowing that the third and the fourth quarter of the year, also regarding the sales, normally stronger than the first half We are very much convinced that we are coming out to the sales numbers that we predicted. So something between 2,800 and 3,000 units for a full year should be absolutely realistic. So we still see healthy demand in the Polish sales market. Sales prices remain on a high level, and that gives us confidence for the future results. Pitch number 21 shows the revenue recognition. As said, you should expect, as in the previous years, that in the fourth quarter, we will have the largest part of our handovers. So therefore, the revenue recognition will pick up more and more as we progress throughout the year. Let's talk a little bit more about the Robic IPO. And I'm now on slide 22 of the presentation. Again, quick summary. Robic is listed on the Warsaw Stock Exchange since the 2nd of July, 2026. and on this date Robic had a post IPO market capitalization of around 860 million. We own still 67.1% of the Robic shares so therefore our remaining stake is valued at currently or at the IPO price 580 million euros. Total cross proceeds of 282 million for the group out of which roughly 94 million through capital increases on Robic level and through the sale of Robic shares that we conducted from the TARC side we received on TARC level around 188 million gross proceeds. And that means both segments, so the build to sell segment meaning Robic and the rental segment meaning the German business and the Polish rental business have now the possibility to grow. So Roebuck has now significant equity from the cross proceeds from the IPO, is able to buy further land plots, is able to grow stronger than in the past. And as already mentioned from the sale proceeds from the Roebuck shares that we received on target level, we can increase our German and Polish rental portfolio based not on the liquidity, but also based on the equity that we have from the sale of the shares now in the balance sheet. as said before, the LCV will be reduced quite significantly after the IPO. Page number 23 shows you again the performer data, so the main impact on the balance sheet as said, roughly 55 million with the NTA accretion translating into roughly 30 cents per share And if we look at our total investment that we have done at the value appreciation since we acquired Robic in 2022, meaning the cash proceeds that we now realized, the remaining stake that we still own of 67%, where the value is even higher than the total acquisition cost for the 100% stake, we achieved a value appreciation for a total investment of more than 40%, which would be a quite strong result. One comment on the FFO guidance or FFO2 guidance for 2026, so this remains unchanged. So far we have only deducted minority interests on project level and this will be unchanged for 2026. For 2027 onwards we will change the reporting, so we will deduct the object minorities from our FFO2 or from our Polish sales results. But this will then lead, on the one side, to a reduction in our Polish sales results next year. But as we expect, based on the IPO proceeds, on the Robic level, a quite strong growth. We think that this dilutive impact only lasts one year. So that means from 2028 onwards, based on stronger growths, even based on a lower stake in Robic, we should have again higher results on our Polish sales business. So therefore, as said, that should be a win-win situation for all the other segments. Page number 24, and that's the final conclusion from the Robic IPO, shows you that now based on a market relation of Robic and of our stake in Robic, We are able also to value as a kind of sum of the parts relation that is the implied market relation for our rental business. So just another example here shown based on the market capitalization at the end of last month. We had a total market capitalization of around 2.6 billion euros deducting the value of our stake at the end of July 2026 in Robic. That's an implied market valuation for our rental business of a little bit more than 2 billion euros only and then comparing that with the upper end of our financial year 2026 guidance for FFO1 that we published today as the more precise outcome of the guidance. We're ending up at a nearly 10% FFO1 yield. So therefore, that should be still a valuation level where an improvement should be possible. So the Robic IPO also makes more visible what our value in this Polish built-to-sell business is and also what then at least the implied market value on the rental business is. So we're operating still on a very high FFO1 yield. And then finally, guidance on page 26. As I said, all guidance for financial year 2026 is confirmed. And after the strong H1 2026 results, we expect now that FFO1 for this financial year is coming up now at the upper end of the guidance range, so more towards the 197 million euros. That's it for me as an overview for the H1 results. Thank you so far for listening, but I'm now very happy to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press STA and 1 on the touchstone 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 STA and 2. Participants are requested to use only handset while asking a question. Anyone who has a question may press STA and 1 at this time. The first question comes from Mario Pasto from Bernstein. Please go ahead.