TAG Immobilien : Company presentation FY 2023

Company presentation FY 2023

Content

I.	TAG overview	3
II.	TAG German portfolio FY 2023	7
III.	TAG Polish portfolio FY 2023	13
IV.	TAG financing structure FY 2023	22
V.	TAG guidance FY 2024	26
VI.	Appendix	29

• Highlights FY 2023
• Income Statement, income statement details Germany and Poland, EBITDA/FFO/AFFO calculation, balance sheet, EPRA NTA/ NAV calculations
• German portfolio details and valuation details by region
• LTV calculation, net financial result calculation, financial covenants
• FFO and dividend historical development
• ESG strategy and ratings
• Share data
• Boards and management compensation

TAG Immobilien AG | April 2024 | 2

TAG overview

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TAG markets

Two separate country operations with distinct strategic angles

		TAG Germany
		 Acquisition of residential properties with value creation
		perspective
		− A cities with B locations or B cities with A locations
Strategy		− Acquisition of higher rental yield properties / portfolios due to
	above average vacancy and refurbishment requirements
		 Value creation via active asset management, which allows to
		grow rents, reduce vacancy and increase property values
		 Value crystallisation via selective asset disposals from portfolio

TAG Poland

• Building a portfolio of residential properties via own project developments in A cities only
• Focus on new constructed apartments to address the demand of the Polish population for higher quality buildings
• Value creation starts already in project development phase
• Project developments which are not suited for letting post completion, will be sold

Key

FFO I

FFO II

			Build-to-hold		Build-to-sell
	l-f-l rental growth		 Rental income starting to
	contribute substantially from		n/a
	Vacancy reduction
	2023/2024 onwards
					 Realization of sales profits
	Selective asset disposals yield disposal profits		n/a (no disposals planned)		 Net cash proceeds to be re-

metrics

NTA

					invested into "build-to-hold"
	Value creation from active asset management		 Value uplift post completion		 NTA growth by realizing
	of project development		sales profits

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TAG overview and strategy

Leading German affordable housing player and major Polish development business

GAV/ real estate assets Germany FY 2023	EUR 5,442.9m
GAV/ real estate assets Poland FY 2023	EUR 1,131.5m
GAV/ real estate assets in TOTAL FY 2023	EUR 6,574.4m
FFO I FY 2023	EUR 171.7m
FFO II FY 2023	EUR 255.6m
Market cap 31 Dec-2023	EUR 2,316.5.m
EPRA NTA per share 31 Dec-2023	EUR 18.31
LTV 31 Dec-2023	47.0%

Strategy for German portfolio

• TAG is a specialist for affordable housing in Eastern and Northern Germany and among the largest owners of residential properties in Eastern Germany
• Fully integrated platform via lean and decentralized organization: Local presence as a key element of TAG's asset management approach to ensure deep local market knowledge and efficient operation of assets
• Internal growth as one main driver: Active asset management approach to lift and realize value potential via vacancy reduction and selective investment of capex
• Disciplined and conservative approach regarding use of capital and new acquisitions
• Clear focus on per share metrics rather than absolute growth
• Stable and long term financing structure to support profitable growth strategy
• TAG is among leading real estate companies in the field of sustainability based on available ESG ratings

Strategy for Poland portfolio

• The Polish build to hold and build to sell platform bundles the Vantage and ROBYG business within one structure
• The current focus is on progressing the build to sell projects in order to maximise short term cash generation, which allowed the Poland portfolio to attain a self-funding stage
• For the build to hold activities, the medium to long term goal is to build c. 20,000 letting units in the residential-for-rentmarket in major Polish cities (A-citiesonly)
• • The focus is on new constructed apartments to address the demand of the Polish population for higher quality buildings
  • The value creation starts already in the project development phase, with a highly attractive c. 7% GRI yield on cost

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TAG highlights FY 2023: overview

1	FFO I guidance achieved
	and good operational performance within
	the German rental business

2

FFO II guidance exceeded due to strong

sales result in Poland

3

Polish rental and sales business

outperforming expectations

4 Total value adjustment in the German portfolio of c. -16% since H1 2022; disposals in Germany

totaling EUR 213m

5 LTV nearly unchanged at 47.0% due to disposals in Germany, strong sales results in Poland and dividend suspension

• FFO I of EUR 171.7m (Guidance: EUR 170-174m) corresponds to a reduction of 9% y-o-y (2022: EUR 189.4m) as a result of higher financing costs
• EBITDA (adjusted) from rental business increased in 2023 to EUR 236.4m (2022: EUR 233.5m); vacancy in the residential units in Germany down by 50 bps to 4.0% ; total l-f-l rental growth in Germany of 2.3% p.a.
• FFO II of EUR 255.6m (Guidance: EUR 240-246m) representing a 3% increase y-o-y (2022: EUR 247.3m)
• Strong EBITDA (adjusted) from sales business in Poland of EUR 100.6m (2022: EUR 80.8m) and increase
  in adjusted net income from sales business in Poland to EUR 82.8m (2022: EUR 59.3m)
• Rental portfolio in Poland comprises c. 2,400 units at YE 2023, further c. 1,400 units under construction; l-f-lrental growth of 10.8% p.a. and vacancy rate of 2.2% for units for more than one year under operations
• 3,586 units sold with total sales volume of EUR 479m in 2023 (2022 pro-forma: c. 2,389 units sold and EUR 265m sales volume)

