TAG Immobilien AG VP-Sr Credit Officer · Profile TAG Immobilien AG (TAG) owns and manages a large and diversified multifamily residential rental portfolio of about 84,300 units mainly

CORPORATES

CREDIT OPINION19 July 2019

Update

RATINGS

TAG Immobilien AGDomicile Germany

Long Term Rating Baa3

Type LT Issuer Rating - DomCurr

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Oliver Schmitt +49.69.70730.732VP-Sr Credit [email protected]

Moritz Mayer +49.69.70730.951Associate [email protected]

Anke Rindermann +49.69.70730.788Associate Managing [email protected]

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

TAG Immobilien AGUpdate to credit analysis

SummaryTAG Immobilien AG's (TAG) Baa3 long-term issuer rating reflects the company's (1) focus onregulated affordable housing activities that generate stable rental income; (2) broad tenantdiversification in a portfolio of around 84,300 units valued at around €4.8 billion across anumber of regions in Germany, one of the most stable European real estate markets; (3)improving debt/gross assets, fixed-charge coverage and net debt/EBITDA; and (4) long-dateddebt maturities.

These positives are partly offset by (1) a larger share of the company's assets in weakereconomic regions of Germany ; (2) the increased likelihood of tightening rental regulations,which may curb income growth; (3) its improving but still-high vacancy rates compared withthose of its peers; and (4) its high reliance on secured funding, resulting in a low ratio ofunencumbered assets and a high secured debt ratio.

Exhibit 1

We expect TAG's leverage to further reduce while improving its coverageMoody's-adjusted leverage and coverage metrics

57%55%

48% 48%

43% - 45%2.2x

2.8x

3.7x3.9x

4.0x - 4.5x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

30%

35%

40%

45%

50%

55%

60%

65%

70%

Dec-16 Dec-17 Dec-18 LTM Mar-19 Moody's 12-18 months forward view

Debt / Gross Assets (lhs) EBITDA / Fixed Charges (rhs)

Sources: Moody's Financial Metrics™, Moody's Investors Service estimates

Credit strengths

» Focus on stable and regulated rental housing activities in Germany, generating stable cashflows from a portfolio diversified across several German regions

» Improving debt/gross assets, fixed-charge coverage and net debt/EBITDA

» Improving vacancy rates and continued rental growth in the portfolio without substantialcapital spending

http://www.surveygizmo.com/s3/1133212/Rate-this-research?pubid=PBC_1179680

https://www.moodys.com/credit-ratings/TAG-Immobilien-AG-credit-rating-823445631

MOODY'S INVESTORS SERVICE CORPORATES

Credit challenges

» A larger share of the company's assets in weaker economic regions of Germany

» Increased likelihood of tightening rental regulations, which may curb income growth

» Improving but still-high vacancy rates compared with those of peers

» High reliance on secured funding, resulting in a low ratio of unencumbered assets and a high secured debt ratio

Rating outlookThe stable outlook reflects our expectation that TAG’s leverage, measured as Moody's-adjusted debt/gross assets, will remain below50% and the company's unencumbered asset ratio remains broadly stable between 10% and 15%.

Factors that could lead to an upgrade

» Gross debt/total assets sustained towards 45%, with a financial policy that supports this leverage position

» Fixed-charge coverage maintained above 3.0x

» Share of unencumbered assets closer to a third of total assets

Factors that could lead to a downgrade

» Gross debt/total assets above 55% — failure to improve the level of unencumbered assets to around a third of the total wouldrequire debt/assets to be below 50% for the assigned rating

» Fixed-charge coverage below 2.25x

» Change in our positive fundamental view of the German residential sector, potentially driven by tightening regulations

» Failure to maintain adequate liquidity

Key indicators

Exhibit 2

TAG Immobilien AG

USD Millions Dec-14 Dec-15 Dec-16 Dec-17 Dec-18

LTM

(Mar-19)

Moody's 12-18 month

forward view

Real Estate Gross Assets 4,533.1 4,134.5 4,248.9 5,578.3 5,767.6 5,662.6 $5,900 - $6,500

Amount of Unencumbered Assets 10.7% 9.7% 6.3% 15.7% 13.8% 14.0% 10% - 15%

Debt / Real Estate Gross Assets 66.0% 62.2% 56.8% 54.7% 48.1% 47.5% 43% - 45%

Net Debt / EBITDA 16.4x 14.1x 12.3x 11.2x 10.9x 10.8x 10.3x - 10.8x

Secured Debt / Real Estate Gross Assets 50.8% 48.2% 45.3% 41.7% 36.8% 36.5% 33% - 35%

