TAG Immobilien (TEG) Q2 2024 earnings summary

Executive summary

• FFO I for H1 2024 was €88.1 million, stable year-over-year despite German disposals; Polish sales result increased to €34.1 million, up from €23.2 million.

• Like-for-like rental growth in Germany rose to 2.7% and in Poland was 4.5%; German vacancy rate improved to 4.2%, Polish vacancy at 7.4% overall and 2.8% for mature units.

• Net rental income was €145.7 million, with consolidated net loss sharply reduced to €-7.1 million from €-304.7 million, mainly due to lower valuation losses.

• Moody’s upgraded credit rating to Baa3 and S&P confirmed BBB- with stable outlook, restoring two investment-grade ratings.

• LTV reduced to 46.6% (pro forma 46.3%), supported by strong Polish cash generation and disposals.

Financial highlights

• EBITDA for H1 2024 was €120.1 million, slightly down due to German disposals; adjusted EBITDA from sales was €38.9 million.

• Rental income rose to €178.2 million (+2.3%), with net rental income stable at €145.7 million.

• FFO II increased 9% to €121.4 million, driven by higher sales in Poland; AFFO was €52.6 million (up 8%).

• German portfolio valuation loss moderated to 2.7% in H1 2024, with cumulative devaluation at 19% over two years; Polish rental portfolio saw a €9.5 million valuation gain.

• 880 units disposed in Germany for €78.4 million; 1,056 units sold in Poland for €198 million.

Outlook and guidance

• FFO I guidance for 2024 is €170–174 million; FFO II (including Polish sales) is €217–223 million, both confirmed.

• Like-for-like rental growth guidance of 2.2–2.7% is on track, with potential upside.

• Vacancy rate expected to fall below 4% by year-end.

• Dividend outlook remains under review, with updates expected in Q3; policy dependent on market conditions.

• Adjusted EBITDA (rental Germany): €218–222 million; (rental Poland): €11–13 million; (sales Poland): €64–70 million.