Ladies and gentlemen, welcome to TAG Immobilien publications of interim report Q3 2020. We have Mr. Martin Thiel, CFO of TAG Immobilien. Without further ado, I will now hand the call over to Mr. Martin Thiel. The floor is yours, sir.
Yeah, thank you very much and good afternoon, everybody, and thanks for joining the call today. The call at a little bit unusual time later in the day, as we had several announcements from companies in the morning. We thought it's perhaps a good idea to do this a little bit later to give you time to listen perhaps to more than just our call. Thanks again for dialing in. Yeah, today, Q3 numbers. Looking at these numbers and summarizing the business development of Q3 , I think the stable business that we had over the course of the year simply continued. I think so far we had really a good year. This is also the reason, perhaps you've seen this already, why we could increase now the guidance for 2020 slightly.
Still just very small effect impacts, negative impacts from the COVID-19 pandemic on our business. That should also be good news. We will report today on our activities in Poland to give you an update, how far we are with our plans to build up the residential foreign pipeline. We will publish or we have published today, we'll explain it to you during this call, the FFO and dividend guidance for the financial year 2021. Let's start with a comprehensive overview on page number four. That's the highlights slide. To pick out some numbers, first of all, a positive development in the vacancy rate during the Q3 .
We were able to reduce the vacancy rate by 30 basis points quarter-on-quarter from 5.1% now to 4.8% at the end of the Q3 in September. like-for-like rental growth, unchanged, still at 1.5%, including the effects from vacancy reduction 1.4% excluding the effects from vacancy reduction. FFO1 basically stable and unchanged. EUR 44.6 million in the Q3 compared to EUR 44.5 million in the previous quarter. The EPRA NTA just showed a smaller change, a small increase to EUR 27.6 or more or less remained stable with the previous quarter.
A slight increase in LTV that was not unexpected because you can remember that we repurchased part of an outstanding convertible bond in August this year, and this liability management transaction more or less was the reason for the increase in the LTV by 80 basis points. That's roughly in line with our LTV target of approximately 45% at year-end. We clearly expect an LTV that should be around 45% or even below 45%. I will comment on the guidance later of course in more detail. Just to give you an overview, we increased the guidance for the financial year 2020 slightly.
On a comparison year-on-year, so new guidance 2020 with the actual results for 2019, we can now or we expect an increase by 7% on an FFO on absolute basis, on a per share basis, and as well we are guiding for dividend increase by 7%. The new guidance for the financial year 2021 shows a 5% increase. 5% increase on the FFO on absolute terms, also on a per share basis. Also we expect the dividend to grow by 5%. Looking at acquisitions and disposals in our German business, we had smaller acquisitions in the Q3 , 120 units, the total acquisition volume for the financial year 2020 now adds up at exactly to 4,338 units.
Also there have been some smaller disposals, 110 units approximately in the Q3 . That adds up to 320 units disposed so far in the financial year 2020. Coming to the next slide and looking more detailed at the COVID-19 pandemic impact on our business. I mean, the first topics that we hit here are more or less unchanged. You know them. I mean, we had this voluntary waiver on rent increases until June 2020. Since July 2020, we are increasing the rents again. We've come back to a kind of normal business. This has not the effect or had not the effect that from the July 1st, 2020, every rent increase was effective or was sent out.
We will expect here rent increases and a stronger rental growth, especially now in the Q4 . Vacancy rates, year-over-year or since the beginning of the year, stable. As I said, even reduced in the Q3 . Still just very little impact on rent payments. That's definitely important. The cash flow is virtually unaffected by the COVID-19 pandemic. Positive development on our business in Poland as well. All the construction sites are still running even today. No delays so far. We've been able to acquire further land banks and projects. The total investments, the total units that we have secured or that are already under construction now add up to more than 7,600 units.
In the Q3 , we acquired land banks and projects for 1,845 units in three locations in Wroclaw, Poznan and in Lodz. The sales numbers in Poland picked up in Q1 2020. Perhaps you remember that we reported a quite strong reduction in Q2 2020 due to the COVID-19 pandemic. As expected, this was just a temporary effect. The sales numbers in the Q3 nearly doubled to 124 units, and that's exactly the number that we expected at the beginning of the year when we did our internal budget. Sales prices remained stable all over the time or even slightly increased in the first month of the financial year 2020. Now on page number seven, and some more detailed comments on the development and income statement in the Q3 .