EBITDA / Fixed Charges 1.5x 1.7x 2.2x 2.8x 3.7x 3.9x 4x - 4.5x

All figures and ratios are calculated using Moody’s estimates and standard adjustments. Moody's 12-18-month forward view is Moody's opinion and does not represent the views of theissuer. Periods are financial year-end unless indicated. LTM = Last 12 months.Source: Moody’s Financial Metrics™

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 19 July 2019 TAG Immobilien AG: Update to credit analysis


ProfileTAG Immobilien AG (TAG) owns and manages a large and diversified multifamily residential rental portfolio of about 84,300 unitsmainly located in the east and north of Germany. As of 31 March 2019, TAG’s assets totaled around €5.0 billion. Headquartered inHamburg, TAG is listed on the MDAX Frankfurt Stock Exchange with a market capitalisation of €3.0 billion as of 28 June 2019, that is,at a 15.5% premium to its reported net asset value.

Exhibit 3

TAG's portfolio is mostly located in Eastern and Northern GermanyProperty fair value split by geography (as of March 2019)

Berlin15%

Chemnitz7%

Dresden10%

Erfurt13%Gera

9%Hamburg10%

Leipzig11%

Rhine-Ruhr6%

Rostock8%

Salzgitter11%

Source: Company information

Detailed credit considerationsFocus on stable and regulated rental housing activities in GermanyThe German residential sector is one of the most stable asset classes in the European real estate industry, with high demand andlimited supply supporting rents and values. While the potential for tighter regulation is a threat to property value and cash flow growth,it will also probably intensify the supply and demand imbalance.

The German rental market is highly regulated: reletting rents and rent increases for existing tenants are capped according to a localindex (Mietspiegel) calculated by local authorities and taking into consideration the property's location and quality. Rent increases arecapped at 15%-20% over a period of three years, with allowance made for modernisation, the cap on which is 8% a year. Prices andrents for residential properties have been more stable in Germany than in any other large developed economy, even after taking intoaccount recent increases. Since 1970, German house prices have increased broadly in line with inflation but have never declined morethan 3% in any given year.1

Further broad-based rental increases are likely in Germany unless regulations tighten significantly. The demand for rental housing isstrong, driven by rising household formation and net immigration. We expect demand for smaller one- and two-person dwellings togrow around 3% a year until 2035.2 In all the major German cities, asking rents for apartments exceed the average existing rentalprices, which will help support rental growth in the next few years.

Average rents remain affordable despite recent rent and value increases. Nevertheless, affordability fluctuates in tandem with theabsolute amount of household income, which exposes lower-income households in particular to higher rental cost-to-income ratios.And affordability has clearly declined in the past five years, with rental growth exceeding income growth.

Various studies show a substantial shortfall in affordable housing in Germany, with supply not picking up quickly enough to closethe gap.3 This gap is the greatest for smaller apartments for households of one to three people. New builds are limited becauseconstruction costs are high at more than €2,500 a square metre (sqm). At the same time, the return on new construction is limited,because of restrictions on rents and other building regulations that differ from city to city. The return on new developments is pusheddown by quotas for affordable living, which are generally in the range of 20%-40% for the main German cities. The regulations oftenrequire developers to maintain affordable rents in parts of new developments for a longer term, for example, 30 years.



Diversified portfolio with stable growth prospects and improving vacancies, partially located in weaker regions of GermanyTAG has a very diversified portfolio of around 84,300 units, out of which are 82,900 residential units, concentrated outside the largestcities. TAG focuses on affordable housing, which is largely reflected in its relatively moderate rents in a portfolio that generates a higheryield on value than those of some of its residential peers.

Around two-thirds of TAG’s residential units are located in 30 cities with more than 20,000 inhabitants, although some are suburbs oflarger urban areas. Only about 10% of the portfolio is located in cities with smaller populations, so overall, the portfolio will benefit tosome extent from the urbanisation trend in Germany.

