TAG Immobilien AG

XETRA:TEG

Earnings Call Transcript 2018-Q3

[Operator]

Welcome to the conference call of TAG Immobilien AG, which is now starting. At our customers' request, this conference will be recorded. May I now hand you over to Mr. Martin Thiel.

[Martin Thiel, CFO & Member of Management Board]

Yes, good morning from Hamburg. Welcome everybody to our 9-month earnings call. This is Martin from TAG. Thanks for dialing in. Let's start right now with the presentation which is available on the website, and I think you all had the chance to download it. And we'll start at Page #4 with the highlights for the third quarter and the first 9 months of 2018.Looking at the original performance, I think, we were very successful quarter behind us which we can now present to you. If you look at the developments in the vacancy rates, I think a strong development, 30 basis points reduction in the residential units from 5.5% to 5.2% at the end of September and also in the full portfolio, including acquisitions, a 20 basis points reduction of vacancy rate.Strong like-for-like rental growth in the 12 month ending in September, 2.4% as the basis like-for-like rental growth and 2.8% as the like-for-like rental growth, including vacancy reduction. So these positive operational development resulted in a strong increase in FFO. More than EUR 1.4 million increase in FFO I from EUR 36.1 million to EUR 37.5 million as a result for the third quarter.Looking at NAV and LTV, with a normal development EPRA NAV up approximately EUR 0.20 per share, we had no valuation at the end of the third quarter, so just ongoing result that led to the increase in NAV. And in the LTV reduction by 80 basis points and now for the first time the LTV below the 50% mark at 49.4%.And so in dividend guidance just a quick comment at that stage I will come back to that in more detail later. We guide for an increase FFO in an absolute amount and on a per share basis by 9% for the financial year 2019 and also we guide for an increase in the dividend per share paid for the financial year 2019 by 9%. But, as I said, we'll come back to this a little bit later in more detail.Then let's go into the details regarding the financials and I'm now on Page 6 of the presentation, and there are the figures from the income statement. Looking at net rent, you see an increase quarter-on-quarter, so between this second and the third quarter by EUR 300,000. Please have in mind that we were net seller in the first 9 months of 2018, so the portfolio is -- so the total units of the portfolio were slightly lower than at the beginning of the year, simply because we had closing of disposals, whereas the closing of the new acquisition -- and we'll come back to later, where more -- or will be more towards the end of the year. But despite that, still an increase in net rent EUR 300,000.Also net rent income increased by approximately EUR 200,000. Here we have effect in both directions, and nothing really material. For example, EUR 600,000 higher maintenance expenses, but on the other side lower operating cost from the good development regarding vacancy rates.Looking at valuation result is almost zero in the third quarter compared to EUR 230 million in the second quarter of 2018. And here we had the full valuation of the portfolio at the end of second quarter and we will have the next portfolio valuation at year-end in December.Looking at this portfolio valuation, I mean, today it's clearly too early to give the exact numbers. But just to give you a guidance or idea where we expect this to come out with a full portfolio valuation, we clearly expected a positive trend from the financial year 2017 and from the first half of 2018 will continue.Talking about numbers, in the first half of 2018 we had a portfolio valuation uplift of 5.4%. So looking at the full year, as I've said, we don't have the concrete numbers available. But perhaps it's percentage-wise a little bit lower. But just as a effect of now higher absolute number of the portfolio value, but definitely something -- I think, that is close to this range. So I think what we expect for the valuation at full year is no surprise that we had extremely lower or extremely higher valuation results. I think it's just continuing the way we had it in the last valuation.Then moving on in the P&L, the next thing to highlight is net financial results. As you see here, looking P&L a strong increase or strongly improved net financial result. But please have in mind that we had in the second quarter non-cash one-offs, first of all from the fair value valuation of the equity option of our convertible bonds and also one-off from the early repayment of our corporate bond that we repurchased in the second quarter of 2018.This was an effect of approximately EUR 33 million-EUR 34 million, so the main reason why