TAG Immobilien Q3 Earnings Call Highlights

Key Points

• TAG raised its 2026 FFO I forecast to EUR 195 million–EUR 200 million after rental earnings helped lift FFO I 12% in the first nine months. It expects EUR 200 million–EUR 210 million in 2027.
• The ROBYG IPO reduced TAG’s stake to 67% and brought in EUR 282 million in gross proceeds, lowering its loan-to-value ratio to 42.6%. The smaller stake is expected to reduce Polish sales income by about 40% and FFO II by roughly 9% in 2027.
• Rental EBITDA growth is expected to be partly offset by higher financing costs, as debt is refinanced at rates above existing borrowing costs. TAG is considering share buybacks but currently favors rental investments, citing their expected yields.

TAG Immobilien ETR: TEG raised its 2026 forecast for funds from operations I after rental earnings helped drive a 12% increase in the measure during the first nine months of the year. The company also projected further growth in 2027, although higher financing costs and its reduced stake in Polish developer ROBYG are expected to weigh on results.

CFO and Co-CEO Martin Thiel said TAG now expects 2026 FFO I of EUR 195 million to EUR 200 million, up roughly 9% from the prior year. Its initial 2027 forecast is EUR 200 million to EUR 210 million, implying growth of about 4%.

Rental-business EBITDA rose 9% in the first nine months, while FFO II increased 7% year over year, Thiel said. Net income from Polish sales declined to EUR 29.6 million from EUR 34 million, but management expects a stronger fourth quarter as more apartments are handed over.

ROBYG IPO reshapes Polish earnings outlook

TAG completed the ROBYG initial public offering in July, retaining a 67% stake. The group received gross proceeds totaling EUR 282 million, including EUR 188 million at TAG from its share sale and approximately EUR 94 million received by ROBYG.

Thiel said the transaction reduced TAG’s loan-to-value ratio to 42.6% at the end of the third quarter, about 300 basis points below the previous quarter. It also increased EPRA net tangible assets by roughly EUR 62 million, or EUR 0.32 per share. EPRA NTA was up 8% year over year.

Because TAG now owns less of ROBYG, management expects its net income from Polish sales to fall by about 40% in 2027, contributing to an approximately 9% decline in FFO II. Thiel said the sales result could return in 2028 to a level similar to 2026 despite the smaller stake, supported by expected sales growth.

TAG sold roughly 2,150 Polish units in the first nine months and expects 2,900 to 3,100 sales for 2026, rising to 3,700 to 3,900 in 2027. Approximately 1,300 units were handed over in the first nine months.

Asked about the fourth-quarter handover target, Thiel said almost all apartments planned for handover had been sold, although completing the process by year-end remained important for accounting purposes. He also confirmed that roughly 100 to 200 handovers had shifted from 2026 into early 2027.

Financing costs and portfolio performance

Management expects rental EBITDA growth of EUR 20 million to EUR 25 million in 2027, partly offset by approximately EUR 10 million in higher financing costs. TAG’s average cost of debt was 2.9%, while current financing costs were around 4.75% to 5%, depending on the instrument, Thiel said.

He said debt maturing in 2027 carries an average cost of 2.5% and is assumed to be refinanced at roughly 225 basis points more. Refinancing pressure should be less pronounced afterward: 2028 maturities total EUR 79 million, while 2029 maturities have an average coupon of 4.1%.

In Germany, vacancy stood at 3.9%, compared with 3.8% in the preceding quarter. Thiel said the company expects a reduction of 30 to 50 basis points by year-end, though vacancy would still rise slightly over the full year. German like-for-like rental growth, excluding vacancy changes, was 3.1%.

Polish like-for-like rental growth slowed to 1.7%, excluding the portfolio acquired in May. TAG expects growth of 1.5% to 3% in both 2026 and 2027. Thiel said the company is pursuing longer leases, accepting somewhat less rental growth in exchange for lower tenant turnover.

TAG expects German property values to decline slightly in the second half, reversing an approximately 1.5% first-half increase and leaving full-year valuations broadly stable. Polish valuations are expected to be unchanged in the second half, Thiel said.

Buybacks under consideration

Thiel said share buybacks have become a more realistic option following recent share-price declines, but rental investment remains the preferred use of capital based on current net yields. He estimated a new Polish rental investment could generate a gross yield of about 7.5% and a net yield around 6%.

Any buyback would need to respect TAG’s leverage targets and investment-grade rating criteria, he said. The company is not seeking to increase leverage to its 45% target as quickly as possible, but views the headroom as flexibility for suitable acquisitions.

Thiel said the 2027 guidance includes no acquisitions in Germany or Poland. TAG sees potential deals of approximately EUR 50 million to EUR 100 million, though he cautioned that none were assured.

The company reaffirmed a dividend policy of 50% of FFO I and said it is not currently planning a scrip dividend for 2026, citing the potential for shareholder dilution at the recent share price.

About TAG Immobilien (ETR:TEG)

TAG Immobilien AG, a real estate company, acquires, develops, and manages residential real estate properties in Germany. It also rents commercial real estate properties, as well as operates serviced apartments. The company was formerly known as TAG Tegernsee Immobilien-und Beteiligungs-Aktiengesellschaft and changed its name to TAG Immobilien AG in September 2008. TAG Immobilien AG was founded in 1882 and is headquartered in Hamburg, Germany.

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