Exhibit 4

TAG's portfolio as of 31 March 2019

Region

Fair Value in

EURm FV in % total Units

Renatable area

(sqm)

Fair value

per sqm

(EUR) in-place yield

Vacancy

March 2019

Actual net cold

rent (EUR/sqm)

Reletting

rent (EUR

sqm)

Maintenance

(EUR sqm)

Capex (EUR

sqm)

Berlin 695.9 14.4% 10,495.0 602,903 1,154.2 5.6% 4.5% 5.6 6.3 1.9 3.0

Chemnitz 332.4 6.9% 7,678 447,021 743.6 7.1% 9.6% 4.9 5.1 1.5 9.2

Dresden 479.8 9.9% 6,336 411,418 1,166.2 5.6% 3.0% 5.7 6.1 0.6 1.3

Erfurt 593.2 12.3% 10,595 596,160 995.0 6.0% 3.0% 5.1 5.5 1.3 3.1

Gera 413.9 8.6% 9,734 566,483 730.6 7.5% 8.2% 5.0 5.2 1.3 3.2

Hamburg 487.1 10.1% 7,072 434,860 1,120.1 5.8% 4.5% 5.7 6.0 2.6 2.2

Leipzig 532.4 11.0% 10,490 624,235 852.9 6.8% 6.3% 5.2 5.5 1.8 1.0

Rhine-Ruhr 290.9 6.0% 4,187 266,405 1,091.9 5.8% 2.3% 5.4 5.8 2.8 2.3

Rostock 403.9 8.4% 7,150 426,534 946.9 6.5% 5.0% 5.4 5.8 1.7 2.4

Salzgitter 499.9 10.4% 9,180 563,124 887.7 6.8% 4.6% 5.3 5.4 1.9 3.3

Total residential 4,729.4 82,917 4,939,142 957.5 6.3% 5.2% 5.3 5.6 1.7 3.1

Others 98.6 2.0% 169 33,347 2,956.8 5.1% 13.1

Commercial units 1,209 155,012 17.2% 7.9

Total 4,828.0 84,295 5,127,501 941.6 6.5% 5.6% 5.4


About 70% of TAG's properties are located across six federal states in Eastern Germany (Berlin, Brandenburg, Mecklenburg-Vorpommern, Sachsen, Sachsen-Anhalt and Thüringen), which are economically weaker regions in terms of purchasing power.Nevertheless, a number of macroeconomic trends are positive in TAG's target markets. The GDP growth in many larger and medium-sized eastern German cities has been in line with or even above the national average, and unemployment rates have improved in recentyears, increasing rent affordability. Combined with a relatively good rent affordability on a portfolio level, TAG's ability to pick the rightassets and locations will be a key driver of further rental growth and vacancy rate reduction.



Exhibit 5

Development vacancy ratesTAG compared with its peers

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2013 2014 2015 2016 2017 2018 1Q 2019

Deutsche Wohnen Grand City LEG ADO TAG

Source: Company reports

TAG's rental growth has been steady in recent years without substantial capital spending. Its rents are lower than those of its peersbut remain affordable compared with average household incomes. Although data is difficult to gather, we think the average spendingpower of TAG's tenants is lower than the national average.

We expect sustained rental income growth of 2%-3% during the next two years, driven by targeted investments, rent increases forstanding tenants and moderate occupancy gains. We expect this income growth, combined with further moderate improvements in itsoperating margin to drive EBITDA growth of 3%-6% over the next 12-18 months.

Exhibit 6

Like-for-like rental growthTAG and its peers

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

TAG Deutsche Wohnen Grand City LEG ADO

2015 2016 2017 2018 Q1 2019




Exhibit 7

Rent and value per sqmIn €

4.0 €

4.4 €

4.8 €

5.2 €

5.6 €

6.0 €

6.4 €

6.8 €

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Deutsche Wohnen Grand City LEG ADO TAG

value per sqm (lhs) rent / sqm /month (rhs)


Key financial ratios to continue to improveWe expect TAG's key financial ratios to continue to improve unless bolt-on acquisitions dilute improvements already made. Debt/grossassets improved to 47.5% as of March 2019, driven by an absolute relatively constant amount of debt, increasing rental income andyield compression. We expect TAG's debt/gross assets to decline to 43%-45% in the next 12-18 months, driven by our expectation offurther valuation gains from its semiannual valuation updates.

Fixed-charge cover has steadily improved since 2014 to stand at 3.9x as of the 12 months ended March 2019. We expect TAG's fixed-charge coverage ratio to improve towards 4.5x in the next 12-18 months, given the effect of EBITDA increases, interest cost reductionsfrom refinancing in 2018 and its potential to further reduce its average interest cost.

We expect net debt/EBITDA to be roughly stable in the next 12-18 months at around 10.5x. TAG owns the highest-yielding portfolioacross the rated residential peer group, whether measured in terms of gross rental income or EBITDA relative to total assets, whichsupports its net debt/EBITDA.

