Dear ladies and gentlemen, welcome to the conference call of TAG Immobilien AG. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Martin Thiel, CFO, who will lead you through this conference. Please go ahead.
M any thanks and good morning, everyone. This is Martin from TAG. Many thanks for dialing in to today's conference call regarding the acquisition of ROBYG. Please accept our apologies that we approach you so shortly before Christmas with this conference call. We thought it's perhaps useful for you to get some more information and some more color on the transaction that we have effectively signed yesterday evening and announced via an ad hoc announcement in the press release yesterday evening. Therefore, we can discuss everything that is helpful for you during this call. Let us start with a short presentation that we have published on our website this morning, and perhaps you've had a chance already to look at it, and to download it.
Perhaps start with the executive summary on page number two, and some general words about the rationale of the transaction, and the main components of the deal. W e're happy that we signed yesterday evening an SPA to acquire all shares in ROBYG. ROBYG is the largest Polish residential developer with a really outstanding track record over the last 20 years. With the help of this acquisition, we're clearly enlarging our footprint in our business in Poland, and, y ou know that we're in the market now since two years. Hence, from our point of view, really a success story with the help of our team at Vantage in Poland. We simply gained a lot of confidence even during this difficult time.
The last two years, you know that the pandemic is still there. Basically, we have been in this market only during the pandemic, and even in this situation, the market has been proven to be extremely not only stable but also growing. Therefore, with the help of ROBYG and with the help of Vantage, we are really looking forward to expand our business in Poland. If you look in rough numbers at our growth targets, I mean, so far we've been talking about a midterm target of 8,000 to 10,000 residential units in Poland. Effectively, we are today doubling this target to more than 20,000 residential foreign units in Poland as our new target. That would account to approximately 20% in terms of units of our current portfolio.
ROBYG has a secured pipeline and that's, of course, for us, of course, of great interest of roughly 23,000 residential units in four major Polish cities. These are not only cities where we already are, like Wrocław and Poznań, and at least for a certain part, Tri-City, so mainly Gdańsk. This is especially also Warsaw. This acquisition enables us also to enter from our point of view an attractive market in Warsaw at a very reasonable price. Out of the 23,000 units in the land bank or in the pipeline, according to our business plan, as we have it today, roughly 12,000 units should be held upon completion as yielding assets, and the remainder of this development pipeline is already in the process of being sold or will be sold in the future.
Looking at the purchase price, the purchase price is not exactly determined yet. That's depending on the exact amount of certain cash distributions to the existing shareholders. We expect that the purchase price will be around PLN 2.5 billion, and that's in euro, roughly EUR 550 million. We think for us this is really a attractive price, especially knowing what kind of company, that means what kind of outstanding track record, excellent team, and attractive land bank we are buying. Looking at the financing, the purchase price, as well as potential refinancing of existing debt and working capital, is funded by a bridge facility that we have already in place up to EUR 750 million. We will take a closer look at that later.
The difference between the purchase price and bridge facility, so roughly EUR 200 million, is available, for example, for working capital, for ROBYG, for further investments or also for the early refinancing of existing debt, if needed. The takeout of this bridge facility will take place in the course of 2022. Let us say very clearly, we are absolutely committed to maintaining our Baa3 investment grade rating at Moody's. We will clearly take this into account when looking at potential takeout transactions. Closing of the transaction is expected to take place in the first quarter of 2022. The only thing we basically have to wait for is the mandatory antitrust clearance. I mean, clearly we have to wait for this.
If you ask us if this is a high risk, no, that's definitely not a risk. We expect that the antitrust clearance will be positive and that the closing will happen in the first quarter of 2022. There are no other conditions. Looking at the next slide, we show you some charts about our overview of our track record in Poland, and t he track record that we have realized over the last two years together with the help of our colleagues at Vantage in Poland. We have grown the business quite significantly.
