TAG Immobilien : Interim Report

INTERIM

REPORT

2021 ON THE 2ND QUARTER

GROWING CASHFLOWS

2
Group financials	Management report	Balance sheet	Income statement	Statement of comprehensive income	Cashflow statement

GROUP FINANCIALS

in EUR m

Income statement key figures	01/01/-06/30/2021	01/01/-06/30/2021
Net actual rent	166.0	159.7
EBITDA (adjusted)	114.2	113.0
Consolidated net profit	324.1	212.8
FFO I per share in EUR	0.62	0.59
FFO I	91.5	86.5
AFFO per share in EUR	0.42	0.33
AFFO	61.9	48.6

Balance sheet key figures	06/30/2021	12/31/2020
Total assets	6,800.7	6,478.0
Equity	2,879.2	2,681.5
Equity ratio in %	42.3	41.4
EPRA Net Asset Value (NTA, fully diluted) per share in EUR	23.69	21.95
LTV in %	44.1	45.1

Portfolio data	06/30/2021	12/31/2020
Units Germany	88,319	88,313
Units Poland (secured pipeline)	11,922	8,742
GAV (real estate assets Germany and Poland)	6,365.4	5,834.3
Vacancy in % (total)	6.1	5.6
Vacancy in % (residential units)	5.8	4.5
l-f-l rental growth in %	1.6	1.4
l-f-l rental growth in % (incl. vacancy reduction)	1.6	1.5

Employees	06/30/2021	12/31/2020
Number of employees (Germany and Poland)	1,377	1,354
Capital market data
Market cap at 06/30/2021 in EUR m		3,920.3
Share capital at 06/30/2021 in EUR		146,498,765
WKN/ISIN		830350/DE0008303504
Number of shares at 06/30/2021 (issued)		146,498,765
Number of shares at 06/30/2021 (outstanding, without treasury shares)		146,379,501
Free Float in % (without treasury shares)		99.92%
Index		MDAX/EPRA

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Changes in consolidated equity	Segment report	Notes	Review report	Responsibility statement	Financial calendar	Contact

CONTENTS

TABLE OF CONTENTS

Group Financials

Management Report

Consolidated Balance Sheet

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Cashflow Statement

Statement of Changes in Consolidated Equity

Notes

Audit Certificate

Responsibility Statement

TAG Financial Calendar/Contact

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04

30

32

33

34

36

38

48

49

50

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Group financials	Management report	Balance sheet	Income statement	Statement of comprehensive income	Cashflow statement

MANAGEMENT REPORT

INTERIM GROUP MANAGEMENT REPORT FOR THE

FIRST SIX MONTHS OF THE 2021 FINANCIAL YEAR

FUNDAMENTALS OF THE GROUP

Overview and corporate strategy

TAG Immobilien AG (also referred to as 'TAG' or the 'Group' in the following) is a Hamburg-based property company focused on the German residential real estate sector. The properties owned by TAG Immobilien AG and its subsidiaries are located in various regions of Northern and Eastern Germany and North Rhine-Westphalia, and, starting in the 2020 financial year, in Poland as well. Overall, at 30 June 2021 TAG managed around 88,300 residential units (31 December 2020: around 88,300) in Germany and had a contractually secured project pipeline for the construction of approx. 12,000 units (31 December 2020: approx. 8,700 units) in Poland, of which approx. 8,200 units (31 December 2020: approx. 5,700 units) are earmarked for long-term portfolio retention.

TAG Immobilien AG shares are listed in the MDAX of the Frankfurt Stock Exchange; TAG's market capitalisation at 30 June 2021 was EUR 3.9bn (31 December 2020: EUR 3.8bn).

TAG's business model is the long-term letting of flats. All functions essential to property management are carried out by its own employees. The Company also provides caretaker services and craftman services for its own portfolio. It specialises in inexpensive housing that appeals to broad sections of the population. The Group's own multimedia company supports the provision of multimedia to tenants and expands the range of property management services offered. Energy management is pooled in a subsidiary and comprises the supply of commercial heating to the Group's own portfolio with the aim of optimising energy management. In the medium term, these services are to be further expanded and supplemented with new services for tenants.

TAG invests primarily in medium-size towns and in the vicinity of large metropolises, as this is where potential for growth, and in particular better opportunities for returns in comparison with investments in the big cities, is seen. The newly acquired portfolios usually have higher vacancies, which are then reduced following the acquisition, through targeted investments and proven asset-management concepts. In Germany, investments are made nearly exclusively in regions already where TAG already manages assets, in order to make use of existing administrative structures in this way. Also, local knowledge of the market is essential in the acquisition of new portfolios here.

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Changes in consolidated equity	Notes	Review report	Responsibility statement	Financial calendar	Contact

Besides long-term property management, the Group selectively exploits sales opportunities in order to reinvest the rea- lised capital appreciation and liquidity into new portfolios with higher yields. This strategy of 'capital recycling' is TAG's response to the intense competition for German residential real estate, and puts a focus on earnings per share. Growth in absolute orders of magnitude is not at the forefront of the corporate strategy. Instead, the aim is to offer tenants affordable housing through sustained and active portfolio management, and investors growing cash flows through attractive divi- dends. In 2020 financial year, TAG regionally expanded its portfolio into Poland. Vantage Development S.A. ('Vantage'), a real estate developer whose headquarters and main activities are located in Wrocław, will serve as the platform for further development here, which in future will also focus on building up a Group-owned portfolio of apartments in Poland and will also include the ongoing sale of units already planned and to be constructed.

The growing Polish residential real estate market is the target of a regional expansion of TAG's business model which here, too, will focus on strong cash returns (i.e. FFO returns in relation to the equity invested). The Polish rental housing market is characterised by a supply shortage. It is considered one of the least saturated housing markets in Europe, with an increasing housing shortage that already exceeds 3.5 million units (OECD database). Furthermore, the absolute size of the Polish market (approx. 38 million inhabitants, sixth-largest EU country in terms of population), coupled with a growing services sector and favourable demographic trends ('Generation rent' - a growing preference for rented apartments) supports TAG's market entry in Poland. The Management Board expects that early market entry can give TAG a competitive advantage in terms of scope, market knowledge, market penetration, and market position.

TAG's medium-term growth target, i.e. for the next three to five years, is to build up a portfolio of around 8,000 to 10,000 residential units in Poland. Capital spending will focus on new construction in large cities with favourable population trends, proximity to universities, and a well-developed infrastructure.

Sustainable corporate development

Sustainability issues are changing the way companies are viewed and how they are perceived by the public. In the future, our responsibility with regard to climate protection, the use of resources and social commitment will become even more important. We successively expanded our sustainability strategy and anchored it more intensively. This enabled us to integrate sustainability aspects even more strongly into our business activities and raise awareness of them. We include all economic, ecological and social impacts of our actions along the entire value chain in our sustainability strategy. Because for us, sustainable corporate development is an integrated concept with synergy effects between the various levels of Sustainability and in return our social and environmental measures have a positive effect on our long-term commercial success for our Company.

Our annual reporting on the topic of sustainability is presented and published in a separate Sustainability Report for the given year (available at www.tag-ag.com under 'Investor Relations/Financial Reports/Sustainability Reports'), which is guided by the standards of the Global Reporting Initiative (GRI) and the European Public Real Estate Association (EPRA). This allows us to compare our results and targets over time, and to review and present our development according to objective criteria.