Exhibit 8

Development leverage and coverageExhibit 9

Development net debt/EBITDA

66.0%

62.2%

56.8%54.7%

48.1% 47.5%

1.5x1.7x

2.2x

2.8x

3.7x3.9x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

60.0%

65.0%

70.0%

Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 LTM(Mar-19)

Debt / Real Estate Gross Assets (lhs) EBITDA / Fixed Charges (rhs)

Source: Moody’s Financial Metrics™

16.4x

14.1x

12.3x

11.2x 10.9x 10.8x

5.0x

7.0x

9.0x

11.0x

13.0x

15.0x

17.0x

19.0x

Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 LTM(Mar-19)


The company pays a relatively high dividend of 75% of funds from operations (FFO) compared with that of its peers. However, thecompany can cover parts of its capital spending programme from free cash flow, because of its higher portfolio yield.



Increased likelihood of tightening rental regulations, which may curb income growthThere is growing public pressure for German policymakers to address housing supply and affordability, which raises the risk of increasedor more stringent regulations, with negative credit implications for residential real estate companies. TAG is not directly exposed tothe discussions in Berlin around socialisation or rental caps. Nevertheless, the recent proposals for rental caps in Berlin, if implemented,will increase the likelihood of tightening regulations spilling over to other regions or even into national regulations. TAG's tenants havelower household income/rental costs than that of its peers in more metropolitan areas, which reduces the pressure in TAG's area ofoperations but does not eliminate them.

Discussions about regulatory changes challenge the very strong operating environment, which we factor into TAG's rating. Companiesin the sector had just digested the tightening of national rental regulations implemented at the beginning of 2019, including the furtherlimiting of modernisation-related rental increases to 8% of investments or €2-€3/sqm, making investments less appealing.

Liquidity analysisLong-dated debt maturities result in a sound liquidity positionTAG's good liquidity position is driven by its:

» very long-dated, well-staggered maturity profile, with a 7.9-year weighted average term, which is largely on fixed or hedged rates

» annualised FFO of around €155 million

» fully undrawn €120 million revolving credit facilities

» cash position of €88 million as of 31 March 2019

Exhibit 10

Debt maturities as of 31 March 2019in € millions

€0

€200

€400

€600

€800

€1,000

€1,200

2019 2020 2021 2022 2023 2024 2025 2025+

Bank loans (maturity) Bank loans (interest terms ending) Convertibles Corporate bonds Commercial paper


TAG's cash generation is stronger than that of its peers, driven by its portfolio's yield and its moderate use of modernisation capitalspending to drive rental income. As such, we expect TAG to cover most of its maintenance and capital spending through rental cashflow, even though more CAPEX resulted is slightly less FFO based CAPEX spending compared to we expect increasing CAPEX to requirerelatively more debt funding going forward.

The company's weighted average interest rate is 1.9%. This is slightly above that of other residential peers we rate, for which it rangesbetween 1.3% and 1.7%.

High reliance on secured funding, resulting in a low ratio of unencumbered assets and a high secured debt ratioTAG's unencumbered asset ratio of 12.4% is the lowest in its German residential peer group, stemming from its bank debt-fundedmodel. The bank debt provides a very long average debt maturity and low cost of funding, but reduces flexibility and subordinatesunsecured creditors, and also increases the secured debt ratio. The company has no intention to depart from its bank debt-basedfunding model, so we do not expect these ratios to change much.



TAG's access to equity capital is supported by it granular shareholder base with cornerstone investors. The company’s largestshareholders as of 31 March 2019 were MFS Investment Management with an 11.4% share, Capital Group with a 9.9% share and theVersorgungsanstalt des Bundes und der Länder (Pension Institution of the Federal Republic and the Federal States, VBL) with another9.9%. VBL is one of Germany’s largest providers of public-sector occupational pensions in the country and is controlled by the GermanMinistry of Finance. TAG’s payout ratio target is set at 75% of FFO before capital spending and capital gains.

We have assigned TAG a Ba score for the rating subfactor Liquidity and Access to Capital, reflecting its access to both private and publicsources of capital and strong banking relationships. These strengths are partly offset by its limited public debt and equity placements inthe capital market, while we recognise the €262m of convertibles placed in 2017, €250m of corporate bonds in 2018 and a recent €102million Schuldschein issuance.

