Stock Analysis & Valuation TAG Immobilien AG (TEG.DE)

• Previous Close: €14.29
• Sector Valuation Confidence Level: Low

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	36.56	156
Intrinsic value (DCF)	7.54	-47
Graham-Dodd Method	19.03	33
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

TAG Immobilien AG (TEG.DE) is a leading German real estate company specializing in the acquisition, development, and management of residential and commercial properties. Headquartered in Hamburg, TAG Immobilien operates a portfolio of approximately 87,600 residential units, along with serviced apartments and commercial rental spaces. Founded in 1882, the company has a long-standing presence in Germany’s real estate market, benefiting from urbanization trends and stable rental demand. TAG Immobilien focuses on mid-sized cities and metropolitan areas, offering diversified housing solutions. With a market capitalization of around €2.49 billion, the company plays a significant role in Germany’s real estate sector, leveraging its extensive property management expertise and strategic asset base. Investors value TAG Immobilien for its steady cash flows, dividend payouts, and exposure to Germany’s resilient housing market.

Investment Summary

TAG Immobilien AG presents a stable investment opportunity within Germany’s real estate sector, supported by a large residential portfolio and recurring rental income. The company’s €1.08 billion revenue and €121 million net income (FY 2021) reflect operational efficiency, though high total debt (€3.76 billion) poses a risk in a rising interest rate environment. With a beta of 1.06, TAG Immobilien exhibits moderate volatility relative to the market. The dividend yield (~2.5% based on a €0.40 per share payout) adds income appeal, but investors should monitor leverage and refinancing risks. The company’s focus on mid-sized German cities provides stability, but slower growth compared to urban hotspots may limit capital appreciation. Overall, TAG Immobilien suits income-focused investors seeking exposure to Germany’s defensive housing market.

Competitive Analysis

TAG Immobilien AG competes in Germany’s fragmented residential real estate market, where scale and regional diversification are key advantages. The company’s portfolio of 87,600 units provides economies of scale in property management, though it remains smaller than sector leaders like Vonovia. TAG’s focus on mid-sized cities (e.g., Dresden, Leipzig) differentiates it from competitors concentrated in Berlin or Munich, reducing exposure to overheated markets. However, its leverage ratio (~65% LTV based on FY 2021 debt) is higher than some peers, increasing sensitivity to interest rate hikes. TAG’s strengths include long-term tenant relationships and operational efficiency, but its growth prospects are tempered by limited development activity compared to more aggressive competitors. The company’s competitive positioning is middle-tier—smaller than giants like Vonovia but more diversified than local players. Its ability to maintain occupancy rates (~97% in 2021) and moderate rent growth will be critical amid regulatory pressures on German housing.

Major Competitors

• Vonovia SE (VNA.DE): Vonovia is Germany’s largest residential landlord, with over 550,000 units, dwarfing TAG Immobilien’s portfolio. Its scale provides cost advantages and better access to capital, but regulatory scrutiny is higher. Vonovia focuses on major cities, while TAG targets mid-sized markets. Vonovia’s recent acquisitions (e.g., Deutsche Wohnen) have increased its dominance but also integration risks.
• Deutsche Wohnen SE (DWNI.DE): Now merged with Vonovia, Deutsche Wohnen was a key competitor with ~155,000 units, primarily in Berlin. Its premium urban exposure contrasted with TAG’s mid-city focus. Deutsche Wohnen faced political risks due to Berlin’s rent caps, whereas TAG’s regional diversification provided more stability.
• LEG Immobilien AG (LEG.DE): LEG Immobilien operates ~166,000 units in western Germany (NRW region), making it larger than TAG but regionally concentrated. LEG’s lower leverage (55% LTV in 2021) gives it more financial flexibility, though TAG’s broader geographic spread may offer better risk distribution.
• Grand City Properties S.A. (GXI.DE): Grand City Properties focuses on undervalued urban areas, with ~35,000 units in Germany. Its value-add strategy differs from TAG’s steady-income approach. Grand City’s smaller size limits economies of scale but allows for higher growth potential in niche markets.