the net financial result show a P&L increase strongly. But important, also the net financial result cash after one-offs improved by approximately EUR 1.4 million quarter-on-quarter. And here the main reason for this positive development was the repayment of the corporate bond 2013-2018 of EUR 191 million in August 2018. This bond issued in 2013 still had a coupon of more than 5%. So clearly a further improvement in our net financial result cash after one-offs after the repayment of these bonds.Income tax, as always, mainly contains deferred taxes. The cash tax expense in the third quarter increased if you compare it quarter-on-quarter by EUR 800,000 to EUR 1.6 million. I mean, following the good development regarding our result, we clearly have higher taxable income so that leads to a somewhat higher cash taxes. For the full year, we expect total cash taxes of approximately EUR 5 million which is still, I think, a moderate tax rate if you compared it to other companies' results.Then moving on to Page #7, were we saw the development of EBITDA FFO and AFFO. I already mentioned that the FFO increased by EUR 1.4 million. If we make it very simple, the main developments were increase in EBITDA, mainly coming from higher net rental income and also from higher service business. So that we have an increase in EBITDA of EUR 600,000, we've got better net cash financial result of EUR 1.4 million and we have higher cash taxes of approximately EUR 800,000. So this is, simply speaking, the reason for the good development in our FFO. And also the AFFO increased by EUR 1.2 million from EUR 21.5 million the previous quarter to EUR 22.7 million, so we see no massive increase in CapEx between the quarters.Moving on to Page #8, a quick look at the balance sheet. Perhaps it's worth mentioning that we have now, as expected, a reduced cash position which is quite strong with about EUR 150 million, because we repaid the EUR 191 million corporate bond in August and already note mentioned, the LTV reduction from 52.3% at the beginning of the year to 49.4%. And see here on the right side of Page #8 in the box with a #4, the change in LTV is of course mainly driven by the valuation we had at half year. And you see that the dividend payment and the ongoing results, mainly leaves the LTV unchanged. So in a -- if you went theoretically here, without any valuation results, the LTV in our company is stable, which is I think a good news and a stable basis to operate. And of course, we expect further valuation gains at year-end. So a further reduction in LTV at year-end coming from this valuation gains should be definitely another surprise.Moving onto Page #9, we see the NAV development. As I said, we had no valuation in the third quarter so an increase by EUR 0.21 quarter-on-quarter, mainly driven by our operating results. Looking at the full 9-month period we have now 11% increased NAV and even 16% excluding the dividend payment of EUR 0.65, so also at the end, we sight a very positive development.On Slide #10, we see in the usual format the development of cost of debt and LTV. LTV, I already mentioned. But looking at cost of debt, we had a further slight reduction of our cost of debt from 1.99% at the end of the second quarter now to 1.96%. And this 1.96% average cost of debt is combined with a very low maturity. So the total maturity of our total financial debt on average is now 8.5 years, which is definitely a very good news, a very good message and a very solid basis for our financial structure. It's even 9.5 years regarding bank loans. So we think that this is still effective 1.96% or already attractive 1.96% average cost of debt combined with somewhere around 9 years maturity.And if we look at the next page, that's Page #11, on the left side, you see in the third bullet point that there is still a potential for the approximately EUR 300 million of bank loans maturing in the next 2.5 years or the interest terms are ending and this EUR 300 million bank loans have coupons between 1.8% and 3.6%. Most of them would have a coupon more in relation to direction 2.6%. So the 1.8% refers to the bank loans maturing or interest terms ending in 2018. And if we look at 2019 and 2020 bank loans, we are talking more about 2.5%-2.6% average coupon, so those should be further moving forward improvements.Coming to Page #12, a slide you know from us from the half year results. We just wanted to summarize the very positive development we have not only on the operations side, but also on the financing metrics. The ICR is now at 3.7x in the first 9-months, that's compared to 3.5x in second quarter. And if we already look at the second half of 2018, so after repayment of the corporate bonds, leaving EBITDA as it was in the first half, the ICR would already be more than 4x. And also net financial debt and -- to EBITDA is