The total pipeline units in our current business, in our existing business in Poland are already above 12,000 units, out of which roughly 8,500 units refer to the build to hold pipeline and roughly 3,600 units refer to the build to sell pipeline. Looking at current results, if I would need to say that simple, we are simply better than planned. FFO II contributions, f irst project that we are already renting out at Vantage. First rents that we see, that's all a little bit better than expected. Again, having in mind that we are really in a difficult time in light of the COVID-19 pandemic. This makes us very optimistic that we not only have already a good team in Poland in place but also that the market is extremely stable and promising.
Page number four of the presentation shows you some more details about ROBYG's portfolio. ROBYG is currently working in four cities. I already mentioned them. It's important to point out again that we are now entering the Warsaw market with the help of the acquisition. When we combine the Vantage and the ROBYG portfolio, you see this on the top right of page number four. The total pro forma combined number for the portfolio stands at 39,000 units. This includes, just to make that clear, 4,000 units that are already sold by ROBYG. On page number four, you also see an overview of Polish developers.
That makes it clear that after the acquisition of ROBYG and TAG or the new TAG group, that means Vantage, including ROBYG, is by far the largest developer in Poland and of course that's our core business, the largest residential for rent company in Poland. Page number five shows some numbers on ROBYG and the build to hold and build to sell pipeline. We think it's remarkable what margins, what gross profits the company ROBYG is achieving. The gross profit margin for the financial 2021 is expected to be above 30%. That's clearly outstanding.
With a team of around 450 employees, with a history of more than 20 years being in the market, we have a lot of confidence that ROBYG will contribute extremely good results for us for the new TAG group in Poland in the future. Looking at the type of apartments that we want to build with the help of ROBYG, basically the product is very much comparable to what we are already building with the help of our Vantage team. Looking at average total investment cost per sq m, that's a little bit higher than our current pipeline. Looking at the details of page number five, so look, for example, at the build to hold pipeline, the average total investment costs in Euro per sq m are around 2,300 units.
That compares to roughly 2,000 units, just a little bit less at our current Vantage portfolio. The difference is mainly attributable to locations like Warsaw and five cities where ROBYG has its larger part of the portfolio. Simply these are the markets with, for example, higher land prices, but also on the other side with higher rents. Taking into account average rent per sq m in EUR 12 and EUR 14, that would lead to an average gross rent yield for us effectively of around 7%. Having in mind that we're talking about the capital city of Poland, Warsaw, that we're talking about a city like Gdańsk, we think this is an extremely attractive pricing for us. Page number six, again, highlights the strategic transaction rationale.
We're clearly expanding our existing footprint in the Polish residential for rent market now with a potential and a pipeline of more than 20,000 residential for rent units, out of which more than 6,600 units are in the Warsaw market, which is a new market for us and highly attractive. Again, the Polish residential market clearly offers a dynamic outlook. Looking at the existing housing shortage in major Polish cities, looking at demographic development, looking at general development in the Polish economy, this really makes us confident that we are here on a very right way. Page number seven outlines the funding. On the left side you see a simple chart, how we are financing the deal, a gain, the purchase price will be EUR 550 million approximately.
To have in place additional working capital or potential for early refinancing of financial indebtedness at ROBYG, there are other EUR 200 million possible, which are then secured by a bridge facility of up to EUR 750 million provided by four capital market banks. T o make clear, you see this in footnote one on page number seven, how we derived at the purchase price of PLN 2.5 billion. Well, basis for that was a total transaction consideration of PLN 3.15 billion. As the company has a lot of basically excess cash at the moment in the balance sheet, the existing shareholder presumably will pay out a dividend of up to EUR 700 million to them and it's clear we are deducting then this dividend payment from this transaction consolidation.
The effective purchase price that we're paying will be around PLN 2.5 billion. That's the EUR 550 million, which is then effectively what we pay. It's clear that we want to take out the bridge facility in the course of 2022. Let me confirm once again that we're clearly committed to maintain our Baa3 investment grade rating. We have, of course, then all options on the table. Of course, we will also look at equity contributions. This could also be the case that we do selective disposals, whether this is within the Polish portfolio, whether this is within the German portfolio, and that's something that we will work on in the next month.