Structural considerationsMost group assets and debt are held by subsidiaries of the holding company, TAG, which is a pure holding company and the issuer oftwo unsecured bonds of €125 million each and a convertible bond of €262 million. We understand that, in most cases, each mortgageloan is only guaranteed by the property held by the relevant subsidiary.

Rating methodology and scorecard factorsThe principal methodology used in this rating was our REITs and Other Commercial Property Firms rating methodology, published inSeptember 2018. TAG's assigned rating of Baa3 is above the scorecard-indicated outcome under both our current view and forwardview. This reflects our stable view of the German residential sector from a demand and supply perspective. It also reflects the Germanbanking markets' provision of very long-term debt funding to residential companies, which lowers the scorecard-indicated outcomethrough weak unencumbered assets and secured debt ratios.

Exhibit 11

Rating factorsTAG Immobilien AG

Real Estate / REIT Industry Grid [1][2]

Factor 1 : Scale (5%) Measure Score Measure Score

a) Gross Assets (USD Billion) $5.7 Baa $5.9 - $6.5 Baa

Factor 2 : Business Profile (25%)

a) Market Positioning and Asset QualityBa Ba Ba Ba

b) Operating Environment Aa Aa Aa Aa

Factor 3 : Liquidity and Access To Capital (25%)

a) Liquidity and Access to Capital Ba Ba Ba Ba

b) Unencumbered Assets / Gross Assets 12.4% Caa 10% - 15% Caa

Factor 4 : Leverage and Coverage (45%)

a) Total Debt + Preferred Stock / Gross Assets 47.5% Baa 43% - 45% Baa

b) Net Debt / EBITDA 10.8x Caa 10.3x - 10.8x B

c) Secured Debt / Gross Assets 36.5% B 33% - 35% Ba

d) Fixed Charge Coverage 3.9x Baa 4x - 4.5x A

Rating:

a) Indicated Outcome from Scorecard Ba2 Ba1

b) Actual Rating Assigned Baa3

Current

LTM 3/31/2019

Moody's 12-18 Month Forward View

As of 6/25/2019 [3]

[1] All ratios are based on adjusted financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.[2] As of 31 March 2019 (L).[3] This represents a Moody's forward view, not the view of the issuer, and unless noted in the text, does not incorporate significant acquisitions and divestitures.Source: Moody’s Financial Metrics™


https://www.moodys.com/research/REITs-and-Other-Commercial-Real-Estate-Firms--PBC_1095505


APPENDIX

Exhibit 12

Peer comparisonTAG Immobilien AG

(in US millions)FYE

Dec-17

FYE

Dec-18

LTM

Mar-19

FYE

Dec-17

FYE

Dec-18

LTM

Mar-19

FYE

Dec-17

FYE

Dec-18

LTM

Mar-19

FYE

Dec-17

FYE

Dec-18

LTM

Mar-19

FYE

Dec-17

FYE

Dec-18

LTM

Mar-19

Gross Assets $5,578 $5,768 $5,663 $24,673 $28,676 $28,621 $9,016 $10,129 $10,094 $12,076 $12,854 $12,724 $4,230 $4,772 $4,702

Unencumbered Assets / Gross Assets 15.7% 14.0% 12.4% 25.0% 25.0% 25.0% 68.0% 70.7% 79.3% 19.8% 19.2% 19.0% 4.8% 26.4% 26.3%

Total Debt + Preferred Stock / Gross Assets 54.7% 48.1% 47.5% 35.9% 36.8% 37.2% 41.9% 43.4% 42.3% 44.7% 42.7% 42.2% 41.3% 39.8% 39.6%

Net Debt / EBITDA 11.2x 10.9x 10.8x 12.0x 13.5x 12.9x 11.5x 11.8x 12.2x 10.9x 11.6x 11.1x 16.7x 17.4x 17.2x

Secured Debt / Gross Assets 41.7% 36.8% 36.5% 23.1% 24.7% 24.4% 12.4% 9.7% 7.3% 30.6% 27.1% 29.5% 28.5% 24.2% 24.1%

Fixed Charge Coverage 2.8x 3.7x 3.9x 5.7x 6.0x 6.0x 4.7x 4.5x 4.5x 4.3x 4.5x 4.5x 3.7x 3.6x 3.5x

Baa3 Stable A3 Stable Baa1 Stable Baa1 Stable Baa3 Stable

TAG Immobilien AG Deutsche Wohnen SE Grand City Properties S.A. LEG Immobilien AG ADO Properties S.A.