improving very well. We are growing and heading more towards the 10x coming from 13x in 2015.Then now on Page 14, coming to the portfolio. Just a quick comment on this slide. If you look at the number of units, we are now at around 82,000 units coming from 83,000 units in 2017. This is what I mentioned with my comment to the P&L. We had a rent increase, even though we sold more units in the first 9 months than we acquired. And this will change in the next months, so we'll come to the acquisitions a little bit later.Moving on to Slide #15, we show you in usual format the development of the vacancy rate. And here we have definitely a very positive development in the third quarter, perhaps not surprising, at least for us, because we knew that in the first months we had some larger projects that now are finished, at least for the largest part. So we had a reduction of approximately of 10 basis points per month from 5.5% to 5.2%. And the strongest reductions in vacancy rates in the financial year 2018 so far have been in the Berlin region with a reduction of 1.4 percentage points. In the Chemnitz region with 0.4 percentage points and still in the Salzgitter region, now below 5%, with 0.3%. You'll see this in the appendix in more detail on Page 24.And we can also tell you that the positive trends also continues after balance sheet dates. So if we look into, for example, our October figures, we will see that this run rate of 10 basis points also continued after the balance sheet date. So this should give us a good outlook for the fourth quarter to come.Then on Page 16, some words about like-for-like rental growth. First of all, as you see on the left side of this chart, for the first time we're now presenting a split for the basis like-for-that rental growth, which was at a very good 2.4% in the first -- or in the 12 months and in the third quarter. This 2.4% consist of approximately 1.4% or percentage point from rent increases from existing tenants, 0.9 percentage points from rent increases after tenant turnover and just 10 basis points from the modernization surcharge. And you notice from us that we not starting large modernization programs for existing tenants. The very largest part of our CapEx -- and in the appendix we have more details on that, clearly grows continuously to vacancy reduction. And including this, into the like-for-like rental growth number, we ended up at 2.8% in the third quarter, which was above the numbers we achieved in the first quarters, which is also not a surprise for us.It clearly requires now a little bit more CapEx. So if you want so the low hanging fruits from vacancy reduction and that's also good news, we have done that -- have been harvested in the last 1 or 2 years. So now looking at maintenance and CapEx altogether, we are around EUR 14 in the first 9 months. If you analyze that, that's a number then of EUR 18.60 for full 12 month period. That compares to numbers between EUR 15 and EUR 16 per square meter in the 3 years before. So, yes, clearly higher. But still I think a moderate leverage and something that you also should expect for us from the future.Just one comment on the development in the different region. Looking at the basis like-for-like rental growth, which was on average the 2.4%, the strongest region was the Hamburg region with a basis like-for-like rental growth of 3.8% and second was Berlin region with 3.5% like-for-like rental growth. Both regions, perhaps not a big surprise. But also with a strong like-for-like rental growth -- basis like-for-like rental growth without vacancy reduction, up 3.5% was Salzgitter region. And this is perhaps a good example where you see that with reduced vacancy rates we clearly see like-for-like rental growth picking up simply because now we've gotten more demand and perhaps in re-letting process. We not only have one tenant that's waiting front of our door, perhaps 2 or 3 tenants are waiting and that makes this easier for us to increase rents for existing tenants and also of course in the re-letting process.Then I'm now on Slide 18, coming to acquisitions. If we look at the table on Slide #18, you know the first 2 small acquisitions from us already from the previous presentations. Again, today announced 2 further acquisitions, one small acquisition of 73 units in Riesa in Saxony and a larger acquisition of 1,266 units mainly located in Schwerin. If we look at the vacancy rates, I think, that’s typical TAG portfolios, 8% in the Riesa portfolio, 6.5% in the Schwerin portfolio. So this should provide further upside.Talking of prices, please understand we agreed confidentially about the purchase price regarding the Schwerin portfolio. Just speaking generally about that, I think if you would see the purchase price of a multiple that would be nothing that would surprise you. So I would say typical