TAG Immobilien : Sustainability Report 2023

Homes for generations

Sustainability Report 2023

1  |  Editorial

Index

Editorial	2
Who we are	4
Our path to tomorrow	8
Our sustainability strategy	9
Economic stability as a basis for sustainable development	37
Dialogue with tenants, local authorities and other stakeholders	39
Integrity and ethics, fair business conduct, and compliance	44
Topic | Speeding things up with serial refurbishment	48

Developing our portfolio responsibly	50
Sustainability in the value and supply chain	56
Sustainable resource management	58
Topic | The 15-minute city: Short distances for high convenience of living	61
Optimising energy efficiency and emissions	64

Our responsibility to society	71
Marketable portfolio development for broad sections of the population	74
Customer focus and service quality	80
Liveable neighbourhoods	84
Topic | Award-winning commitment to neighbourhood spirit	85

Our employees shape our future	90
A company culture of appreciation, transparency, and participation	93
Employee qualification and further training	96
Work-life balance, family friendliness, and diversity	101
Topic | Ask, analyse, take action: Strengthening our work culture	105
About this report	107
Key figures	109
GRI Content Index	117
Implementing the recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD)	123
Information on the EU Taxonomy Regulation	129

2  |  Editorial

Editorial

Dear readers,

Eleven years ago, we published our first sustainability report. Since then, we have disclosed our sustainable actions every year. We described measures, outlined progress, and highlighted challenges. We will continue to do so, but the twelfth sustainability report is the last in this form. Starting in 2025, we will implement the new standards of the Corporate Sustainability Reporting Directive (CSRD) that will apply to us at that point, and integrate our sustainability reporting into our Annual Report.

But first let us take a look back: In 2023, we again made a lot of progress in advancing our

decarbonisation strategy and making our portfolio future-proof. Our goal is clear: Between 2022 and 2024, we plan to achieve savings of around 6,000 tonnes of CO2 by renovating our buildings and heating systems. Accordingly, during the reporting year we invested particularly in refurbishing our buildings and switching energy sources. This enabled us to further reduce the CO2 intensity in our portfolio in Germany to 29.4 kg/sqm. Around 60.2% of our portfolio is energy efficiency class C or better. We intend to further increase this proportion over the next few years - and are more and more focussing on serial refurbish- ment. With the pilot projects launched in Delmenhorst, Merseburg and Salzgitter in 2023, we have laid important foundations for this. Serial refurbishment reduces the on-site construction time by around 50 to 75% - depending on the scope of the measures - thanks to digital preparatory work and industrial prefabrication of the building elements.

In this way, we are making a decisive contribution to providing climate-friendly and at the same time socially acceptable housing for all generations. In our investments, we always keep affordable rents in mind and adapt our residential units to the needs of our tenants. As part of responding to demographic change, we are further expanding our range of disabled -access flats and supplementing this with special advisory and service offerings for senior citizens.

In Poland, a traditional homeowners' market, we are meeting the increasing demand for rental flats in urban areas with our subsidiaries ROBYG and Vantage. We are successfully expanding our rental flat portfolio in six Polish cities, with the number of rental units standing at 2,400 at the end of 2023. In our Polish neighbourhoods, we are focusing on environmentally friendly infrastructure, low-emission building systems, and sustainable materials with the concept of the '15-minute city' or 'city of short distances', and the Green Standard developed by ROBYG for new-build projects.

It has always been important to us that residents of our neighbourhoods not only find a place to live, but a real home - which is why we once again advocated for a neighbourly coexistence in our neighbourhoods in 2023. Together with partners from the social sector, we expanded projects, particularly in the regions of Thuringia, Saxony and Lower Saxony, and launched new neighbourhood initiatives, such as the Senior Citizens' Lounge in Erfurt. We are delighted to report that our community efforts won several awards and accolades during the year under review - in Germany as well as internationally. The European Public Real Estate Association (EPRA) presented TAG with the Outstanding Contribution to Society Award 2023.