Therefore, we have now the good situation really to look over the next month and quarters when we find the right timing to do here capital market transactions. It's clear that looking mid- to- long term, our LTV target of 45% will be unchanged. We will not weaken our financial metrics now with the acquisition of ROBYG and this is basically unchanged to what we have always said when acquiring Vantage or when entering the Polish residential-for-rent market that we clearly want to have the financial metrics in good shape as they are today. Some final words on page number eight on the timeline. Clearly, the announcement was yesterday evening. What is now our next? We're basically waiting now in the next weeks for the antitrust clearance by the authorities.
In case of our Vantage transaction, that happened quite quickly. As far as I remember, this was something between four weeks and six weeks. Normally, a timeframe would be around two months. An estimate would be that the closing prep takes place in the course of February or it's in early March. That needs to be seen. We definitely expect that this takes place in the first quarter of 2022. Yeah, that's it from our side. A short overview of this important that we think highly effective acquisition of ROBYG. Of course, we are here and are happy now to take your questions.
Ladies and gentlemen, we will now begin our question and answer session. If you have a question for a speaker, please dial zero and one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial zero and two to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question is from Kai Klose from Berenberg, your line is now open. Please go ahead.
Yes. Good morning. It's Kai Klose from Berenberg. May I have two questions? The first one is on page four. Could you explain or give more details on the two numbers that you show here for ROBYG on the table at the top right, you say 27,100 units and then the chart at the bottom is 23,200 units. Could you explain how what the difference is? There's some information in the bottom left but maybe we can have more bit more details. The second question is, what changed your view on the Warsaw market? Are you a bit more positive? If I remember correctly, that Vantage was not in the negative for you. I think now going to Warsaw might also change the profile a little bit.
The last question would be on the Moody's rating. Have you always been in contact with the rating agency? If they keep the rating temporarily, even if temporarily, the LTV goes up. Thank you.
Yeah. Good morning, Kai. Many thanks for your question. Yeah, of course, happy to explain this, honestly, but it's a little bit confusing number, 23,000 units, 27,000 units. 23,000 units, that's the pure land bank, where construction not has started and where nothing has been sold. An additional 4,000 units has already been pre-sold and is under construction. We can look at the pipeline in two different ways. If you count everything, so whether they're already sold or not, that's the 27,000 units. If you exclude the already pre-sold units, you arrive at 23,000 units. That's the difference between this number.
When you say pre-sold, it includes own block or condo sales?
Sold, simply sold. That's perhaps more exact to individual buyers.
Okay.
That it's already sold, but the handover has not yet taken place.
They're in the construction phase, so to say.
Exactly. Exactly.
Thank you.
What has changed our view on the Warsaw market, I would say simply with the help of this acquisition, we are really able to enter this market at an attractive price. Our assumption in the last two years, three years was that the Warsaw is, of course, an attractive market regarding the development, like demographic development, like rent development. When we looked at land prices, we always felt, the yields that we effectively would get when acquiring single land banks, single land plots are perhaps not that attractive in comparison to projects that we see in Wrocław or in Poznań. Now, with the help of this acquisition, we are effectively buying properties in Warsaw.
When you look at the total investment costs and compare that with expected rents at a close to 7% gross yield and, y ou know that we are very much looking at numbers, then this is something which is, of course, highly attractive for us. Basically, the acquisition of ROBYG allows us to enter the Warsaw market at a really good price. That's the conclusion. Regarding the Baa3 rating with Moody's, of course, we are already in contact, and we have discussed this acquisition with them. We know that we are then more exposed to development risk. We know that also the Polish market is something that has a different view from every rating agency compared to the German market.
We are very optimistic and very confident that we keep the Baa3 rating. I mean, we have a positive outlook currently. Before the transaction, we were more moving towards a rating upgrade so t hat should provide us definitely with some kind of buffer. It's clearly Moody's will release its comment, not in the next days, as there's a kind of of Christmas break, but I think in, as far as I know, in the course of January.
Okay, thanks.
The next question is from Thomas Rothaeusler of Deutsche Bank. Your line is now open. Please go ahead.
Hi, morning, everybody, a couple of questions. Firstly, I mean, the step is quite an expansion, what will you say is the maximum exposure to Poland, your plan, for tech over time?
