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Group Annual Report 2017 Incl. Group

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Group Annual Report 2017 Incl. Group VALUES. GROWTH. POTENTIAL. 2017 ANNUAL REPORT KEY GROUP FIGURES ACCORDING TO IFRS Unit 01/01/2017– 01/01/2016– Change 31/12/2017 31/12/2016 in % Earnings indicators Rental income in EUR k 168,310 140,464 19.8 Net operating income from letting activities (NOI) in EUR k 153,548 125,588 22.3 Disposal profits in EUR k 2,561 6,391 – 59.9 Net income in EUR k 284,373 94,109 202.2 Funds from operations (FFO) in EUR k 102,673 76,877 33.6 FFO per share1 in EUR 1.29 1.14 13.2 Unit 31/12/2017 31/12/2016 Change in % Balance sheet matrix Investment property in EUR k 3,383,259 2,215,228 52.7 Cash and cash equivalents in EUR k 201,476 68,415 194.5 Total assets in EUR k 3,835,748 2,344,763 63.6 Equity in EUR k 1,936,560 1,009,503 91.8 Equity ratio in % 50.5 43.1 7.4 pp Interest-bearing liabilities in EUR k 1,541,692 1,040,412 48.2 Net debt in EUR k 1,340,216 971,997 37.9 Net LTV2 in % 39.2 43.4 – 4.2 pp EPRA NAV3 in EUR k 2,228,512 1,252,131 78.0 EPRA NAV per share1, 3 in EUR 21.84 18.57 17.6 Unit 31/12/2017 31/12/2016 Change in % Key portfolio performance indicators Property value4 in EUR k 3,400,582 2,241,615 51.7 Properties Number 426 404 22 units Annualised in-place rent5 in EUR k 214,057 155,276 37.9 In-place rental yield in % 6.3 6.9 – 0.6 pp EPRA Vacancy Rate in % 3.6 3.8 – 0.2 pp WALT in years 6.3 6.1 0.2 years Average rent EUR/sqm 10.05 9.67 3.9 1 Total number of shares as at 31 December 2016: 67.4 m, as at 31 December 2017: 102.0 m. The weighted average number of shares was 67.4 m in 2016 and 79.7 m in 2017. 2 Calculation: Net debt divided by real estate assets; for the composition see page 69. 3 The calculation has changed in accordance with the specifications of the EPRA. For more detailed information, seepage 42. 4 In line with values disclosed according to IAS 40, IAS 2, IAS 16 and IFRS 5. 5 The annualised in-place rent is calculated using the annualised rents agreed as at the reporting date – not factoring in rent-free periods. Page reference Contents Link VALUES GENERATE GROWTH tlg immobilien ag is a leading commercial real estate company in germany IMMOBILIEN continued its development in 2017 TLG and established itself as a leading commercial real estate company throughout Germany by acquiring WCM, which was primarily active in western Germany. TLG IMMOBILIEN was able to increase the value of its portfolio to around EUR 3.4 bn due to consistently strong demand for lettable areas and its high-quality portfolio, which it expanded further through strategic acquisitions and the takeover of WCM. The company improved important key performance indicators and, in doing so, greatly surpassed some of its stated objectives. Thus TLG IMMOBILIEN once again created VALUE. The cornerstone was laid for sustainable GROWTH through the expansion measures implemented in 2017 as well as the refinancing and securing of solid long-term funding. The Management Board sees the POTENTIAL to increase rental income, increase the value of the portfolio and, in turn, further increase earnings in 2018. In 2017, the capital market recognised the reliability of TLG IMMOBILIEN in achieving its stated objectives with a share price increase of 23.7%. Furthermore, the shareholders of TLG IMMOBILIEN AG are to share in the success of the company once again in the form of an attractive dividend. EUR 0.82 proposed dividend based on 102.0 m shares as at 31 December 2017 m – 128 EUR 125 is the FFO forecast for the end of 2018, plus the income contributions from further acquisitions VALUES. 02 EDITORIAL GROWTH. 06 STRATEGY POTENTIAL. 22 NEW RENTAL AGREEMENTS 26 POTENTIAL FOR DEVELOPMENT 30 FINANCING GROWTH » TLG IMMOBILIEN is very well funded for the future. « peter finkbeiner member of the management board of tlg immobilien ag TO OUR 32 REPORT OF THE SUPERVISORY BOARD SHAREHOLDERS 36 TLG IMMOBILIEN SHARES 40 KEY FIGURES ACCORDING TO EPRA 46 CORPORATE GOVERNANCE REPORT » We are confident that our growth will remain solid in 2018. « niclas karoff member of the management board of tlg immobilien ag GROWTH 58 REPORT ON THE POSITION OF THE COMPANY AND OF THE GROUP IN 2017 TARGETS 98 CONSOLIDATED FINANCIAL STATEMENTS RELIABLY INSIDE COVER ACHIEVED ANNUAL-/QUARTERLY PERFORMANCE INSIDE COVER FINANCIAL CALENDAR AND IMPRINT 2 VALUES. GROWTH. POTENTIAL. | 2017 ANNUAL REPORT OF TLG IMMOBILIEN editorial DEAR SHAREHOLDERS, DEAR SIR OR MADAM, DEAR BUSINESS PARTNERS AND TENANTS. he 2017 financial year was a