LEG Immobilien AG: Accelerated rent growth and successful continuation of acquisition strategy

  • FFO I rises by 19.3 per cent year-on-year to EUR 81.6 million, 
  • Rent per square metre increases significantly by 3.3 per cent (like-for-like), 
  • EPRA net asset value of EUR 48.14 per share, up 2.7 per cent year-to-date after adjustment for dividend distribution, 
  • Portfolio acquisition of around 2,400 units close to signing, 
  • FFO I forecast for 2014 raised slightly to between EUR 158 and EUR 161 million, 
  • Positive FFO I outlook for 2015 with target of EUR 172 to EUR 177 million (not including effects of future planned acquisitions)

Dusseldorf, 12 August 2014 – The positive business performance of LEG continued in the second quarter of 2014. Momentum in organic rent growth has increased further. The leading profitability was extended and the value-oriented acquisition strategy successfully continued.

LEG's rental income increased by 6.1 per cent year-on-year to EUR 189.0 million in the first half of the year. A main driver continues to be the undiminished strong organic growth in rental income from the residential property portfolio, which was up by 3.1 per cent compared to the previous year. The organic rent growth is due in particular to a dynamic development in like-for-like rents of 3.3 per cent. Rents from free financed properties even climbed by 3.8 per cent. In addition, the development in the occupancy rate remains positive. The vacancy rate was reduced further by around 10 basis points to 2.9 per cent like-for-like against the previous year. 

This positive overall development is a clear expression of the high quality of the property portfolio and LEG's management capabilities.

The key performance indicator FFO I rose significantly by 19.3 per cent year-on-year to EUR 81.6 million. In addition to temporarily lower expenses for maintenance work, this reflects the positive economies of scale and therefore further efficiency enhancements. This confirms LEG's leading profitability in the German residential property sector.

EPRA net asset value was EUR 48.14 per share as at the end of the quarter. Adjusted for the effects of the dividend distribution, this marks an increase of 2.7 per cent compared to year-end 2013. Net debt in relation to property assets (loan-to-value/LTV) remained at a low level of 48.4 per cent and therefore still clearly reflects the strength of LEG's balance sheet. 

LEG's strategy is systematically geared towards value-adding growth. In addition to the dynamic organic rent growth, progress was also made in the acquisition strategy. The acquisition of a portfolio of around 2,400 units will be signed shortly. Thus, around 9,400 residential units have been acquired since the IPO with an initial FFO yield in excess of 8 per cent. Other portfolio acquisitions are currently in the due diligence phase. LEG therefore feels that it is well on its way to surpassing its acquisition target of 10,000 residential units in total by the end of the year.

“The positive business performance clearly illustrates LEG's growth momentum and operative strength. A dynamic rent development with more than proportionate earnings growth results in a further increase in our leading profitability. In addition to value-enhancing acquisitions this clearly adds value for our shareholders. We intend to keep on pushing this sustainable growth strategy,” said Thomas Hegel, CEO of LEG Immobilien AG.

Outlook

Against the backdrop of the positive business performance, the earnings outlook for 2014 is being raised slightly with an FFO I forecast of EUR 158 million to EUR 161 million (EUR 2.98 to EUR 3.04 per share). The outlook for 2015 remains positive and the target for forecast FFO is between EUR 172 million and EUR 177 million (EUR 3.24 to EUR 3.34 per share). This earnings outlook takes into account the forthcoming acquisition of 2,400 residential units. Other than this, the forecast does not include any other positive effects anticipated from future planned acquisitions.


About LEG

With around 95,000 rental properties and over 260,000 tenants, LEG is one of Germany's leading housing companies. It has a comprehensive presence in North Rhine-Westphalia, with nine branches, 16 customer centres and around 100 tenant offices providing personal local contacts. LEG generated rental and letting income of around EUR 532 million in the fiscal year 2013.

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