Comparing the first nine months, 2020 with the first nine months, 2019 and looking at net rental income, this number increased by EUR 4.99 million. There was the increase in the net rental income, mainly driven by a higher net actual rent, that's EUR 4 million, and lower ancillary cost of vacant real estate over this time. In the Q3 , now we had a reduction of our net rental income by EUR 2.3 million. Please don't consider this as a kind of trend from quarter- to- quarter. Some costs, like for example, maintenance or also like service charges costs, have a certain swing depending on the fact whether we do more service charges or not, whether we do more investment or not. That should be definitely not a trend, but in the Q3 , therefore, a smaller reduction by EUR 2.3 million.
Looking at the net income from sales, I think that's also important to point out. You see a number of EUR 2.6 million. That's more or less purely coming from our business in Poland. This EUR 2.6 million net income, don't be confused, is a number after effects from the purchase price allocation that we did under IFRS in our consolidated statements. If you exclude this effect and really look more at a cash number, this number is EUR 4.9 million higher. In the Q3 , EUR 2.6 +EUR 4.9 million, so EUR 7.5 million was more or less the net cash effect from the sales in Poland on our P&L. Looking at the valuation result, as always in the Q3 , more or less no valuation result. Just a very small impact.
As always, we're doing the next full portfolio valuation with the help of CBRE at year-end, so we will publish that with the Q4 results. Clearly, we are already in discussions and we know at least perhaps a certain trend where you should expect the full year valuation result to come out. Please be aware this is not official guidance, but looking at our H1 results, we had a 3.3 valuation gain, so 3.3% valuation gain in our P&L. You should expect something similar in that direction. Perhaps percentage-wise, the number is a little bit smaller, but in absolute terms, perhaps something very similar that as a trend or as a first rough estimate for the full valuation result.
That means more or less, we don't expect here any change in the positive trend that we had in the past, and we also see that in our markets, in our business. If you look what our acquisition department today has on the table from the COVID-19 pandemic, they're simply seeing not any pressure on prices. I think that's something that you know from other peers and what is true for the whole sector. Looking at other operating expenses, they are unusually high in this Q3 , but that's to a very large part, the result of a one-off effect. We founded in the Q3 a new foundation, TAG Miteinander Stiftung that was established to invest in social projects in our TAG Immobilien regions.
We've done this already in the past, but we thought especially now after the developments that we had in the past months as a result of the COVID-19 pandemic, we want to structure that. We want to increase our social projects, and therefore, we founded this TAG foundation. We will report on the foundation more in detail with our sustainability report. It is EUR 3.6 million. That's a kind of capital this foundation needs to do this social project. That's, as I said, just a one-off or a one-time payment. The net financial result mainly decreased quarter-over-quarter by nearly EUR 75 million due to the fair valuation of the older convertible bond 2017-2022. That's a non-cash effect. Looking at the income tax result, the income taxes in Germany for the first nine months have been, from our point of view, quite low with EUR 3.9 million.
Very helpful. What led to an income tax reduction in the Q3 was the repurchasing of the convertible bond or the partial repurchasing of the convertible bond 2017-2022, that we repaid in cash, and that led to higher tax losses. Over the next three years, including 2020 and including 2021, 2022, we expect a total income tax saving of up to EUR 10 million from this transaction. Looking at page number eight, you see the development of the EBITDA, the FFO and the AFFO. Looking at the EBITDA margin in the first nine months, 2020, you see that increased over time. We are now at nearly 70% compared to approximately 68% in the first nine months, 2019. As I said, in line with the reduced EBITDA in the Q3 , which is again not a trend reduction in the EBITDA margin compared to the previous quarter.
The more accurate picture can be taken from the first nine months, 2020, where we see the increase in the EBITDA margin. FFO1, more or less in line with the previous quarter here. Clearly, we benefited from the positive cash tax effect that I already mentioned from the partial repurchase of the outstanding convertible bonds. The results from the operations in Poland purely contributes to FFO 2. As of today, and this will be also the case for the very largest part of 2021, the business in Poland is more or less purely a sales business. We're handing over apartments that have already been sold in the past, and the first renter project will start towards the end of 2021. The result from operations in Poland in the first nine months was EUR 2.5 million.