3  |  Editorial

Our customer service is another important factor in ensuring that tenants feel at home in our neighbourhoods. In 2023, we further expanded our customer communications by introducing a call-back service in September, among other things. We also improved our setup in the areas of damage reports and document management. Monthly random sample surveys help us to determine how our services are received by tenants, and identify areas for improvement.

Behind all of our services, our offerings, and our portfolio design are employees who give their best every day. Because they are the heart of TAG, and their satisfaction is crucial to our development, we conducted an extensive employee survey in 2022 to find out how our employees rate the workplace culture at TAG. We derived measures from the feedback and started putting them into action in 2023. The initial focus was on expanding occupational healthcare and strengthening our 'WE culture'.

Our commitment to sustainable corporate development is also recognised and honoured by rating agencies. In a report published in early 2024 by Sustainalytics, a leading company for market research, ratings and data on ESG issues, TAG was ranked 9 out of more than 1,000 real estate companies analysed worldwide.

These successes as well as the feedback from our tenants, employees and stakeholders are both an incentive and a challenge for us to devote full effort to continuing our sustainability path in 2024: We will pursue our decarbonisation strategy, promote neighbourly coexistence in our neighbourhoods, and working to continuously improve customer service and thus customer satisfaction. We also want to further strengthen employee satisfaction with measures in the areas of training and purpose. In 2024, we will be organising the TAG Social Day for the first time: Our employees can spend a working day volunteering in a social project - and will receive special leave to do so.

We cordially invite you to let us know what you think. Your feedback will help us to continue to effectively shape our sustainability efforts at TAG. We welcome your suggestions and requests as well as any constructive criticism. Please feel free to contact us directly or write to us at [e-mail].

Yours sincerely,

Claudia Hoyer	Martin Thiel
COO and Co-CEO	CFO and Co-CEO

4  |  Who we are

Who we are

Our business model: Affordable housing and service with quality

[GRI 2-1,2-6,3-3,201-1]

TAG Immobilien AG (also abbreviated as 'TAG' in the follow- ing) is one of the largest private residential real estate companies in Germany. Sustainable action forms the basis of our business strategy - it is the prerequisite for the secure future of our Company (see  Our sustainability strategy section).

We are listed on the German Stock Exchange's MDAX index, as well as on the EPRA Europe and EPRA Germany.

TAG is headquartered in Hamburg. We have other offices in Germany in the regions of Berlin, Chemnitz, Dresden, Erfurt, Gera, Leipzig, Rhine-Ruhr, Rostock and Salzgitter, as well as in the Polish cities of Warsaw, Wrocław, Gdańsk, Poznań, Kraków and Łódź.

We acquire, develop, let, and sell residential properties. They are located in various regions of Northern and Eastern Ger- many as well as in North Rhine-Westphalia, and since financial year 2020 in several Polish cities as well. At the end of the reporting year, TAG managed around 84,700 units in Ger- many (including some 83,600 flats and around 1,000 commercial units located in the housing estates). The total value of the German portfolio at the reporting date is approx. EUR 5,443 million.

In 2020, we laid the foundation for our Company's regional expansion beyond Germany with the acquisition of the Wrocław-based Polish company Vantage Development S.A. (Vantage). And with the 2022 acquisition of ROBYG S.A. (ROBYG), the leading developer of apartments in Poland with a strong position in the Warsaw and Gdańsk markets, we substantially expanded our investments in the Polish residential market, with a focus on new-build flats.

In the medium term, i.e. by the end of 2028, we plan to build a rental housing portfolio of around 10,000 flats in Poland. As of 31 December 2023, we had a rental portfolio in Poland of around 2,400 finished flats. Another approximately 1,360 rental flats were under construction. In addition, we have a land reserve for the construction of another approx. 5,700 rental flats. In the sales business, approx. 4,200 flats were under construction as of the reporting date (including approx.

500 finished and not yet sold flats); the land reserve in this business segment comprises another approx. 15,600 future flats. The total value of the portfolio in Poland amounted to EUR 1,132 million as of the reporting date.