highly eventful and ex- By acquiring around 86% of the shares in WCM Beteiligungs- ceptionally successful one for TLG IMMOBILIEN. The und Grundbesitz Aktiengesellschaft and a total of 29 other markets relevant to us generally developed positive- attractive properties, we have increased the value of our Tly in the context of healthy economic development portfolio by more than EUR 1.0 bn, or 51.7%, to EUR 3.4 bn and persistently low interest rates. We used these devel- – twice as high as it was at the IPO in 2014. Our successful opments to further substantiate the value of our portfolio expansion into other growth regions in Germany over the and pave the way for more profitable growth. In doing so, past two years helped us to position ourselves as a leading we were consistently able to achieve our stated objectives. commercial real estate company throughout Germany in a short period of time. This generates significantly greater opportunities that enable us to continue to grow flexibly on the basis of our established business model. 2017 ANNUAL REPORT OF TLG IMMOBILIEN | VALUES. GROWTH. POTENTIAL. 3 Last year, we utilised the capital market four times in order Ever since the IPO, it has been our philosophy to give our to finance the record investments totalling over EUR 1.0 shareholders a proportionate share of the success of the bn relating to our expansion and to repay existing loans. company. We are therefore happy that the results achieved For one, a total of around 34 m new shares were issued in the reporting year have also been recognised by the through two capital increases and the stock swap as part capital markets. This is reflected by the 23.7% increase in of the WCM transaction. Additionally, our healthy relation- the share price of TLG IMMOBILIEN AG to EUR 22.15 by the ships with numerous investors resulted in the successful end of 2017. Additionally, we would like our shareholders placement of our first corporate bond totalling EUR 400 m. to share in our success by paying a dividend of EUR 0.82 The great interest of the financial markets was reflected in per no-par value share based on 102.0 m shares as at 31 the highly attractive terms. Furthermore, within one year December 2017. We will propose this dividend to our next we were able to significantly decrease the average cash general meeting on 25 May 2018. costs of debt of TLG IMMOBILIEN from 2.46% to 1.84%. We are confident that our profitable growth will continue in As in previous years, in addition to the acquisitions, the sale the new 2018 financial year. Financially speaking, we are of a number of properties which were no longer strategically exceptionally well equipped to acquire attractive office and suitable attested to our active portfolio management. retail properties as well as selected hotel properties for our Overall, including due to the successful closing of new portfolio this year. As you can read in this annual report, rental agreements in the financial year, we were once again we want to continuously develop our property portfolio. able to improve our relevant key operational indicators. Net Therefore, with consideration of acquired properties year to operating income from letting activities grew by 22.3% to date as well as WCM, we aim to generate FFO of between EUR 153.5 m and funds from operations (FFO) increased by EUR 125 m and EUR 128 m in the 2018 financial year. This around 34% to EUR 102.7 m. FFO was last forecast to be would represent a further improvement of 20.1% or 23.7% between EUR 95 m and EUR 97 m. Due to the operational compared to the previous year. performance, the positive development of the value of the portfolio and the recognition of the income tax loss You have our thanks, dear shareholders, for your loyalty to carryforwards, the EPRA Net Asset Value (EPRA NAV) also our company and for our constructive dialogue. The same increased significantly from EUR 18.57 to EUR 21.84 per goes for our business partners and tenants: These positive share. developments would not have been possible for our com- pany without our close and cooperative partnership. We Central adjustments were also made to our organisation therefore wish to thank you very much. Special recognition in 2017 in order to account for planned dynamic growth is also due to all of the employees of the Group, of whom in the future and the associated complexity of the Group. more was demanded than in previous years due to the In addition to reorganising the operational fields, we were successful growth of the company.
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