On the right side of page eight, you see the details on this calculation. For the full year, you noted from the guidance, we expect a result between EUR 10 million and EUR 11 million coming from this dispose. Looking at the balance sheet on page nine, you see a quite strong cash position of more than EUR 500 million at the end of September 2020. This is before payment of acquisitions in an amount of around EUR 114 million in October. The very largest parts of all acquisitions closed in October. We paid the purchase price. That means in October, after the balance sheet date, this cash position was reduced by roughly EUR 140 million. Of course, the strong cash position was the result of the issuance of a new convertible bond that we did in August 2020 with a volume of EUR 470 million.
We also issued a smaller promissory note in July 2020 of EUR 92 million. I already mentioned that we repurchased an outstanding convertible bond partially. That was a total investment of nearly EUR 190 million. These increases or these issuances of financial debt was also the reason why you see here an increase in the non-current liabilities. Page number 10 shows the EPRA NTA calculations. Comparing that with the number at the beginning of the year, you see a 3% increase. If we exclude the dividend payment of EUR 0.82, the increase is 7%. Please be aware that this EPRA NTA calculation is with the deduction of full transaction costs. Just to compare that, perhaps with other calculations that you see, if you would exclude transaction costs, then the EPRA NTA per share would be nearly EUR 3 per share higher.
You see this in the footnote on page number 10. Page number 11 shows the financing structure. The average maturity of the total financial debt stands now at 6.7 years. The average interest rate on the total financial debt is now down to 1.5%. Of course, the issuance of the new convertible bond with a coupon of just 0.6% helped to reduce this average interest rate of the total financial debt. There's refinancing potential next year. EUR 383 million of bank loans are maturing, or the interest terms are ending in the next up to two years. The average coupon of these bank loans is 2.1%. We are currently refinancing bank loans for 10-year maturities below 1% in most cases. There should be clearly further interest cost savings in the future possible.
On page number 13, you see the overview or the main data on our German portfolio. In this case, the quarter-on-quarter number of units is really unchanged, 85,000. As I said, the closing of the largest part of all our acquisitions happened in October. Beginning with October, the number of units is increased by approximately 3,500 units. Page number 14 shows the development on the like-for-like rental growth and CapEx in the Q3 and on a like-for-like basis. The like-for-like rental growth is at 1.5%. I already mentioned that at the beginning, that's more or less unchanged compared to the previous quarter.
You know also from the last call that we tried to identify to make clear the COVID-19 impact on our rental growth from our voluntary waiver of rent increases from reduced tenant turnover and also from lower vacancy reduction than we had in previous quarters. Still, we stick to our guidance on like-for-like rental growth. It should be above 2% for 2020, 2%-2.5% is the official guidance. That's still the case that we confirm the guidance that we expect for the rental growth in the Q4 . Maintenance and CapEx development, there are no really new developments here. We have slightly increased the total investments. You see this in top right on page number 14 to EUR 21.80 on an annualized basis compared to EUR 20.40 on an annualized basis or on a full year basis in 2019.
Not really a major change in maintenance and CapEx spending. Also the regions where we invest the largest part of our money are unchanged, which is Berlin, in our case, the community around Berlin and the Chemnitz region. Page number 15 shows the development of our vacancy rates in the portfolio. Here, we're happy to show a reduction by 30 basis points in the Q3 of 2020. For the full year 2020, that means for the Q1 , we expect similar development of the vacancy rate. That means if we achieve a similar vacancy rate reduction like in this quarter, also in the Q4 , then we are already at our targeted vacancy rate of 4.5%, and perhaps we're even able to reduce it a little bit further.
That means in case of a vacancy rate reduction, be more or less back on track after the difficult months of the COVID-19 pandemic earlier this year. Page number 17 shows in a summary the acquisitions year- to- date. As I said, just small acquisitions in the Q3 . Generally, we're of course, very happy and satisfied with the acquisition volume year- to- date in 2020, more than 4,300 units at a nearly 7% growth rate in regions where we already are with an average vacancy rate of 21%, where we're convinced that we can reduce the vacancy rate over the coming years strongly. That should be something very positive for the future. Page number 19 shows an overview of the current and planned projects of our business in Poland.