Good morning, Thomas. For now, we have more than enough work to do. I mean, buying a company, buying land banks is one thing, but really getting this into real projects, re-renting the properties out, really realizing the sales over the next years, that's a lot to do. I mean, we're talking here really about mid- to- long term cycles. Our total pipeline at ROBYG will take until 2028, until we really have realized everything, built all the units. We're doing this step by step. Currently, in terms of units, that would account for approximately 20% of our existing portfolio. And that seems to be for us as a good number.
As we also always said, I mean, we look at such markets permanently and then we will review this continuously. Sh ould you expect a further increase shortly? No, that's not the case. For us, it's clear that we have our core market. That's Germany, which is an extremely stable, extremely reliable, and extremely predictable market. As you know, also very competitive market, where it's more and more difficult to buy portfolios at attractive yields. Then comparing that with the possibilities that we have in Poland, yes, of course, combined with a certain higher risk as we are developing these units.
Seeing that we're here building brand-new products or brand-new houses in Poland's largest cities, in good locations, a really good construction quality at a 7% gross yield, that makes us very confident that this is the right thing to do and that it deserves a higher share than the originally 10%, now more the 20% of the portfolio.
Another question. I mean, what would you say is the key motivation of ROBYG's management, also its shareholders to sell it now?
Well, of course, I can't comment really what the shareholders or the existing shareholders are thinking. Knowing that private equity investors or observing that a private equity investor after four years of investment is selling its investment, that seems to be kind of typical in investment time.
Yeah, and, of course, it's also for the selling shareholders a good deal. That does not mean that we are overpaying. From our point of view, that's definitely not the case, but we simply have to acknowledge that they have entered the market four years ago, when perhaps at that time, the confidence in this market from investors was much lower. T hey for sure had made a good return, and that's simply something which is absolutely okay for us. As you know, based on existing purchase price, we are still able to achieve very attractive returns for our shareholders.
Can you comment on the deal pricing? Let's, I mean, if you take EV/EBITDA multiple, is it correct that the 550 corresponds to EV, and then it would be roughly 7x EV/EBITDA? Is it the right view, or is that different?
Yeah. The total financial debt at ROBYG is currently EUR 170 million, so 170. Out of which approximately EUR 30 million are bank loans and approximately EUR 114 million are, of course, the bonds. If you put that on top of the EUR 550 million, then you're around EUR 700 million, then there's a certain cash balance in the balance sheet that brings you perhaps then back to more EUR 650. Comparing that with the expected EBITDA for 2022 then you are at an EBITDA multiple below 8x, perhaps between 7x and 8x. That would be a kind of pricing perspective from a developer's point of view, y ou know that we look at that as more from a residential for rent perspective, and we do that then often quite simply say, "Okay, what are we effectively buying?
We're buying a portfolio at a 7% gross yield, so it'll be more than 14x multiple. We're buying at a little bit more than EUR 2,000 per sq m total investment costs, including land, including construction costs, including fit out, and these are for us, of course, highly attractive numbers.
If you compare the pricing, I mean, if you take the multiple and compare it with the Vantage deal, is there a big difference or?
That's higher, but I think this is a normal market development compared to two years ago. Simply looking at the overall results, that's definitely for us an attractive pricing.
Okay. Thank you.
The next question is from Sander Bunck of Barclays. Your line is now open. Please go ahead.
Hi. Good morning, team. Sander from Barclays. A couple of questions, j ust one thing first on the purchase price. I just want to get clarified. I think in the announcement it says the purchase price is approximately EUR 700 million. You're also talking about EUR 559 million as being in that consideration. The delta is the EUR 159 million. Is that effectively what's going to the sellers? And is it basically that you're paying the sellers, or is it going straight out of the company?
Good morning, Sander. I'm happy to clarify this. Well, let's put it like this. Basis for the valuation is a purchase price or a transaction consideration, let's put it like this, of EUR 700 million in rounded numbers. The existing shareholders will receive a dividend from ROBYG of around EUR 150 million. That means the company, after this dividend payment, is valued at EUR 550 million, and that's what we pay.
