HAMBURG (dpa-AFX) - TAG Immobilien once again does not intend to pay a dividend to shareholders for the current financial year. "We can use the liquidity remaining from the dividend waiver to increase debt reduction, but also to further expand the high-yield Polish sales and rental portfolio," said CFO and Co-CEO Martin Thiel in a surprising announcement published on Monday evening. In reaction to the news, the share fell by a good four percent in early trading on Tuesday.

Thiel went on to say that not distributing profits to shareholders would also give the company greater independence in view of the uncertain market situation. As soon as the capital and transaction markets have returned to normal, TAG intends to resume dividend payments, the Hamburg-based MDax company added. A decision on a proposal for the 2024 financial year is to be made by the end of next year at the earliest and will then depend on the prevailing market conditions. TAG had already decided not to pay a dividend for 2022 in order to keep the money together in the face of rising market interest rates.

Meanwhile, the real estate group benefited from strong demand for residential space in the first nine months of the year. Net cold rent increased by three percent year-on-year to 261.8 million euros in the reporting period. Rents in the German portfolio rose by 2.2 percent on a comparable basis and including vacancy reduction. However, higher financing costs in particular weighed on the Group's earnings. The operating profit (FFO 1) fell by almost nine percent year-on-year to EUR 132.6 million. For the year as a whole, the management is still targeting EUR 170 to 174 million - and has also set itself this range for the coming year.

Like others in the industry, the Hamburg-based company is selling real estate in order to reduce its debt. In Germany, the Group sold around 1,300 apartments in the first nine months, and around 2,900 in Poland. "In a challenging market environment in Germany, we continued our apartment sales in the third quarter of 2023 and have now achieved the target we set in July 2022 of generating at least EUR 250 million in net cash inflows from this point onwards," said Co-CEO Claudia Hoyer.

Despite rising rents, TAG Immobilien posted a consolidated net loss of almost EUR 275 million in the first nine months. In the same period last year, the Group had posted a profit of just under 335 million euros. The revaluation of real estate in an environment of rising interest rates is also affecting other groups in the sector. Germany's largest residential real estate group Vonovia even made a billion euro loss in the first three quarters due to the lower valuation of its properties. The next round of real estate revaluation at TAG Immobilien will take place at the end of the year.

Analyst Thomas Rothäusler of Deutsche Bank assessed TAG Immobilien's results positively due to the surprisingly strong business in Poland and further residential sales. He also said that the planned suspension of the dividend for the current financial year was the right decision. Analyst Andre Remke of Baader Bank had expected the dividend to be canceled. Nevertheless, he was somewhat surprised that the company also justified the renewed suspension of the dividend with the financing of new projects in Poland. He had assumed that the Polish business was already self-financed.

In an interview with the financial news agency dpa-AFX at the beginning of October, CFO Thiel had said that the Polish residential real estate market was significantly more attractive than the German market. There, construction costs for buildings of the same quality are significantly lower than in Germany. This is mainly due to the significantly lower regulatory requirements in the Eastern European country. In Poland, the company can build really good apartments in Warsaw, Wroclaw and Gdansk for less than 2,000 euros per square meter. The apartments are therefore affordable for the Polish population despite the high interest rates. TAG currently sells 3000 to 4000 apartments a year in Poland.

In addition to selling apartments, TAG Immobilien also builds for its own company in Poland. "We have a rental portfolio - 2300 apartments are ready," said Thiel . In the next five years, the number of apartments owned by the company should rise to 10,000. The rent per square meter in the portfolio is between 14 and 15 euros. These are new-build apartments in large cities, the manager emphasized. Annual rental growth is currently more than ten percent.

The Hamburg-based company entered the Polish market at the end of 2019 with the acquisition of project developer Vantage Development and expanded its business in 2022 with the purchase of residential developer Robyg. Just recently, the real estate group founded a joint venture with a fund company of the financial investor Centerbridge Partners, which is responsible for the purchase of land and the construction and sale of residential units.

In Germany, the Hamburg-based group concentrates its portfolio of around 85,400 properties on so-called B and C locations, which are located in the wider catchment areas of metropolitan areas and medium-sized cities. The majority of the residential properties are located in eastern Germany in cities such as Gera, Leipzig, Chemnitz, Erfurt and around Berlin./mne/men/tav/stk