Looking at the current projects in the meanwhile, we have a total number of units, so that means land banks or projects already under construction of 7,600, out of which more than 4,000 are designated as build-to-hold projects and 3,500 units are designated as build-to-sell projects. If you add on top of that planned projects, and planned projects really means projects where we are in processes of looking closer at them, perhaps already in due diligence processes and in negotiations, this number will increase. You see here on the left part of page number 19, a rough estimate of 9,900 units in total in the build-to-hold projects, and that would exactly tie into our target of 8,000-10,000 ready-for-rent units on the midterm in Poland. Three locations we have entered in the meanwhile. Wroclaw, that was the starting point. Poznan is the second location.
Lodz is the third location. You should expect that in the Q4 , we can also publish that we've entered a fourth location. Here we can deliver and publish some details, hopefully now with the full year results next year in March. Finally on slides 21 and 22, the guidance for financial year 2020 and financial year 2021. We increased the guidance regarding the FFO per share and the dividend per share a little bit to EUR 170 million to EUR 173 million in absolute terms and to EUR 1.17 per share regarding the FFO and to EUR 0.88 per share when looking at the dividend. That's a 7% increase compared to the previous year. Again, the 7% increase is not only realized on an absolute amount, it's also realized or will be realized on a per share basis.
On page number 22, you see the new guidance for the financial year 2021. We're guiding here for a 5% increase, again, on an absolute amount and on a per share basis. This also is true for the dividend. This guidance is based on the current portfolio, including all the acquisitions that we have signed until October 2020. Everything that you see today in the presentation. For purpose of the guidance, no further acquisitions or disposals in the next weeks or in the coming year are assumed. Of course, we're working on that. Please be aware that it's on the existing portfolio. The FFO guidance 2021 basically purely refers to the German renting business as we expect from our renting activities in Poland that the contribution to FFO1 will be not really material.
This in the midpoint, EUR 118 million FFO for which we're guiding is basically coming purely from our German business. Page 23 shows in more detail the FFO or the expected FFO development between new guidance 2020, where the midpoint is EUR 171.5 million and the midpoint of the new guidance of EUR 118 million. You see that the main impact is coming from an increase in net actual rent by more than EUR 14 million. We are expecting for 2021 a like-for-like rental growth including vacancy reduction of around 2%, and the remaining 2.5% of the total growth in net actual rent will be from acquisitions and disposal in 2020 that will then contribute in 2021 for the first time for a full year. We also expect some high expenses from property management, but that's not really a change in structure or a change in maintenance policy or whatever.
That's more or less the result of an increased portfolio size in 2021. Besides this, the cost base is broadly stable. This also refers to financing costs. We don't expect lower financing costs on an absolute amount in 2021 as the total debt as a result of our investments this year is higher than in 2020. With the lower interest rate that we achieved through our refinancings in the course of the year, we were able to keep the financing costs stable, and this is also true for the taxes. Despite the fact that we expect a higher profit, not only under IFRS, but also under tax law, we're able to keep that more or less stable. Also here, very helpful was the effect from the partial repurchase of the outstanding convertible bonds 2017-2022. Yeah, that's it from our side.
The overview of the developments in the Q3 of 2020 and our comments here on the increased guidance for the financial year 2020, the new guidance for the financial year 2021. Of course, now we're very happy to take your questions.
Thank you very much, Mr. Martin Thiel. Now, we will begin the question- and- answer session. To ask a question, please press zero one on your telephone keypad. Please press zero one on your keypad and you will be placed in the queue. To cancel the queue, please press zero two. Yes. The first question we have is from Mr. Thomas Neuhold from Kepler Cheuvreux. You may ask your question.
Thank you very much for the presentation and taking my questions. I actually only have two questions. The first one is on the likely ramp up of the Polish build-to-hold portfolio. You mentioned that there will be only a material effect in 2021. Can you provide us with more details on how 2022 and 2023 and 2024 could look like in terms of ramp up of the build-to-hold portfolio? Then just a minor question on the guidance on page 23. You mentioned that you modeled in 2% total like-for-like rental growth, including vacancy reduction. If you would split this 2% between like-for-like rental growth and vacancy reductions, what would be the figures here? Thank you.