 Valuation loss of 4.1% in H2 2023 after 7.4% in H1 2023; total fair value adjustment of

c. -16%in the last 18 months (-11.6% in FY 2023); 6.3% gross yield at YE 2023 and fair value of c. EUR 1,060/sqm

• 1,373 units sold in Germany in 2023 (2022: 1,589 units); total sales volume of EUR 213.5m (2022: EUR
  102.3m) and net cash proceeds of EUR 187.4m (2022: EUR 86.3m); gross yield of 4.3% (2022: 5.6%)
• LTV at YE 2023 of 47.0% after 46.7% at 31 Dec-2022 despite valuation adjustments in the German portfolio
• Net debt/EBITDA adjusted and ICR in 2023 at strong 9.3x (2022: 11.3x) and 6.0x (2022: 7.4x) respectively

Vacany rate in the German portfolio

down to 4.0%

Increase in EBITDA (adjusted) of 26% and in net income of 40% y-o-y

High rental growth and increasing

sales prices

in Poland

Conservative portfolio valuation level at 6.3% gross yield and fair value of c. EUR 1,060/sqm

Continued dividend suspension in 2024 (to be proposed to AGM) to safeguard cash and reduce leverage

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TAG German portfolio FY 2023

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TAG German portfolio rental growth and capex allocation

Rental growth achieved with moderate capex investments due to strong underlying fundamentals

Rental growth achieved with moderate investments

Maintenance & capex development (in EUR/sqm/year)

• TAG creates attractive rental growth from
• • Regular rent increases and tenant turnover ("basis l-f-l rental growth")
  • Vacancy reduction (leading to "total l-f-l rental growth")
• Investment of capex at selective locations targeted to reduce vacancy: Investments
  in vacancy reduction result in highly attractive returns: c.7%-12% equity return on capex in large modernisation measures and c.45%-50%equity return in the modernization of vacant flats

20.9

		Maintenance	13.3
		Capex
		Total	7.6

24.6

7.4

17.2

25.2

7.7

17.5

l-f-l rental growth excluding and including vacancy reduction

	rent increases existing tenants	0.1%
	tenant turnover	0.9%	0.8%
	modernisation surcharge

2.7%

2.3%

1.8%

1.5%	1.5%
	1.3%

2021			2022	2023
		Basis l-f-l		incl. vacancy reduction

	2021			2022		2023
Maintenance & capex split by region
		11%			EUR 124.5m in FY 2023
		14%
	12%				EUR 17.0m	EUR 9.6m
			12%
				EUR 14.4m	EUR 20.8m
	5%
			4%
				EUR 5.4m	EUR 6.4m
	17%			10%	EUR 12.7m	EUR 15.0m
		8%	7%
					EUR 9.0m	EUR 14.2m
Berlin	Chemnitz	Dresden	Erfurt	Gera
Hamburg	Leipzig	Rhine-Ruhr	Rostock	Salzgitter

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TAG German portfolio vacancy reduction residential units

Strong track record of recurring vacancy reduction after acquisitions leads to significant value creation

Acquisitions					Acquisitions
				+0.1%
+0.8%	5.9%
5.8%	5.7%				5.7%
			5.4%	5.5%	1)				Acquisitions
5.3% 1)					5.2%
										+0.1%
									4.8%		4.7%	4.7%
											4.6%
											4.5%	1)
										4.4%
														4.0%
Vacancy rate
Jan	Mar	Jun	Sep	Dec	Jan		Mar	Jun	Sep	Dec	Jan	Mar	Jun	Sep	Dec
		2021						2022					2023

1. including acquisitions from the previous year, part of vacancy in residential units from Q1 onwards

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TAG return on capex German portfolio 2023

Total capex 1)

(EUR 86.2m)

Equity (EUR 41.4m)

Modernisation of flats

• Share of total capex: c.48%
• Return on equity invested: 25%-30%

Equity + Debt (EUR 44.8m)

Large modernisation measures

• Share of total capex: c.52%
• Return on total investment: 7%-12%

Modernisation capex (EUR 21.4m)

Modernisation of vacant flats

• Share of total capex: c.25%
• Return on equity invested: 45%-50%

1. excl. capex for project developments of EUR 11.7m

Capitalised maintenance (EUR 20.0m)

Modernisation during re-letting

• Share of total capex: c.23%
• Return on equity invested: 4%-10%

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