Okay. Is EUR 550 million consideration post the dividend payment?
Exactly.
Okay. Fine. That's great. Thanks for that. Second question I had is on any guidance on potential value creation going forward. I mean, there's quite a lot of numbers flying around in terms of the amount of units that are going to be constructed over the next couple of years. Is there anything you can say in terms of the returns that you expect or the profits that you expect to make from that and over what kind of timeframe we have to think about?
First of all, we will of course give much more details on the future business plan of ROBYG once we have closed the transaction and once we are able also to intensively discuss our business plan with the ROBYG management. What we can clearly say today is that the overall returns yields are very much comparable to what you know from us from Vantage. Looking at gross yields, I already mentioned the 7%. Looking at EBITDA margins, north of 70%, 75% that you know from Vantage. We should also apply such EBITDA margins to ROBYG and that is very much comparable. As I said, in the sales business, the gross profits ROBYG is currently achieving is above average.
While as we are looking at, you know, our Vantage portfolio at gross profits of around 25% or margins of around 25%, that's at ROBYG more at 30%. That's not only due to a different market like Warsaw, like Gdańsk. It's also due to the fact that ROBYG is not directly employing construction workers but is doing the whole coordination like a general contractor externally normally would do internally. That brings an additional margin. That means the sales business should be clearly above average. Then regarding the pipeline, as I said, we expect that this pipeline of the residential-for-rent units will be completed in full at latest in 2028. We will now, basically, right after closing, start to work on the first residential-for-rent project.
As you know, with our history from Vantage, that will take one and a half to two years until the first residential for rent projects are finished. That means from beginning of 2024 onwards, we will have the first Resi4Rent contributions from ROBYG. That is then increased year- by- year until 2028. We will definitely come up with more details also with a guidance for the financial year 2022 after we know when the closing happened and after we have discussed also and confirmed our business plan with the ROBYG management.
Okay, good. D id I hear you saying that ROBYG basically does their construction internally, i.e., they have their own construction platform?
Yeah, they coordinating the construction works so that means they're not directly hiring people who do the construction work.
They're the general contractor.
Yeah. They're basically their own general contractor.
Okay, fine. Okay, great, and j ust a last one from me. Just on the balance sheet of ROBYG. How are currently the assets being recognized? Are they currently being held at cost or is that already at fair value?
A very small part of it is valued at the fair value. This is a land bank where the concrete planning has not yet started. You can take a look at the ROBYG balance sheets, by the way, also on the ROBYG homepage.
Yeah.
ROBYG is not a listed company, but it has issued listed bonds, so they're issuing quarterly financial statements on our IFRS, but by far the largest part of the portfolio is valued at cost.
Okay. That isn't because that's mainly then the inventories, which is the largest item on the balance sheet at the moment. That's all held at cost.
Exactly.
Okay, super. All right, that's very helpful. Thanks so much, Martin.
Yeah. Thank you.
The next question is from Peter Papadakos, Green Street. Your line is now open. Please go ahead.
Good morning, Martin. Thanks for the presentation. T wo questions, mainly on the softer side of things, with regards to ROBYG management team. Can you say anything about, is there a lock-up period for them? A lso, just how the integration between ROBYG and Vantage, will there be more of an integration? Will it be sort of one company or sort of is the intention to keep them separate, a nd obviously the senior people there separate? T hen sort of related to that, will there be someone from TAG, sort of someone senior, even in the executive team that will sort of focus intensely on the Polish portfolio? I imagine Claudio is really busy as it is.
How do you see that in terms of putting more resources from TAG in that business? Finally, just a little bit on the bidding itself. Was this portfolio or was this platform shopped around, s ort of was it a competitive bidding process, or did the sellers approach you a few months ago and you took it from there?
Thank you and s orry, the line was quite bad. I'm not sure whether I got your second part of the question. Perhaps let's start with the first one, which referred to the plans with the ROBYG management team and how we will set up the company structure. I mean, for us, the good situation is that we have now two really excellent management teams in place in Poland. That's the already existing platform, which is our Vantage team. We're very happy with who delivered excellent results over the last two years. Then, we are, of course, very happy that we have now an additional management team at ROBYG who has proven over the last 20 years how strong results they can deliver.