Yeah, thank you Thomas for the questions. I'll start with the second question. It's correct, it's a 2%, is a rough number, like-for-like rental growth that we expect, out of which is approximately 30 basis points, approximately 0.3 percentage point vacancy reduction. That means that we expect approximately 1.7% from like-for-like rental growth without vacancy reduction. This 1.7% is then purely a like-for-like rental growth coming from regular rent increases for existing tenants and from rent increases in case of tenant changes. That's without any modernization CapEx or without any effects from larger modernization work for existing tenants.
That was the second-
Looking at the portfolio in Poland, as you know from our previous presentations, we will update that with the company presentation that we will publish in the course of the day, that we are already guiding for the development of the build-to-hold. You will see that the total number of units in the renting business at year-end 2021 will be still not that significant. We expect around 500 units. Year-by-year, that will increase, and at the end of 2023, we expect that something around 5,000 units in our portfolio are also designated or also ready to be rented out.
The full impact from the renting business in Poland, that means the point in time when we have reached the 8,000- 10,000 ready for rent units, will then be in the end or in the course of financial year 2025. Poland is definitely a midterm business and more or less the FFO 2021, and also to a larger part, the FFO 2022 will see just smaller contributions from the renting business in Poland. Since we're beginning with the financial year 2023 and then quite strong 2024, 2025, you will clearly see very positive effects from the business in Poland in our FFO1 as well. Until that date, we still have the cash flows from the disposal business. Just to make that clear once again, for 2020, we expect here a number of around EUR 10 million from disposals, so net cash proceeds from disposals.
For 2021 and the following years, we expect, of course, also further net cash proceeds. By the way, we will publish the guidance for the disposal results in Poland next year together with the annual report in March next year.
Okay. Thank you very much.
Thank you very much. Next, we have Kai Klose from Berenberg. The floor is yours.
Yes, hello, good afternoon. I've got three questions, if I may. The first one is regarding page 14, where you show the COVID-19 impact on rental growth. Just to understand how we should read that, if we hadn't had COVID-19, it's then right to assume that the vacancy reduction in Q3 would have been around 60 basis points compared to 30, what you achieved. Second question would be on the income statement on page seven or on the chart with the income statement on page seven. I didn't understand completely the comment on the net income from services, why there was this decrease. Maybe you could elaborate a bit on that.
Also on that page, just to understand the increase in other expenses, which you mentioned is coming from the personal expenses in Poland, just to understand where the salaries for the Polish employees booked, is it in personal expenses and/or in other expenses? The last one would be on the FFO bridge on page 24. The increase in personal expenses you expect in the next year, how is it coming from also from Poland, or are there some other reasons behind it?
Yeah, thank you for the questions, Kai. I start perhaps with the last question. The increase in personal expenses that we expect is purely for salary increases that we penciled in into our forecast, and we expect that on average, and that means for the largest part, our employees are here in Germany, the salaries will increase at around 3%. We will have also some efficiency gains in this regard, but that's definitely not an increased head count. It's even a little bit slower, but it's on average 3% increase in salary that we take here into account, and that leads to the higher personal expenses. Yeah, of course it's correct if you ask, well, what is this 30 basis point reduction, or let's say this 30 basis point impact that we show here on the like-for-like rental growth as a COVID-19 impact.
This 30 basis point is the number that we are behind our plan. Behind this assumption, there's a very simple thought that due to the COVID-19 pandemic, we were not able for several weeks to proceed with the vacants reduction as we have been used to in the previous months. Therefore, looking into our plan, the vacancy rate would be normally 30 basis points lower, and therefore we penciled in, or we try to give you an understanding, well, what is the impact on like-for-like rental growth from a low vacancy reduction expected. I think the last quarter, means the Q3 2020, shows that we are already back on a, let's say, normal mode. Also for the Q4 , you should expect perhaps similar and perhaps even stronger vacancy reduction, compared with the Q3 . That's the background of this 30 basis points.