We have set up a strategic sustainability programme with concrete goals in our four action areas. These goals include making affordable housing available to our tenants from a variety of social groups (see  Our responsibility to society section). It is also important to us to offer secure jobs to our employees and future generations (see  Our employees shape our future section). We want to assure attractive returns for our shareholders and an ideally low-risk return on their capital for our lenders (see  Our path to tomorrow section). We are also continuously working to make our real estate portfolio more climate-friendly and improve our carbon footprint (see  Developing our portfolio responsibly section). To this end, in 2021 we finalised the long-term decarbonisation strategy that was formally adopted by our Management and Supervisory Boards, and underpinned it with a timetable and specific measures. In accordance with the Paris Climate Agreement, our goal is to have a nearly climate -neutral building stock by 2045.

Through subsidiaries we also offer our customers a range of additional residential services (see  Our corporate structure section). By doing so, we establish consistent and efficient processes, can operate more independently of third-party service providers, and achieve planning reliability in calculating prices. We can also actively control the quality and time of execution of services, creating added value for our tenants and our Company.

At the end of the reporting year we had 1,699 employees, 1,299 of them in Germany and 400 in Poland.¹ We are actively involved in neighbourhood management locally and support towns and municipalities in contributing to the positive development of the regions. We fund our community efforts through our non-profitTAG Miteinander Stiftung (TAG Together Foundation) The foundation focuses on supporting children and youths, families and senior citizens, as well as people who have fallen on hard times and are in need of help (see

• Liveable neighbourhoods section).

The majority of TAG shares are held by national and international investors with a long-view investment strategy. The largest individual shareholders as at 31 March 2024 were BlackRock, Inc., USA (6.0%), MFS Massachusetts Financial Services Company, USA (4.9%), BayernInvest Kap- italverwaltungsgesellschaft mbH, Germany (4.9%), Versor- gungsanstalt des Bundes und der Länder, Germany (4.7%), Internationale Kapitalanlagengesellschaft mbH (HSBC INKA), Germany (3.4%), Norges Bank, Norway (3,1%), and Resolution Capital Limited, Australia (3.0%).²

• This is based on the number of employees (1,299 in Germany and 400 in Poland excl. associates) as of 31 December 2023. In the annual report, the number of employees was calculated

in accordance with the regulations of the German Commerical Code (HGB) (total: 1,816, of which 1,221 in Germany and 595 in Poland incl. associates).

• TAG shareholder structure (tag-ag.com /shareholder-structure)

5  |  Who we are

ESG issues are becoming more and more important for our investors as well, and are increasingly the subject of our dis- cussions. Particularly regarding climate protection, we have noticed a significant increase in the capital market's interest in information about the targets we have set for our portfolio in our decarbonisation strategy.

Our  Annual Report 2023 contains further information on our portfolio strategy and key economic indicators.

Our corporate structure:

A combination of centralised and decentralised management

[GRI 2-2,2-6,3-3]

Our corporate structure is divided into centralised and decentralised functional areas ( see chart on page 5). This ensures that we can manage our portfolio efficiently while at the same time responding flexibly to the special aspects of the respective housing market.

TAG Immobilien AG essentially serves as a management holding company, and in this capacity fulfils tasks for the entire group of companies, across the Company. The central business units are assigned to it. These include Group Accounting, Finance, Controlling, Legal and Tax, Investor and Public Relations, ERP/Data Management, IT, Human Re- sources, Compliance and Internal Audit.

Strategic Real Estate Management serves as the interface to our locations in Germany. These are assigned to ten so- called 'LIM regions' and our cross-regional Customer Man- agement. The LIM regions are managed in a decentralised manner by our Heads of Real Estate Management (Leiter Immobilienmanagement - 'LIMs'). Our cross-regional Customer Management serves as the first port of contact for our tenants, primarily by phone and in writing. Acquisition and Sales, Facility Management Services, Craftsman Services, Central Purchasing and Business Development are managed centrally for all branches. All matters of accounting, including utility bills, are also processed centrally by the Shared Service Center.