The idea is, I mean first of all, clearly we have to wait until closing. We will combine the two companies and we will work with both management teams together on a new kind of platform. What is the exact legal structure? Needs to be seen. I mean, there's always such things as sometimes more tax implications, but really looking at it from operational platform, it should in the midterm be then one combined company. Yeah, we need both teams on board. I mean, we have clearly growth ambitions in Poland, so therefore for us it's clear we need the people, we want to keep the people on board. That does not only refer to the management teams, that also infers to the employees.
Therefore, it is good also to have a larger platform to realize the ambitious plans that we have for the future. At TAG, we have not been members of the management board in Poland so far, and this is also not the plan for the future. We are members of the supervisory board at Vantage and will be also members, at least, this is the current status, of the supervisory board at ROBYG. We are then clearly active. I mean, we should be involved in all the major decisions, but we have a lot of trust and confidence in the already existing management team, as well as in the future combined management team today to do the day-to-day business because they've really proven impressively how capable they are and have proven their skills.
Peter, perhaps you can, if this was part one of the question, if you can repeat the second part of the question because this was hard to understand for me.
Yeah, sorry. I was just asking, was the portfolio put on the market by the sellers? Certainly, it was shopped around or did they sort of come to you a few months ago, almost off market?
No, this was an auction process, which was more or less also public. As you've seen some press releases. It has not been an exclusive process but it has been a public auction. L ooking at such transactions, looking at the transaction volume, I mean, for us as a company that's clearly manageable. We have the access to the financing that is needed. For the Polish market, that's a large transaction. EUR 550 million purchase price for the German residential market would be definitely nothing small, but nothing unusual, I would say. For the Polish residential market, it's a huge transaction and therefore it's not everyone is really able to have the financing in place for such a purchase price.
This was clearly an advantage and also the fact that we are able to pay that quite quickly, which is on the German market, honestly, not really anymore an argument. That was an argument some years back. In Poland, that's still an advantage.
Understood. Thanks, Martin, and m aybe just so in terms of our modeling for the bridge loan, what type of all-in interest rate should we be assuming for our FFO calculation in 2022?
I can't give you the exact basis points, but let's assume that is something between zero and 0.5%. In that range. That should not be really that significant especially as we clearly want to look at it to take out, not too late in the course of 2022.
Okay. Understood. Thanks very much and merry Christmas.
Yeah. Thank you very much.
The next question is from Tom Eisenstadt from Stifel, your line is now open. Please go ahead.
Morning, Martin. Questions remaining are when you look at the units that you want to retain versus the ones you're looking to dispose of, what's the criteria that you have there?
Yeah. Good morning, Tom. I would say, the apartments themselves are not so much different. It really refers mainly to the micro location. That means for the Resi4Rent products, we clearly need a location, which is more central, which has a good connection to public transport and so on, where the city center is not too far away. Whereas in the residential for sale business, I mean, we're not investing in the outskirts of the cities, but even a little bit far away from the city center, this is something that really works. It's more something like looking at the micro location compared to a different or i mean, it's not a different or totally different kind of apartment.
On the gross profit margin, you highlight 30% and why it's been so high. I mean,equally in 2019, it was down 21%. Should we be looking at this 30% as sustainable or is that a sort of exception?
We don't think that this is an exception. Also, for the years 2022, 2023, we are expecting such margins on the disposals. Clearly also in Poland, rising construction costs are an issue but we have seen simply a very strong price growth in the Resi4sale market in Poland. We don't expect that this is coming to an end as affordability ratios are simply still in good shape. The price increase is on the back of really growing household incomes. It's not the case that we see here, a lot of supply coming to the market. The bottleneck in Poland is really getting access to land banks, and that's now our big advantage when we acquired ROBYG, that we have this land bank of 23,000 potential units.
Therefore, we also expect for the foreseeable future, a margin, a gross profit margin north of 30%.
Lastly, when you acquired Vantage, you supplied a graph which showed the rental development in the target cities. How have rents evolved during COVID?