TAG dimensions, you know from us in 2017 and 2018, a portfolio that fits extremely well into our existing locations. So 1,500 units all-in-all acquired in the first 9 months of 2018.Looking at the pipeline, I mean it's difficult to forecast that, but this should not be the end for the financial year 2018. But as I explained, I think, quite often it's difficult for us to give you here exact forecast, so let's see what happens in the final weeks of the year if we can announce to you further acquisitions with the full year results.Moving on to Page #19, disposals. No major news on this side. In the third quarter, we had ongoing disposals now 355 units in the first 9 months all-in-all after 312 units in the first 6 months of 2018 such that we ended up at 800 units so far sold in the first 9 months of 2018. So as we said before, we are clearly still a net buyer. It was more something temporarily that we've been a net seller in the first 6 months.And looking into the disposal pipeline, something that you can clearly expect from us again is that we continue do these ongoing disposals, which is privatization, which is smaller block sales. But also you should expect, and we will see this later on in the guidance that we do again something on the non-core side. So we have currently a portfolio on the market with approximately 1,600 units. There is no time pressure on that and it's not yet decided if we sell it really as a full block, the 1,600 units or if it is the better way, because it has quite a lot of locations, perhaps, to sell it in separate transaction that would then perhaps take a little bit longer time. So 1,600 units are penciled in the new guidance for 2019 already as a disposal. It could also be the case that the disposal of these non-core asset takes place not only in 2019, but in 2019 and 2020. So just to make it clear, little bit more non-core assets that we want to sell. But if I look at the numbers 1,600 units out of 2,000 units, there is nothing really strategic. And as I said, there is no pressure on that.So then as a last slide and as again very important slide for us today Page #21, the new guidance for the financial year 2019. First of all, we leave the guidance for the financial 2018 unchanged. But if you look at the numbers, I think it's fair to say that this 2018 guidance is quite conservative. So FFO of EUR 33 million-EUR 34 million, which is approximately EUR 3 million lower than what we had in the third quarter would lead to the midpoint of the guidance. And of course, it's always a little bit difficult for us to estimate the exact cash taxes and also to a certain extent to estimate exact maintenance expenses, which always has a kind of seasonality. But please have in mind that this guidance for 2018 should be definitely achievable.Then looking at the new guidance. I already mentioned that we had guide for increased FFO by 9% and this 9% increase is the case, although we disposed of 2,100 units. These 2,100 units consist of the 1,600 units non-core assets already mentioned and the 500 units from our ongoing disposals that we continuously have. So these disposals leads to an FFO reduction in 2019, at least to an estimated FFO reduction of EUR 3 million. Or speaking in other words, if we would not include these disposals in the guidance and the guidance would be EUR 3 million higher. So important to have this in mind.The new midpoint of the guidance is EUR 155 million and that translates into an FFO per share of EUR 1.06 and we are also publishing today the new dividend guidance for the financial year 2019 than paid in 2020, which is still 75% of FFO. And this is then a number of EUR 0.80 per share, which is as we think, definitely attractive payout ratio and attractive dividend.If you look at the main reasons for the increase in new guidance, so on a year-on-year basis compared 2018 to 2019, you see this also explained in the main effects on this slide. The EUR 13 million increase in total is driven, first of all, by higher rental income, approximately EUR 9 million, and by reduced financing costs, again another approximately EUR 9 million. On the other side, we have higher maintenance expenses by EUR 2 million, which is mainly driven by increasing prices that we expect, so not higher maintenance on more projects, but simply prices that we see increasing. And higher cash taxes of approximately EUR 3 million. So we expect an increase in the cash tax from this year approximately EUR 5 million to EUR 8 million into next year. That's the main driver -- these are the main drivers for the EUR 13 million increase in FFO, which is even after considering these disposals and what we think at an attractive number of EUR 155 million.That's it from my side. And thank you so far for listening to the presentation. And of course, I'm now happy to take your questions.

