TAGOF - TAG Immobilien AG (TAGOF) Q1 2024 Earnings Call Transcript

2024-05-14 20:50:22 ET

TAG Immobilien AG (TAGOF)

Q1 2024 Earnings Conference Call

May 14, 2024 4:00 AM ET

Company Participants

Martin Thiel – Co-Chief Executive Officer and Chief Financial Officer

Conference Call Participants

John Vuong – Van Lanschot Kempen

Marios Pastou – Bernstein

Andres Toome – Greene Street

Stephanie Dossmann – Jefferies

Céline Soo-Huynh – Barclays

Kai Klose – Berenberg

Thomas Neuhold – Kepler Cheuvreux

Manuel Martin – Oddo BHF

Simon Stippig – Warburg Research

Presentation

Martin Thiel

Gentlemen thanks and good morning all. Many thanks for adding into our Conference Call for the Q1 2024 Results. As always, I will try to give you a brief overview about our results and latest development and after that we, of course, have a lot of time for Q&A. So let’s start on Page number 4, which is the summary slides, where we want to show you the highlights from our point of view most important developments in the first quarter. Firstly, FFO I increased year-on-year by 5%, so we came out at an FFO I of €44.6 million in comparison to the previous year, that’s around €2 million more or 5% increase year-on-year. We think a good development that we can grow our rent results even in this quite elevated interest rate environment.

German portfolio showed quite solid performance like-for-like rental growth, including the impact from vacancy changes was 2.4%, so a little bit more than in full year 2023. Vacancy rate slightly up by 20 basis points, but we know this now for many years, that the first quarter in terms of vacancy reduction is always a little bit weaker, so 20 basis points up, but if you compare that with one year ago, so March 2023, where vacancy rate was 4.7, you clearly see the positive trend. Looking to Poland, quite strong sales result in Poland. So we handed over more than 800 units in the first quarter of 2024. And also on the sales side, the quarter was quite strong. So in terms of units it was a little bit less than in the previous quarter, so we sold 636 units. For example, in the previous quarter it was 709 units and in the quarter one year ago 972, but as prices have increased in Poland very strongly, so we see currently a year-on-year increase of around 20%, the sales volume. So the cumulative sales prices were at €118 million, so more than in the previous quarter and even more than in the first quarter one year ago due to this strong increase in sales prices.

Rent business in Poland was also very strong. Like-for-like rent growth is still above 10%, 10.1% exactly. If you look at the vacancy rate of the portfolio, the rental portfolio in Poland, which now comprises 2,600 units, it was at 9.8% compared to 7.2% at year end 2023, but don’t be confused about this increase in vacancy rate. This was purely driven by new apartments that came into operations as well at the end of 2023 and additionally in the first quarter of 2024. So looking at apartments that are in operation for a longer time, so at least more than one year, the vacancy rate is 2.6%, so just a temporary impact from new apartments coming into operation. Looking at disposals in Germany, we had basically after the balance sheet date, quite strong disposals, at least in our sizes, so we sold from January to May 2024, 780 apartments in Germany. The total sales prices are above €67 million and we expect net cash proceeds. So after repayment of respective bank loans of nearly €16 million, the average gross yields of the units that we sold was 5.3%. And you should expect the closing of these disposals mostly at the end of the second quarter this year perhaps a little part at the third quarter 2024.

The LTV was reduced in the first quarter by 140 basis points. So we are now almost at our LTV target, so a quite strong reduction from 47% here in 2023 now to 45.6%. And this was purely driven by the high cash generation that we had, especially in the Polish sales business. So any impact from disposals will come after the balance sheet date. So therefore it was, from our point of view, a very successful quarter in terms of deleveraging. And if you look at the cash metrics, which have been always quite strong in our company, they improved further. So net debt to EBITDA is now at around 8.7x and the ICR is still at 6.7x. So that’s quite a good value if you compare it within the sector....

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