New construction is carried out exclusively in Poland and is therefore also managed from there. As in the rest of the Group, the organisation of the operating business in Poland has flat hierarchies and short decision-making paths. The

Services

TAG Immobilien Service

TAG Handwerkerservice

Energie Wohnen Service

Multimedia Immobilien

Bauverein zu Hamburg

Core business:

Real Estate Management

Regional real estate

management

Cross-regional

customer management

Additional (hous-

ing-related) services

Strategic Real Estate Management/

Marketing

Acquisition / Sales

Central Purchasing

Central Technical department

Shared Service Center

Central business units

Human Resources	Legal	IT	Compliance	Internal Audit	Controlling	ERP/ Data Management
Group Accounting	Financing / Treasury	Taxes	Investor + Public Relations	Business + Change Development

6  |  Who we are

business is structured into a Rental business, which is operated by Vantage, and a Sales business, which is mainly conducted by ROBYG. ROBYG also handles construction services for the business in Poland as general contractor. Although Vantage and ROBYG continue to be independent companies in purely legal terms, they are nevertheless a unified organisation under the same management. Central decisions are made in close consultation with TAG's Management Board and the operating divisions in Germany.

Once the first rental projects in Poland were completed, we launched the 'Vantage Rent' rental brand in the Polish residential market. In the course of this, a department for tenant services was formed. It serves as the contact point for all tenants once the contract has been signed. The sales and marketing department is responsible for all tasks, including communication, related to the 'new leases' process. Digital communication formats are especially popular with the predominantly young tenants. Vantage Rent offers furnished and fully equipped flats in modern buildings in good loca- tions, close to public transport, shops and services, parks, and schools.

Real estate management focused on customer satisfaction

Our real estate management works both centrally and de- centrally. The decentralised organisation of our LIM regions makes it possible for the local LIMs to consider specific characteristics and challenges of their locale. They report directly to the Management Board and are for the most part autonomously responsible for developing and managing their assigned real estate portfolio in their LIM area within the framework of the approved budgets. Flat hierarchies and short decision-making paths facilitate independent action (see

• A company culture of appreciation, transparency, and participation section).

In the LIM regions, real estate management handles matters of letting and property management. The region's property managers and landlords are responsible for customer concerns through personal contact in the neighbourhoods, for commercial and technical property management, as well as for inspecting vacant flats and letting them locally. They also offer our tenants the additional services provided by our sub- sidiaries.

Alongside this, there is a nationwide Central Customer Management unit that serves as the first point of contact for processing the concerns of our tenants. Its Quality Management team ensures the quality of the work processes in close coordination with the other departments, and is responsible for process improvements.

The Central Technical department is responsible for larger investment projects, major maintenance measures, and other technical and overarching measures across the entire TAG portfolio. The technicians in Property Management concentrate on smaller maintenance projects and on readying vacant properties for rent.

This division of housing management tasks also gives our employees more time for their personal support of tenants on site and for all matters relating to the properties in our portfolio. The real estate management team is specialised and focused on its core processes and concentrates on the related strengths and goals.

In-house service companies guarantee quality standards

Part of our corporate strategy is also to provide as many services as possible ourselves, with our own employees. This enables us to better assert product and quality standards and thus optimise services for our tenants.

The TAG group includes several service companies. TAG Im- mobilien Service GmbH is our caretaker company. Around 500 caretakers, cleaners, and grounds maintenance staff ensure that the residential buildings and outdoor facilities are well maintained at all our major locations. Our caretakers also support our property managers in monitoring traffic safety in our housing estates.

In the greater areas of Brandenburg an der Havel, Nauen, Chemnitz, Döbeln, Dresden, Leipzig, Magdeburg, Halle, Merseburg and Schwerin, TAG Handwerkerservice GmbH handles craftsman services in our residential properties. This enables us to prepare flats for new lettings more quickly and efficiently, and also to offer repair services at some locations.

We ensure a well-functioning energy supply and efficient energy management through our subsidiary Energie Woh- nen Service GmbH (EWS). By renovating heating systems and switching to new technologies, EWS also makes a significant contribution to reducing CO2 emissions in the existing portfolio. In this way, we also take responsibility for the environment, save energy, and conserve resources (see  Developing our portfolio responsibly section).