[Operator]

[Operator Instructions] Mr. Bernd Janssen from VictoriaPartners.

[Bernd Janssen, Head of Research]

One question regarding the disposal, got 2 parts to that. One, are you intending to mainly undertake these disposals as shared yields or asset deals? I know that you said it might be that you are selling them in lots rather than as a whole. So the question, obviously, related to potential changes to the R.E.T.T. blocker as of sometime next year? Second question, could you guide us a bit on what type of non-core assets these are? So is it more like lower quality assets in remote locations that you're intending to sell or would it also be called a higher quality, where you think that they are very mature in terms of valuations and therefore, basically taking profits?

[Martin Thiel, CFO & Member of Management Board]

Yes. Thank you, Bernd for questions. First of all regarding the structure of disposals. This will be very surely asset deals. And just a comment on perhaps the new changes we expect from the regulation side regarding real estate transfer tax and shared yields. For example, the acquisition that would be announced today in Schwerin was a shared deal but we did not use a R.E.T.T. blocker structure for it, because we think today it's really uncertain how the future outcome of this discussion is. And we are not sure whether structures that we had in the past, still work. And if we look at the proposals that are under the table and in meanwhile are quite concrete, let's say, at perhaps the most important change that now you need minority shareholders of more than 10% for the next 10 years. That makes share deals in the structure wherein the past from economic point of view --at least from our point of view, not really attractive. So in this case, we paid to real estate transfer taxes. We acquired 100% of the shares of the company, because we shared debts for us from an economic point of view, the better decision than to give away for 10 years to a 10% shareholder ongoing profits as well as perhaps a good portfolio development that we clearly expect from -- or that we still expect from these acquisition. So we think that the shared deal structures, the real estate transfer tax structures we had in the past are now not really interesting. And then regarding a question to the type of non-core assets. It's mixed. First of all, of course, there are some locations in there where we say, okay, at the moment not really a problem, but we are not sure how, for example, demographic development in the next 5 to 10 years will be. And on the other side, it's also a kind of portfolio optimization that you said, okay, the location is perhaps not too bad, but we just owing 50 units and then from a more efficiency point of view it makes more sense for us to sell that. It's not the case that we have very strong locations in this kind of non-core assets like Hamburg or Dresden, Leipzig.

[Bernd Janssen, Head of Research]

So I should -- I guess, I should have used the word capital recycling. So in that regard, not really capital recycling, but more optimization of the portfolio, which should then mean that we should assume sales multiples that are closer to your average valuation today rather than call it premium valuations?

[Martin Thiel, CFO & Member of Management Board]

Yes. Yes, that's true. That's a fair assumption. I'm talking about capital recycling. That means that those in strong locations this will also continue. But at the moment, we have enough cash in that balance sheet to finance new acquisitions. So -- and we are clearly harmonizing that. So that means perhaps disposals in stronger locations, as you know, from us from the past, there's nothing to expect for 2018, but we'll be on the table again in 2019-2020, still with the unchanged idea to sell at a very high multiples in strong locations like we did for example in Berlin in the past. And then reinvest the net cash proceeds from these disposals into high yielding portfolios in our TAG regions in Eastern Germany.

[Bernd Janssen, Head of Research]

So one quick follow up on the on the R.E.T.T. blocker as you were elaborating on your expectations, or kind the economic sense in the future. Would you expect that if one would undertake acquisitions and -- in share deals with the R.E.T.T. blocker, so less than 95% today, at a time where the new law has not been, I think presented, as I understand, in the -- I think it would have to start probably in -- I don't know in the in the Upper House. Would you still be able to execute under the old R.E.T.T. blocker structure or would you be potentially affected by upcoming changes to the to the tax law?

