The real estate company TAG, which specializes in apartments, sees light at the end of the tunnel: the value adjustments made to the German residential portfolio in recent quarters should cover "the major part", the company, which operates in Germany and Poland, announced on Tuesday.

Rising interest rates, skyrocketing construction costs and a lack of major transactions have caused the real estate industry to struggle over the past year. TAG had to significantly devalue the value of its apartments in Germany and was in the red.

Rising rental income and the sale of apartments now brought the Hamburg-based company a leap in profits in the first quarter: consolidated net profit rose by 60 percent to EUR 52.9 million. In the rental business, earnings grew by five percent to 44.6 million euros.

In addition, TAG generated eleven million euros from the sale of apartments in Poland, slightly more than in the previous year thanks to higher prices. In Germany, the sale of 780 apartments for 67.6 million euros has been notarized since the beginning of the year. This reduced the leverage ratio to 45.6 percent from 47 percent at the end of 2023. "With a leverage ratio close to our target of around 45 percent, we are very well positioned financially," explained CFO Martin Thiel.

(Report by Sabine Wollrab, edited by Thomas Seythal. If you have any questions, please contact our editorial team at frankfurt.newsroom@thomsonreuters.com)