Our subsidiary Multimedia Immobilien GmbH specialises in the organisation, commercial and technical support, and operational management of broadband cable networks. Longterm framework agreements with signal suppliers enable us to provide our tenants with cable TV and other multi- media services such as phone and internet at a low cost.

7  |  Who we are

We provide real estate services for homeowners (homeown- er management), and manage rented residential portfolios on behalf of third parties (third-party management). Here, we make use of existing expertise and generate added value for third parties and for TAG.

Besides the parent company and service companies, our Group is divided into further property companies, each of which is the owner of a portfolio of properties. Our entire portfolio is managed and administered under our residential brand 'TAG Wohnen'.

At 31 December 2023, the TAG Immobilien Group comprised 183 fully consolidated companies including the Polish subsidiaries. The Polish subsidiaries form a separate subgroup within the Group. In the reporting year, there were no material changes regarding TAG's size or structure, or its supply chain.

Expansion of the new-build business in Poland

By acquiring ROBYG S.A., one of the largest project developers in Poland, TAG expanded its platform in the fast-growing Polish residential market. Headquartered in Warsaw, ROBYG has been designing, building and managing multifunctional residential developments in attractive Polish locations for over 20 years. The acquisition expanded our portfolio in the Wrocław, Poznań, and Tricity regions. In Warsaw, the acquisition enabled us to enter the market comprehensively. Since the acquisition of ROBYG, our focus has shifted to the sale of flats in addition to the rental business. In particular, we invest in new flats in large Polish cities showing a favourable population development, close to universities, and with

• well-developedinfrastructure. We offer new-build flats with a high standard of fittings and modern technologies that are individually tailored to our customers' wishes. The portfolio includes small flats designed as first homes as well as flats for families or senior citizens. (see highlight page
   The 15-minute city: Short distances for high convenience of living).

TAG Services

TAG Immobilien Service GmbH

TAG Handwerkerservice GmbH

Energie Wohnen Service GmbH

Multimedia Immobilien GmbH

Bau-Verein zu Hamburg Hausver- waltungsgesellschaft mbH

Caretaker services, cleaning, yard maintenance (since 2012)

Craftsman services, including modernisation, refurbishment of empty

flats (since 2015)

Heat supply, energy management, facility management (since 2016)

TV supply and other multimedia services (since 2016)

Homeowner management and third-party management

(since 2001)

Serviced portfolio

approx. 80,200 units

(approx. 95% of the total portfolio)

6 regions

Brandenburg a.d.H. incl. Nauen, Leipzig incl. Magdeburg, Chemnitz, Döbeln, Dresden, Schwerin

approx. 41,100 units

(expansion to approx. 70,000-75,000 units planned in the long term, approx. 90% of the total portfolio)

approx. 57,500 units

(expansion to approx. 70,000-75,000 units planned in the long term, approx. 90% of the total portfolio)

approx. 10,600 units

4 main regions: Berlin, Erfurt, Gera, Hamburg

8  |  Our path to tomorrow

Our path to tomorrow

Material topic

Economic stability

Dialogue with tenants, municipalities and other stakeholders

Integrity and ethics, fair business and compliance

Sub-topics

• Long-viewbusiness strategy including sustainability goals
• Risk management including climate-re- lated risks
• Breakdown/disclosure of the impact of climate-related risks and opportunities
• Sustainable financing
• Stakeholder dialogue/requirements
• Shareholder democracy
• Transparent communication
• Stakeholder engagement (on site)
• Corporate governance
• Conduct in compliance with laws and guidelines
• Tax compliance/transparency
• Values, guiding principles, principles incl. respect for international standards of conduct and internal codes
• Data protection and information management
• Quality management system and certification
• Prohibition of child, forced or compul- sory labour
• Anti-corruption
• Participation in political discourse

9  |  Our path to tomorrow

Our sustainability strategy

[GRI 3-3]

Housing is a basic human need and has become even more important given its social and ecological dimension. As a large housing company, we are therefore aware of our corporate responsibility. We realise that our actions have an impact on society, the environment, and the economy.