[Martin Thiel, CFO & Member of Management Board]

Yes. That’s exactly the risk we currently have. And we said okay, we kind of go to take this risk. So, yes, of course, there are arguments so to say, well if you do it in the old structure that should still go up, because the new law is not concrete. So it's not even a proposal, but we have very clear press releases from the Ministry of Finance. And we simply cannot exclude that the new law is also -- or applies to transactions we do now. So therefore, from our side the risk was too high to say, okay, we hope that the old structure still works. At the moment, a very uncertain situation and we decided not to go to risk.

[Operator]

Mr. Georg Kanders from Bankhaus Lampe.

[Georg Kanders, Investment Analyst]

Just regarding the expectations for the fourth quarter. Actually, you are expecting a reduction in the FFO. And you mentioned probably some higher maintenance spending to come at year-end. Are there any other factors that could affect this?

[Martin Thiel, CFO & Member of Management Board]

Yes, thank you for the question, Georg. And perhaps I have to make this a little bit more clear. Basically, not expecting a reduction in FFO. So, as I said, the guidance for 2018 is conservative. So if you put on top the third quarter results on the first 9 months, you end up approximately, I think, EUR 3 million above the midpoint of the current guidance. So then the question is, okay, why did we not increase the guidance today? First of all, we think, well, that's not really a material change. And then secondly, just to be a little bit more conservative, it's always a little bit difficult to estimate the exact outcome of cash taxes and also to estimate the exact outcome of maintenance. First thing, cash taxes is simply a complex calculation. And second thing, maintenance has a kind of seasonality. I mean, of course, we have now a quite a good view and don't expect any major negative surprises. But, let's say that this, if we beat the guidance for 2018 from our side, it would not be a surprise.

[Operator]

Mr. Manuel Martin from ODDO.

[Manuel Martin, Analyst]

Just 2 questions from on the portfolio. You were able to use vacancy rate and I saw that Berlin, saw the nice reduction in vacancy rates to 4.9% from 5.3% quarter-on-quarter. When it comes to Berlin, where do you see your structured vacancy rate in your Berlin portfolio. And Berlin overall, has a lower vacancy rate, but maybe in your locations little bit higher?

[Martin Thiel, CFO & Member of Management Board]

Yes, thank you for the question. I mean, in our case the Berlin portfolio is a portfolio consisting completely with Berlin commuter belt locations. So locations like Brandenburg an der Havel, Strausberg, Eberswalde, Nauen. And we clearly have the highest vacancy rate in the Berlin region in Brandenburg an der Havel, a location that we presented to you in our Capital Markets Day in summer this year. And especially in Brandenburg an der Havel we see a really good progress. So in locations like Nauen and Strausberg, we are almost perhaps at kind of minimum level, not only in this quarter but also I think 1 or 2 years back which is then around 1.5% to 2%. And still have a continuously, very strong like-for-like rental growth even without vacancy reduction. So if you look and Page 24 in the appendix, I think we also have included the numbers for 2017, but we had basis like-for-like rental growth in the Berlin region of something around 3.5%. So we clearly expect it to continue. And then the potential Brandenburg an der Havel is clearly there, sort of 4.9%, so it's definitely not the end of the road. I think, it's just an estimate it should go more towards 3%, perhaps even lower.

[Manuel Martin, Analyst]

Sorry, second question, I almost forgot. It's a little detail, I've seen in your tax position that there has been also deferred taxes in Q1 and also in Q3. Although there were no valuation gains, any idea of that detail where does it come from?

[Martin Thiel, CFO & Member of Management Board]

Yes, the answer is quite simple. Even in a quarter where we have no valuation gain, it is a different quarter-on-quarter between IFRS evaluation and tax evaluation, because in the tax accounting as well in as in the some commercial code accounting we have an ongoing depreciation of the assets. So -- and if the -- as values stays stable regarding tax accounting we have quarter-on-quarter ongoing depreciation and the reduced value. So from -- this is the region for the deferred taxes that we have continuously every quarter.