Yeah, in some cities when the pandemic started, rent stopped, which is, that's nothing unusual for a non-regulated market. The reason for that was mainly happening in markets like Gdańsk, that also a lot of short-term lease apartments came to the market. T his is kind of typically Airbnb apartments in Gdańsk at the Baltic Sea, where simply no one went to holiday, where students were not there and so on. R ents have really recovered quickly. Looking at rent levels today, we are already above, at least in most locations, above the rent level that we had before the pandemic. As I said, this whole development on Resi4Rent market as well as the Resi4sale market gave us much confidence.
As you know, well, these two years where we are in the market in Poland are definitely not easy years, as the pandemic is still there. On the safe side, on the rent side, as well as on the construction side, we've seen how good this business develops.
Great. That's it from me. Thanks very much.
Ladies and gentlemen, just as a reminder, if you would like to ask a question, please press zero and one on your telephone keypad now. The next question is from Simon Stippig, Warburg Research. Your line is now open. Please go ahead.
Great. Good morning. Thank you for giving us the opportunity to ask questions. My first question would be in regard to your capital market financing. Will you undertake that in Polish Zloty or in Euros?
Good morning, Simon. No, this would be in euros.
Okay. Do you intend to hedge them over the longer term or starting in 2022?
Can you repeat this? The line was a little bit bad.
Sorry. When you finance your Poland exposure, which will grow a lot in the future, I just wonder if you will hedge your Polish Zloty exposure.
Well, that's not the plan of effecting this for 2022, and that's also not for 2023. I mean, we are long-term investors in Poland, and we will be now involved in Poland for years. Basically the profit that we realize, for example, with the Resi4Sale business will be directly reinvested into the Resi4Rent units. Therefore, the point in time when we really effectively need to change Zloty into euro, that will not be 2022 or 2023, as we have years of investments ahead of us. Currently, even a little bit weaker Zloty helps us. Paying the purchase price upon this foreign exchange rate is a little bit more attractive than before the pandemic.
This view might change us, when we are in a phase we say, "Okay, now we're really in the yielding phase," and we expect then significant dividends paid out from our Polish subsidiaries to TAG, the holding company. We think it makes sense to think about foreign currency hedges more to secure visible cash flows over the next two years to three year s to protect dividends. It's not the plan to do a high foreign currency hedge exposure right now because, again, we are different than, for example, a fund who's investing and knows, well, after exactly five years, after exactly 10 years, we have to repay the debt, we have to repay the equity, and that's not the case in our company.
Therefore, it's more a long-term view that we look at that.
Okay, great. Thank you. Second question would be in regard to alternatives to your current acquisition. Have you looked at, for example, Murapol, which was intended to IPO in August, or later this year? Did you consider that as well?
Well, please understand we won't every time comment on certain companies or certain transactions, but perhaps just being also aware that several transactions in the Polish residential for rent market or the Polish residential market, I should say better, have happened in the last two years, last few years. It's clear we are active on this market. We've been taking a look at that, as always. Also, in this transaction we are disciplined. We had not really pressure. I mean, we have an existing platform in Poland. We have a good team in place. We have a good track record. We were not under pressure now to buy something.
Therefore, ROBYG was for us simply a good opportunity to buy a really outstanding company with a large land bank at a very reasonable and attractive price for us.
Okay. Maybe one more question regarding your units upcoming for the next two years, which you say would be around 7,000 units. As you've mentioned before, your rental portfolio from ROBYG should start to provide rents in 2024. Can I assume that those 7,000 units will be sold over the next two years?
The total sales volume should even be for next two years a little bit higher. Again, we will come back to you with detailed numbers when we have had the closing. That's hopefully quite soon. It's clear 2022, 2023, these are years where we have significant EBITDA and cash contributions from the Resi4Sale business. Basically this is very visible because what is handed over next year in 2022 is more or less completely sold. What is handed over in 2023 is perhaps also to a certain part in the sales process, is already now in construction. These EBITDA contributions from disposals are very visible for us.