• future-orientedhousing industry is no longer conceivable without sustainability. TAG's business policy is therefore geared not only to economic but also to ecological and so- cial aspects. The provision of affordable housing has always been our core business, so sustainability is traditionally an- chored in our corporate actions.

At TAG, the field of sustainability is assigned directly to the Management Board. Accordingly, in the year under review, sustainability issues such as the implementation of our ESG targets were regularly among the topics discussed by the Management Board and the Supervisory Board.

TAG understands sustainable corporate development as a holistic system that enables positive interdependencies between economic stability, ecological measures, and social commitment. Our sustainability strategy takes into account recent developments such as demographic change, climate change, urbanisation and technological progress (see  Developing our portfolio responsibly section). We also consider the macroeconomic conditions. In 2023, these continued to be the high energy prices, ongoing inflation, and increased interest rates and construction costs.

In our sustainability strategy, we also include all economic, ecological, and social impacts of our actions across the value chain or entire life cycle of a property. In addition to our Business Principles, various ESG guidelines, in which we have specified our requirements and goals, contribute to this. The intensified sustainability communications with our stake- holders, too, are increasing the importance of considering the effects of our actions on the entire life cycle of the properties.

In practice, however, external factors also lead to conflicts in achieving our sustainability goals. One of the biggest challenges at present is affordable yet climate-friendly housing. This development has been further exacerbated by the current framework conditions. We want to tackle the challenges associated with this. To ensure this, we will continue to develop our portfolio with a sense of proportion. We believe that housing should be affordable for all our tenants. Through

efficient and targeted modernisation, we make an effective contribution to climate protection on the one hand, while also striving to do justice to other requirements, such as barrier -free living for the elderly. On the other hand, we are careful not to exceed the budgets of our tenants.

Going forward, the Corporate Sustainability Reporting Directive (CSRD), which came into force on 5 January 2023 as a further development of the Non-Financial Reporting Directive (NFRD), will also place new regulatory requirements on our sustainability strategy. One important component of the CSRD are uniform EU standards for sustainability reporting, the European Sustainability Reporting Standards (ESRS). The EU Commission adopted them in July 2023 as a delegated act. Among other things, the ESRS are accompanied by key changes in the areas of materiality analysis and risk manage- ment. TAG therefore launched a Group-wide CSRD project in mid-2023 to analyse the impact of the ESRS requirements on our strategy and our structures in the area of sustainability. We will successively make the necessary adjustments identified so that we can report in accordance with the ESRS from fiscal year 2024 onwards.

Central coordination of sustainability topics

[GRI 2-12,2-19]

Sustainability issues are dealt with and managed in the central Strategic Real Estate Management division.3 The division reports directly to the Management Board (Chief Operating Officer, COO). On the Supervisory Board, Prof. Dr. Kristin Wellner is responsible for ESG issues (Environment, Social, Governance). The sustainability programme sets out the de- partments' responsibilities for the various topics, targets, and implementation measures.

Strategic Real Estate Management is also the point of contact for all of TAG's operational divisions in matters of sus- tainability. The development of the Company's sustainability management is advanced through regular exchange with the specialist departments and the summary of segment and departmental reports. Strategic Real Estate Management raises the awareness of all employees for corporate responsibility (CR) and the urgency of CR measures. We have established a dedicated project team for putting our decarbonisation strategy into practise and mainstreaming it in our operations: the 'Climate Board'. It includes representatives from the relevant departments - Energy Management, Central Technical department and Strategic Real Estate Management. The Climate Board plans, monitors, and evaluates the measures and reports to the Management Board. The reporting year saw a continued focus on measures to improve energy efficiency

• Due to the reporting obligations under the CSRD and the associated integration of sustainability reporting into financial reporting, sustainability management will be handled by the Group's Accounting department, and will report to the Chief Financial Officer, CFO, going forward.