Exhibit 13

Moody's-adjusted debt breakdownTAG Immobilien AG

(in EUR millions)

FYE

Dec-14

FYE

Dec-15

FYE

Dec-16

FYE

Dec-17

FYE

Dec-18

LTM Ending

Mar-19

As Reported Debt 2,452.9 2,349.6 2,270.2 2,513.8 2,398.8 2,376.0

Pensions 6.3 6.0 6.1 5.9 5.5 5.5

Operating Leases 12.0 11.8 11.6 11.0 12.1 0.0

Non-Standard Adjustments 0.0 0.0 0.0 9.2 9.0 15.0

Moody's-Adjusted Debt 2,471.2 2,367.4 2,287.9 2,539.9 2,425.4 2,396.5

All figures are calculated using Moody’s Investors Service estimates and standard adjustments.Source: Moody’s Financial Metrics™

Exhibit 14

Moody's-adjusted EBITDA breakdownTAG Immobilien AG

(in EUR millions)

FYE

Dec-14

FYE

Dec-15

FYE

Dec-16

FYE

Dec-17

FYE

Dec-18

LTM Ending

Mar-19

As Reported EBITDA 226.4 277.5 342.3 488.5 645.5 647.9

Operating Leases 3.0 3.0 2.9 2.7 3.0 2.3

Unusual -88.8 -119.2 -164.1 -286.5 -433.6 -435.2

Non-Standard Adjustments 0.0 0.0 0.0 0.0 0.0 0.0

Moody's-Adjusted EBITDA 140.5 161.3 181.2 204.7 214.9 215.0

All figures are calculated using Moody’s Investors Service estimates and standard adjustments.Source: Moody’s Financial Metrics™



Exhibit 15

Overview of Moody's-adjusted financial dataTAG Immobilien AG

(in EUR millions)FYE

2015

FYE

2016

FYE

2017

FYE

2018

LTM

Mar-19

INCOME STATEMENT

Revenue 261.1 288.5 433.4 445.1 449.7

EBITDA 161.3 181.2 204.7 214.9 215.0

Interest Expense 93.7 83.1 74.3 58.8 55.2

BALANCE SHEET

Real Estate Gross Assets 3,806.0 4,028.4 4,645.5 5,045.4 5,043.1

Amount of Unencumbered Assets 9.7% 6.3% 15.7% 14.0% 12.4%

Cash & Cash Equivalents 95.9 67.0 249.2 89.0 84.6

Total Debt 2,367.4 2,287.9 2,539.9 2,425.4 2,396.5

Net Debt 2,271.5 2,220.9 2,290.7 2,336.3 2,311.9

CASH FLOW

Funds from Operations 73.6 105.6 140.7 152.9 157.1

CASH FLOW FROM OPERATIONS 80.7 104.3 126.8 162.0 164.2

Capex = Capital Expenditures 46.8 54.5 12.7 8.4 10.9

Dividends 60.8 73.3 84.9 96.4 96.4

Retained Cash Flow 12.8 32.4 55.8 56.4 60.6

RCF / Debt 0.5% 1.4% 2.2% 2.3% 2.5%

Free Cash Flow (FCF) -27.0 -23.6 29.1 57.2 56.9

FCF / Debt -1.1% -1.0% 1.1% 2.4% 2.4%

PROFITABILITY

% Change in Sales (YoY) 4.1% 10.5% 50.2% 2.7% 1.5%

EBITDA Margin % 61.8% 62.8% 47.2% 48.3% 47.8%

INTEREST COVERAGE

EBITDA / Fixed Charges 1.7x 2.2x 2.8x 3.7x 3.9x

LEVERAGE

Debt / Real Estate Gross Assets 62.2% 56.8% 54.7% 48.1% 47.5%

Secured Debt / Real Estate Gross

Assets48.2% 45.3% 41.7% 36.8% 36.5%

Net Debt / EBITDA 14.1x 12.3x 11.2x 10.9x 10.8x

All figures and ratios calculated using Moody's estimates and standard adjustments. FYE = financial year end. LTM = last 12 months.Source: Moody’s Financial Metrics™



Ratings

Exhibit 16Category Moody's RatingTAG IMMOBILIEN AG

Outlook StableIssuer Rating -Dom Curr Baa3Commercial Paper -Dom Curr P-3ST Issuer Rating -Dom Curr P-3

Source: Moody's Investors Service

Endnotes1 Source: OECD.

2 Source: BBSR — Regional Planning 2035.

3 Pestel Institute (2015), Prognos (2017) and the Hans Böckler Stiftung (2018).



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