Clearly for the next two years, that's mainly a Resi4Sale business as it was the case with Vantage. You have to look at the figures at Vantage. Y Ears 2020, 2021, these are Resi4Sale years if you want so. Now we have the first projects finished after nearly two years and the Resi4Rent business kicks in. This will be very similar with ROBYG.
Okay. Maybe lastly, what's your risk that the Antitrust authority in Poland will restrict or block this acquisition?
We consider this to be as a really minor risk. The reason for that is if you look at the markets where we are currently already are with Vantage, that's mainly Warsaw. Sorry, not Warsaw. That's mainly Wrocław, that's Poznań, that's Łódź, and to a small part, Kraków. Looking at the markets where ROBYG is currently investing the largest part of its portfolio, that's Warsaw and Tri-City. It's not the case that we have in one city now a big combined exposure coming from two companies, and therefore we think that also knowing that this is still a fragmented market, the antitrust clearance should definitely not be a risk. Clearly we have to respect that and wait for the decision.
Okay, great. Thank you for your answers and, yeah, have some nice holiday.
Many thanks.
The next question is from Andre Remke, Baader Bank. Your line is now open. Please go ahead.
Yeah. Good morning, Martin. Also from my side, t wo questions. First on the purchase price. Did you receive any external view by appraisers with regard to the price and could you provide a first indication on potential goodwill? This is the first question, and the second question is on, again, on your rating. Well, with an even now higher development exposure, is there any risk that this will be viewed more negatively by the agency? And in addition, is there any risk on the EPRA membership due to higher EBITDA contribution from developments? These are the two questions I ask.
Good morning, Andre. First of all, we have not yet done a full portfolio valuation. This will be done now with the specific closings. Therefore, it's difficult to comment on the exact goodwill. I mean, we have done a quite detailed DCF valuation on the business, and that takes into account more or less every single project. You can assume that the valuation is definitely not below the purchase price that we have paid. Also, with the Vantage acquisition, it was hard for us to predict what is the exact amount of goodwill. I assume that there definitely will be a goodwill, but let's see what the final outcome of this also technical valuation will be.
In terms of the rating, I would say that this, I mean, the rating agencies have like nothing more than the German residential rent market. Every other market per se is not something negative, but is of course, from a rating perspective, somewhat weaker than the German market. This is not necessarily a statement that rating agencies have a negative view on Poland. I would say to the contrary, but German market is, if it wants, so the AAA in market. I'm very confident. I mean, we are in discussion with our rating agency about our business in Poland for two years. I mean, we have proven that we are successful. We both, that means CG and the rating agencies, that know the market better than two years before.
We're basically doing nothing completely new. Simplifying this transaction a little bit, we are doing the same again, but in a larger size. We have shown how we are able to change the business model away from this purely developer model into a business model with a focus on the ready-for-rent business and in addition estate business. I think this will also help not only the rating agency, but also perhaps certain investors to understand our view and our business model, and that we are not now changing the company into a Polish developer. We are still a, let's say, German residential plus company. The basis for our business is still Germany. Then, we have this, what we think, highly effective growth opportunities in Poland also coming from developments.
To the largest part, the developments in the future will be for the ready-for-rent business. The fact that we have a significant EBITDA contribution in 2022, 2023 from disposals, from my point of view, that's not necessarily negative, as this EBITDA contribution, as I said, is very visible. A very large part of that is already sold, and that's simply something that needs to be worked on. The results, I wouldn't say are almost realized. We have to finish the construction process, and that's clear, but they're very, very visible.
The last question on the EPRA, EBITDA contribution, the calculation for that. Is there any risk that you will drop out the index?
No, we don't see here any risk.
Okay. That's from my side. Merry Christmas to you and see you next year.
Many thanks. Many thanks, Andre.
There are currently no further questions, so I hand back to Martin, to you, for closing remarks.
Yeah. Many thanks all for joining this conference call so shortly before Christmas. As always, we are here for any further questions also after Christmas and in between New Year's Eve. Please feel free to contact us any time and surely we'll have a dialogue on our Polish business in the following weeks and months. For now, I wish you all a good Christmas time. Stay in good health and talk soon again. Many thanks.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.