Looking in the income statement, you asked for the personal expenses from the business in Poland, that's completely included in the personal expenses. Personal expenses are really everything. Whether people are in Poland or in Germany, whether they are on the caretaker service or whether they work in the asset management, it is everything in personal expenses. In the net other operating income, I think that was your question. Here is the effect of capitalizing some of the personal costs in Poland, because this personal costs, and in this case, this was the EUR 1.6 million, refer to people who are directly working in the construction business. As we would do it with external costs, also this internal costs are capitalized. It's, let's say, a cross presentations of full personal costs are in the personal expenses.
If we capitalize some of these costs because they refer, for example, for the construction work, then it's shown, in this case, in other operating income.
Thank you very much. On the slight reduction in the income from services, you mentioned there's a footnote saying billing volume for energy services.
Yeah. Service business is also to the energy business, that we have kind of service charges services that we're doing to the tenants that are then part of the service charges. If we do hear more billings for the service charges in one quarter, then from time to time, the income is higher than following quarter. That means in the Q2 of 2020, we had, if you want, saw a slightly positive one-off effect. In the Q3 , we had then a kind of normal volume in service charges that, for example, contain also our energy business compared to the previous quarter. That led, in this case, to a slight reduction of EUR 600,000 quarter-on-quarter in net income from services.
I think in this net income from services, perhaps it's really the better view to look at that on a year-on-year basis, and there you'll see the increase from EUR 15.8 million- EUR 19 million. That's often more, let's say, the true picture than looking at that quarter-on-quarter.
Sure. Many thanks. The last question I have is again on page 14, where you show the regional splits of the amount of maintenance CapEx spend for the nine months, which was primarily on Berlin and Chemnitz. Could we expect that there will be, in those two regions also in 2021, the focus on investments? Or are you have projects in other regions, or special projects in other regions, that the location of the investment volume might be somewhat different compared to this year?
No. This should be more or less unchanged, especially the Berlin region. In the Berlin region, more specifically, Brandenburg and Havel as a location, that's clearly, let's say, focus of our CapEx programs also for the financial year 2021.
Great. Thanks so much, indeed.
Thank you very much. Next, we have Mr. Andreas Thomi from Gliserii Advisory. The floor is yours.
Hi, good afternoon. I was hoping maybe you can speak to what are you seeing in terms of market rents in your locations, and in which locations are you underwriting highest look-forward rent growth?
Looking at the different regions, I would say where we especially see strong rent growth is first of all, the region around Berlin. In our company, it's of course called the Berlin region, but you know that these are the nearly commuter belts around Berlin. These are locations like Brandenburg an der Havel, like Strausberg, and like Nauen, where we have seen over the past years, and also see today here quite strong rental growth. Definitely cities like Leipzig and cities like Dresden are quite strong. We see still a very sound underlying like-for-like rental growth around, let's say, 2%, even without any CapEx programs in other medium-sized cities in East Germany where we are in.
I would say in our portfolio, it's not the case that we have extremely strong locations where we have, let's say, double or triple the rental growth compared to other locations. It's often quite close together. A like-for-like rental growth without CapEx, without vacancy reduction of 1.5%- 2% is something that on a midterm basis, I think refers to nearly every region in our portfolio.
Okay. A follow-up, maybe alluding to the like-for-like rental growth comments you made for 2021. That 1.7% on basis, like-for-like, that's lower than historically. Is this a result of lower market rents or the result of being lower or a combination?
Honestly, we are, of course, more careful also with guiding our like-for-like rental growth after the development that we had in 2020. It's not the case that we see a trend in the market that we see rents not increasing that strong as in the past. One has simply to say, looking at the actual results, looking at the results from that came out over the course of the year, they have been a little bit weaker than in the past. Now we can start discussions, where is that coming from? Of course, one impact is that the reference period from the rent tables from this has been extended to four to six years. Perhaps there's also some more pressure on politicians as inflation rates are lower, that also rent from this niche period should not increase too strong.
I would say, it should be more a conservative measure to having that in mind what happened over the course of 2020, that we guide really a reliable figure for the financial year 2021.
Okay. Thank you very much.
Thank you very much. There are currently no question in queue. If you like to ask a question, please press zero on your telephone keypad now. Up next, we have Japa Rein from BMO. The floor is yours.