[Operator]

The next question comes from Andre Remke from Baader Bank.

[Andre Remke, Co]

A question left on the acquisition side for the smaller portfolio was almost paid 14x, even though it is sort of very small portfolio. What is the attractiveness of such a portfolio to buy? And the related question, did I get you right that we should not feel that the larger portfolio will have such a multiple, so more gains then in the magnitude of 10x to 12x. And probably last related question on the acquisition side in general. If acquisitions would really become more pricey and you show it off 2 weeks ago with your presentation of the housing report in Eastern Germany, if this is a case, would you reduce in general your previous indications of buying roughly, let's say, 4,000 units per year also going forward?

[Martin Thiel, CFO & Member of Management Board]

Thanks, Andre, for questions. Talking about multiples. The 13.9x paid for the Riesa portfolio, the 73,000 units, I think that's clearly -- a portfolio of clearly the value. It's not the 8% vacancy rate it offers potentially, but also -- I mean we illustrated a little picture, the quality of the portfolio is really extremely good. So from our point of view this was really a purchase price that made sense. And then, talking about general prices, and again, I mean we have to keep the purchase price for a larger transaction confidential. But it should be more in regions that you know perhaps from 2017 and other acquisitions in 2018. Buying portfolios even in Eastern Germany with higher vacancy rates at a 10x multiple, if you know from us from 2015-2016, these times are clearly over. So prices are up which is on the acquisition side not the best news, but of course, something that first of all, confirms our strategy and secondly helps us in the valuation. So when we talk in 2017 on average more at a gross units for acquisition of more than 8%, perhaps it's in the end 2018-2019 more at gross yield of 7%. But looking at that gross yield 7% with upside potential from vacancy reduction in regions where we already are, so that we can integrate it efficiently in our platform, from our point of view still makes sense to buy. But as -- so that in the past, you will not see from us acquisitions at multiples that go in other directions, just to demonstrate excellent growth. So generally, regarding acquisition sizes, regard acquisition strategies, I would say this is unchanged but you can of course expect that we are -- we will continuously be disciplined regarding pricing of new acquisitions.

[Andre Remke, Co]

And also, you today also repeat what you indicated before of buying, let's say, 3,000 to 5,000 units per year, if possible?

[Martin Thiel, CFO & Member of Management Board]

Yes. And as I also said, acquisitions is technical. So as you know from our example in 2017 in the first months we had a very high number of acquisitions. It get very normal that you have months where there is perhaps a lot of processes, but at the end you don't get it because other people pay higher prices. And then you have a series of 2 to 3 acquisitions in a row. So this is also the reason why we have note an official guidance and we are not promising you that we acquire 7,000 units. But just speaking generally, we feel that this is still possible in the market that in a normal year we acquire sizes like 3,000 or all in all more than 3,000 units plus.

[Andre Remke, Co]

And the last question on the financing side for such portfolios what is the current, let's say, indication from financing banks.

[Martin Thiel, CFO & Member of Management Board]

I'm looking at 10-year bank loan, I would say on average perhaps for new bank loans we talk about, let's say, 80 basis points for the margin and if we put today's 10-years swap rate on that which is around I think 95 basis points, then you end up at something around let's say 1.7%, 1.8% for a 10-year bank debt mortgage secured all-in.

[Operator]

[Operator Instructions]. Mr. Thiel, there are no further questions.

[Martin Thiel, CFO & Member of Management Board]

Okay, then. Thank you very much all listening to our call. As always, we are of course available for any questions, please contact Dominic from our IR Department or myself. Do not hesitate to contact us. And then that's it from our side, have a nice day and bye-bye.

[Operator]

We want to thank Mr. Thiel and all the participants of this conference. Thank you and goodbye.