LEG Immobilien AG confirms outlook and initiates acquisition of a medium-sized portfolio

  • FFO I grows by another +5.1% to EUR 156.4 million despite higher maintenance
  • Increase in EPRA NAV per share to EUR 88.46 reflects positive value development; further growth expected in Q4
  • Like-for-like rent per square metre up +2.7% as planned; growth expected to accelerate further in the second half of the year to +3% for the year as a whole
  • Portfolio growth continues: agreement reached on the acquisition of a portfolio of around 3,750 residential units in NRW
  • FFO I forecast confirmed for 2018 (EUR 315-323 million) and 2019 (EUR 338-344 million)

LEG Immobilien AG is well on track to achieve its full-year forecast. In addition to the profit growth, the positive fundamental performance is also shown by the further significant increase in the value of the property portfolio. Further valuation uplift is expected in the final quarter of 2018. In addition, LEG is achieving value-adding growth through acquisitions even in a difficult market environment. In this context, LEG has successfully reached an agreement with a seller on the acquisition of a portfolio of approximately 3,750 residential units in NRW.

“We remain on track to achieve our ambitious targets and anticipate stronger profit growth in the second half of the year. Prospects for the further appreciation of our portfolio remain very positive. In addition, we will tap into additional growth potential with the upcoming acquisition,” said Thomas Hegel, CEO of LEG Immobilien AG.

FFO I continues to grow despite higher maintenance expenses

Funds from operations (FFO I), a key performance indicator for the company, increased by 5.1% year-on-year to EUR 156.4 million in the first half of 2018 (previous year: EUR 148.8 million), although the proportion of maintenance already carried out was higher. However, the expenses resulting from this were more than offset. FFO I before maintenance expenses therefore increased by 7.6% year-on-year. FFO I per share saw similar development, likewise climbing by 5.1% year-on-year to EUR 2.48 (on an unadjusted basis).

In the reporting period, in-place rent rose by 2.7% year-on-year on a like-for-like basis to an average of EUR 5.54 per square metre. The rent in the free-financed portfolio increased by 3.5% on a like-for-like basis. Organic rental growth is expected to continue accelerating as the year progresses. Forecast for like-for-like rental growth of around 3.0% for 2018 as a whole remains unchanged. The like-for-like vacancy rate was 3.4%, down slightly on the previous year. The like-for-like occupancy rate is still expected to increase slightly overall in 2018 as a whole.

Portfolio appreciation of +4.1% increases NAV considerably

EPRA net asset value (not including goodwill) amounted to EUR 88.46 per share as at 30 June 2018 (31 December 2017: EUR 83.81 per share), equating to growth of 5.5% in the first half of the year. The temporary effect of the dividend distribution of EUR 3.04 has thus already been more than compensated. This was mainly driven by the valuation uplift of the property portfolio. On the basis of the rental growth and rising valuation multipliers on the property market, the portfolio had increased in value by EUR 383.9 million or +4.1% by the middle of the year. The property portfolio is also set to enjoy further positive value development in the second half of the year. The gross rental yield on the portfolio was a still attractive 5.7% as at the end of the quarter. 

Long-term financing with attractive terms secure

The average remaining term of liabilities was still 7.8 years as at the end of the quarter. Average interest costs are at a low 1.75%. This contributes to a high degree of security for stable medium-term earnings and dividend growth, particularly in a scenario of rising market interest rates.

Net debt in relation to property assets (loan-to-value/LTV) was at a low level of 41.9% as at the end of the quarter. This serves to underline LEG’s low risk profile and offers scope for financing the company's future growth. 

External growth continues

LEG is about to sign a purchase agreement for the acquisition of around 3,750 residential units at various locations in the NRW core region. This transaction promises the realization of further economies of scale and thus the enhancement of LEG’s leading management efficiency. On the basis of initial investments, the transaction is expected to have a tangible positive effect on profit, especially after 2020. The acquisition can be financed without raising new equity.

Earnings forecast for 2018 and 2019 confirmed

Based on its sound business development, LEG is confirming its forecast for FFO I of between EUR 315 million and EUR 323 million in 2018 and between EUR 338 million and EUR 344 million in 2019.

About LEG

With around 130,000 rental properties and approximately 350,000 residents, LEG is one of Germany’s leading listed housing companies. The company has eight branch offices in North Rhine-Westphalia, providing personal local contact. LEG generated rental and lease income of around EUR 796 million in the 2017 financial year.

Investor Relations contact:

Burkhard Sawazki

Tel. +49 211 45 68-204
E-mail: burkhard.sawazki[at]­leg.ag

Press contact:

Sabine Jeschke

Tel. +49 211 45 68-325
E-mail: sabine.jeschke[at]­leg-wohnen.de

The quarterly report is available to download at: http://leg.ag/Q2-2018-en


This publication constitutes neither a solicitation to buy nor an offer to sell securities. To the extent that we express forecasts or expectations or make forward-looking statements in this document, these statements can entail known and unknown risks and uncertainties. These statements reflect the intentions, opinions, or current expectations and assumptions of LEG Immobilien AG. The forward-looking statements are based on current planning, estimates and forecasts, which LEG Immobilien AG has made to the best of its knowledge, but that are not a statement on their future accuracy. Actual results and developments can therefore differ materially from the expectations and assumptions expressed.

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