TAG Immobilien ETR: TEG reported a stronger start to 2026, with Chief Financial Officer and Co-CEO Martin Thiel telling analysts that the first quarter was “a very good one” as funds from operations, rental growth and Polish apartment sales all improved from the prior-year period.
FFO I rose to EUR 49.3 million in the first quarter, up from EUR 44.9 million in the same period last year, representing a 10% increase. Thiel said the quarter-over-quarter improvement was driven by more than EUR 5 million of higher EBITDA, partly offset by roughly EUR 1.3 million of higher financing costs.
The company also confirmed its 2026 guidance for FFO I, adjusted net income from sales in Poland and FFO II. Thiel said the company remains “very comfortably positioned” within its guidance range, particularly if the planned Resi4Rent acquisition closes in the second quarter as expected.
German and Polish rental growth remains solid
TAG reported like-for-like rental growth of 3.3% per year in Germany and 3.2% per year in Poland during the first quarter. Thiel said the German growth rate was the company’s strongest in roughly three to four years and was mainly driven by rent increases for existing tenants, supported by some vacancy reduction.
In Germany, vacancy rose by 30 to 40 basis points in the quarter, which Thiel described as a normal seasonal pattern. He said TAG expects vacancy in the German portfolio to decline over the remaining quarters and finish the year below the starting level of 3.2%.
During the Q&A, John Wong of Van Lanschot Kempen asked whether the stronger German rent growth reflected particular local rent index developments. Thiel said the improvement was broad-based across the company’s portfolio and not dependent on a few major locations. He added that TAG’s rents are only rarely above local rent index levels, giving the company room to raise rents step by step as those indices increase.
In Poland, Thiel said the stabilized rental portfolio had a vacancy rate of 2%, which he characterized as low and evidence of strong demand. Responding to Andrew McGrath of Green Street, he said the increase from the prior quarter was due to tenant turnover and was normal given that many Polish rental contracts have one-year terms.
Polish sales business improves from prior year
TAG’s Polish sales business also posted year-over-year gains. Net income from sales in Poland reached EUR 12.7 million in the first quarter, compared with EUR 5.0 million in the same quarter of 2025. The company sold 658 units in Poland, up from 592 units a year earlier. Handovers also increased to 311 apartments from 224 apartments in the first quarter of 2025.
Thiel cautioned that the first quarter is typically weaker than the fourth quarter, when the company usually completes the most apartment handovers. He said TAG expects a similar seasonal pattern this year, with results increasing over the course of 2026 and the strongest contribution coming in the fourth quarter.
Asked by Stéphanie Dossmann of Jefferies about pricing and margins in Poland, Thiel said demand remains strong and sales prices are “even slightly increasing.” He said TAG has not yet seen stronger construction price inflation, though energy prices remain an uncertainty for 2027 and 2028. He added that the company is optimistic it can keep its margins and noted that gross margins in many cases are close to 35%, providing a buffer if cost inflation increases.
Resi4Rent closing still expected in second quarter
Thiel said antitrust approval for TAG’s planned acquisition of the Resi4Rent portfolio in Poland remains outstanding but is expected shortly. He said the company still assumes the transaction will close in the second quarter of 2026 and continues to expect approval without conditions.
According to Thiel, the antitrust decision is the only material outstanding closing condition. Once approval is granted, he said closing should take place roughly two weeks later.
In response to a question from Thomas Rothäusler of Deutsche Bank about possible conditions from Polish authorities, Thiel said TAG does not expect any. He said that even after the acquisition, TAG would own a little more than 9,000 units in Poland out of about 1.2 million rental apartments, leaving it “far away” from a position where it could dictate rents.
Kanat Mitra of Barclays asked whether there could be a valuation uplift on the Resi4Rent portfolio given interest rate cuts in Poland since the deal was signed in August. Thiel said TAG acquired the portfolio based on an expected gross rental yield of around 7.5% for this year and believes there is room for valuation uplift over the medium term, though he said the immediate valuation impact remains uncertain.
ROBYG options still under review
TAG continues to evaluate strategic alternatives for ROBYG, its Polish sales business. Thiel said the main option under consideration is a potential public offering and listing of ROBYG shares on the Warsaw Stock Exchange.
However, he emphasized that TAG is committed to remaining the majority shareholder of ROBYG and does not view the process as a strategic shift away from the sales business. “This could be an opportunity, but it’s not a must,” Thiel said, adding that remaining the sole shareholder would not be a bad outcome.
Rothäusler asked whether a potential IPO should be viewed as a way to shift capital from build-to-sell into build-to-rent. Thiel said that would not represent a new strategy, noting that cash generated by the sales business already effectively supports growth in the rental business.
Balance sheet metrics remain near targets
TAG reported an LTV ratio of 41.0% at the end of the first quarter. Thiel said the pro forma LTV after the Resi4Rent acquisition would be about 45.3%, close to the company’s 45% target. EPRA NTA was broadly unchanged quarter over quarter but up 7% year over year.
The company had a cash position of nearly EUR 1.3 billion, though Thiel said much of that is earmarked for the Resi4Rent purchase price of about EUR 565 million and repayment of a EUR 470 million convertible bond due in August 2026.
Thiel said S&P confirmed TAG’s BBB- rating with a positive outlook in March 2026, while Moody’s has rated the company Ba3 with a positive outlook since June 2025. He pointed to the company’s 8.6 times net debt-to-EBITDA ratio and interest coverage ratio above 6 times as supportive financial metrics.
On capital allocation, Thiel said TAG intends to continue expanding its Polish rental business, with construction starts of roughly 2,000 apartments planned this year. He said no external equity is needed for this organic growth. When asked by McGrath whether TAG would consider share buybacks given its discount to NTA, Thiel said, “No, not at this point of time,” citing growth opportunities in the Polish rental market.
TAG plans to pay a dividend of EUR 0.40 per share for the 2025 financial year, subject to approval at its annual general meeting, with a scrip dividend option available. Thiel also reiterated that the payout ratio for the 2026 financial year is set to increase to 50% of FFO I.
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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