Sorry, I was on mute. Can you hear me?
Yeah, I understand you now. Thank you.
Hi. Good afternoon. Thanks for taking my question. Just for next year, how much CapEx do you plan to spend in Poland? How does that compare with the current firepower left that you have? Also just to get back on the lower like-for-like rental growth, excluding vacancy reduction at 1.7%, what is your assumption in terms of churn rate and reversion rate? Thank you.
Looking at the investment that we're doing in Poland, you see on the slide that we have in the presentation, page number 119, that we're investing approximately EUR 1.1 billion in Poland over the next five years. Part of that is already done in 2020. That means if you do a simple calculation and that calculation leads to a correct number, on average around EUR 200 million per year needs to be invested in Poland. This is also a good estimate for financial year 2021. Perhaps a little bit more. I would say something between EUR 200 million and EUR 250 million is something that you should expect as total investment in Poland. That, of course, depends also on the timing of further acquisitions in Poland.
Looking at our current firepower, I just commented on the cash that we have in the balance sheet, so if we reduce that by the payments that we did after the balance sheet date for acquisitions, there's still something around EUR 300 million, EUR 350 million left. Therefore, for 2021, there's definitely not any short-term financing need. Therefore, we should be very well prepared. Again, we're doing in Poland investments of a really material size, but we're doing that step by step. Over years, again, around EUR 200 million annually, you should expect as investments. The second question was around the like-for-like rental growth. The assumption for the tenant turnover and the reversionary potential are unchanged to financial year 2020. We have in a normal year Well, I should say more specifically to 2020 without this month of COVID-19 pandemic.
During the COVID-19 pandemic, which is still ongoing, but during the first lockdown, I should say more specifically in March, April, May, we had a tenant turnover which was very low in our portfolio, around 7%. Now we are back to a normal level, which is perhaps between 10% and 11%, and that's also the assumption for 2021. Also the reletting rents.
Are based on a scenario or developments that are very comparable with 2020. That means the reduced like-for-like rental growth income is mainly coming from expected low rental growth from existing tenants, mainly from Chemnitz region, as I just said before. Okay, I think we can ask for any further questions if there are any. If I may ask if there are any further questions. It doesn't seem to be the case. In case if we have here any technical difficulties, please feel free to contact us right now after the call. The other department and personally myself are always available , for any questions. Hello? I can hear you.
Hello, Mr. Simon. The call is. Yes.
Yes.
Now it's. Yes.
Please continue your question, please, Mr. Simon.
Okay. Can you hear me?
Yeah, I can hear you. Sorry.
Okay, great. Thank you very much.
Yeah, it seems so. Thank you for taking my question. My first question would be in regard to the pipeline and the acquisitions. Maybe first in regard to Germany, what do you see there? Do you see anything? Do you have any number in mind that is maybe equal as in full year 2020, also in full year 2021 to be acquired? In regard to Poland, because for now, as I understand, you're only acquiring land plots and where you intend to build property for to hold and to sell. Is it also attractive to buy portfolios or assets, and integrate them to your portfolio then, in regard to Poland, as you did in the past in Germany?
Well, looking at the acquisition market in Poland, that's just unchanged.
It's extremely difficult to predict a specific acquisition number, and therefore, we have also not an official acquisition target. This year so far was quite successful with more than 4,300 units. If we remember the year 2019, we acquired something around 1,600 units. If you ask me, was there any change in the market? I would say no, but simply in one year, we have more opportunities for what reason ever, and you get the sellers to the notary, and you can sign it. There's a kind of natural swing. As an average, and just to give you an idea, as in the past, you say where something around 2,000- 3,000 units a year in a normal year should be something that is doable. We know acquisition markets are competitive, but we are buying also in smaller sizes. We buy more frequently.
We're not penciling that into our guidance. Just to give you an idea where perhaps a normal year should end up, perhaps that's a number that could be helpful. Looking at Poland, perhaps I can comment a little bit more detailed on what we are buying. When I'm commenting on land banks and projects, that means that we're also buying projects from other developers. This is a smaller part of the total acquisitions. Out of the currently 7,600 units that we have in the pipeline as ready-for-rent or ready-for-sale project, I think something around 1,300 units are projects where we have more or less entered into forward deals with other developers. That's mainly the case in one location in Poznań, where we then of course, use their capacities, where we think we have achieved a good price for the whole project.
