TAG Immobilien AG, the German real estate company that bought 25,000 homes from Bayerische Landesbank in March, said third-quarter profit rose 26 percent as rental income jumped.
Net income rose to 15.4 million euros ($19.7 million), or 9 cents a share, from 12.2 million euros, or 17 cents, a year earlier, the Hamburg-based company said in a statement today. Rental income more than doubled to 40.2 million euros.
TAG owns homes in cities such as Berlin and Hamburg and is benefiting from rental growth in large urban areas as young Germans move to places where jobs are easier to find.
“The residential real estate market is becoming increasingly attractive,” Chief Executive Officer Rolf Elgeti said in the statement. “This is reflected in higher prices across the market, but at the same time opens up opportunities for us to opportunistically sell properties.”
The acquisition of DKB Immobilien AG, owner of homes valued at about 1.1 billion euros, increased TAG’s portfolio to about 57,000 homes.
The company plans to add more residential properties while shrinking its commercial real estate business. TAG is one of the bidders in the government’s sale of 11,700 eastern German apartments valued at about 450 million euros, according to people with knowledge of the matter.
“Profitability is more important than size, but we are confident that we will continue to be offered opportunities that we are willing and ready to take advantage of,” Elgeti said.
TAG reiterated a forecast that full-year funds from operations, a measure of a property company’s ability to generate cash, will be 40 million euros. Third-quarter FFO was 11.2 million euros, the company said.
To help pay for DKB, TAG had a stock sale in March that generated gross proceeds of about 127 million euros, diluting its earnings per share.