TAG Immobilien Will Probably Join MDAX After Acquisition

TAG Immobilien AG (TEG), Germany’s third- largest publicly traded residential landlord, will probably join Germany’s MDAX Mid-Cap Index for medium-sized companies after its market value rose 64 percent this year.

Deutsche Boerse AG (DB1), operator of the Frankfurt exchange, will announce any changes to the 50-member index after the market closes today. Deutsche Boerse decides which stocks to include in its indexes by considering factors including companies’ market value and share-trading volume.

“TAG making it into the MDAX is pretty sure,” said Silke Schluensen, an index analyst at Close Brothers Seydler Bank AG.

TAG, based in Hamburg, has the 35th highest market capitalization among German medium-sized companies excluding technology firms and ranks 52nd on 12-month trading volume. That puts it above the MDAX criteria requiring members to rank at least 60th on both counts, said Uwe Streich, an index analyst at Landesbank Baden Wuerttemberg. TAG has about a 70 percent chance of joining the MDAX, he said.

TAG, with a market value of 758 million euros ($949 million), is the largest German real-estate company that’s not included in the index. Earlier this year, TAG paid 160 million euros for DKB Immobilien AG and raised 127 million euros in a share sale.

The residential and office landlord was up 1.4 percent at 7.77 euros at the 5:30 p.m. close in Frankfurt, the biggest gain since Aug. 15. The shares have advanced about 26 percent this year. The SDAX Index for small companies, in which the shares are listed, has climbed about 10 percent in that time.

Investor Attention

Joining the MDAX would increase demand for the shares, said TAG Chief Executive Officer Rolf Elgeti.

“It would be good news,” he said by telephone. “Investors would pay more attention to the stock.”

More investors buy medium-sized company stocks than small caps, Schluensen said. Joining the MDAX would make it easier for TAG to raise capital for acquisitions.

A Deutsche Boerse committee meets every quarter to decide whether to remove or add companies to its indexes.

TAG Immobilien would probably replace Deutz AG, an engine maker with a market value of 357 million euros that puts it in 61st place, said Streich.

The switch isn’t certain because Deutsche Boerse also takes other factors into account, including how long a stock has fulfilled the criteria.

German residential real estate companies listed on the MDAX include Deutsche Wohnen AG, Gagfah SA and GSW Immobilien AG.

To contact the reporter on this story: Dalia Fahmy in Berlin at dfahmy1@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.

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