That's not an existing portfolio, but that's then a project or projects that are started right now and are then finished in the course of 2021. What we cannot exclude, but what is currently not the case, that we're buying really existing portfolios. First of all, in the segment that we are looking at, that is newly constructed apartments in large cities in Poland, these portfolios are not really on the market, not as ready-for-rent portfolios. That's something where we, as one of the first companies want to build up. Looking at existing portfolios in existing buildings, the construction quality of these portfolios, if they are on the market, is really, in most cases, poor, not comparable to what we are buying in East Germany or in other federal states in Germany.
Therefore, that's nothing we should expect, at least not in a material size in the near future.
Okay, great. Thank you. Can you hear me?
Yeah, I can hear you.
Okay, perfect. The second question would be, in regard to vacancy reduction. I need to get back to the 30 basis points of low vacancy reduction, because I just wonder, is it really a catch-up effect or that you see then in Q4 maybe even switching into next year? These 30 basis points, where do they come from? Do they come from a lack of re-leasing modernization projects? Or is it rather empty apartments you were about to newly rent, haven't spent any CapEx on it?
Can you just give me a little bit of more of an insight into those 30 basis points, and then also into where you see the most vacancy reduction going forward, maybe especially the focus on full year 2021.
Quarter-on-quarter, the largest progress of vacancy reduction was in the Chemnitz region. We expect that especially in the Berlin area, you will see a strong reduction in the Q4 , and it is coming mainly from the modernization programs that I already mentioned. Perhaps to make that clear, that's not one modernization program that takes some months and then we letting it out. We really divide that into different stages and to really do that step by step. Therefore it means that already in summer, some of these modernization program ended. It has taken some longer time as expected to rent them out. We think this was for the very largest part, not a reflection of market development, but simply to restrictions from the COVID-19 pandemic or from any concerns that tenant had to move during this time.
Therefore now this is kicking in. I would not say that this is a kind of catch-up effect when I look into the reports to- date or vacancy developments in October, I mean, vacancy rate was already further reduced. Therefore we are very optimistic that we can reach our target of a vacancy rate of at 4.5% maximum at year- end 2020.
Okay, great. Just the last question maybe on the guidance. In regard to the full year 2020 guidance, just look at it on a per share basis, I'm already at EUR 0.90, you're still guiding at EUR 1.17. I have the additional acquisitions kicking in, which is included, just annualize that and add another EUR 0.30 on your current nine-month 2020 figure, you would end up at EUR 1.20 per share. Is it that I'm missing something? I mean, surely there is some higher maintenance cost, are you more cautious somewhere, or is it just that you expect more cost somewhere else than maintenance? Could you detail that a little bit for me, please?
Yeah. Well, generally you should not expect any surprises or how to call it that you should be aware of in the Q4 . What is really always difficult to guide exactly is not only maintenance, that's also income taxes. I mean, of course we have here estimates, but let's say EUR 2 million more or less in, for example, income taxes or also then in the maintenance area is then difficult to guide exactly. Therefore, we are always more comfortable to guide perhaps more towards the lower end of a possible range than guiding something that is then perhaps too high because even at year end we see, I don't know, EUR 1 million or EUR 2 million more income taxes. We did more maintenance work than expected, which is then often not bad news, but simply perhaps the possibility of doing some projects more early.
Therefore that's really nothing behind, but still uncertainties in perhaps these two areas are the reason why we are here, let's say a little bit more careful.
Okay. In the sense of under promise, over deliver.
That's, yeah, something that could be.
Okay.
Could be reasonable.
Okay, great. Thank you very much.
Thank you very much. That will be ending for our question- and- answer session. I would like to pass this session over back to Mr. Martin Thiel. The floor is yours, sir.
Yeah. Again, thank you very much for listening to our call a little bit later today. If there are any questions, again, please feel free to contact Dominique from our IR department or myself. We're available for your questions. Have a good day and talk soon. Thank you very much.
Ladies and gentlemen, with that, we have come to the end of the conference call. Thank you for your participation and have a pleasant evening ahead.