LEG Immobilien AG: Positive profit growth and capital growth continue – first guidance for 2020 presented

  • FFO I continues to increase - up 7.0% at EUR 242.2 million despite higher maintenance expenses
  • EPRA NAV increases to EUR 90.21 per share; value of the portfolio expected to climb again by around 4.0% in Q4
  • Like-for-like rent per square metre up 2.7% in line with planning; guidance for year as a whole confirmed at plus 3.0%
  • FFO I forecast confirmed for 2018 (EUR 315-323 million) and 2019 (EUR 338-344 million)
  • First guidance for 2020 anticipates further rise in FFO I to between EUR 356 and EUR 364 million

On the basis of business development in the first three quarters, LEG Immobilien AG is again confirming its full-year guidance. Key drivers of the positive performance remain structural organic rental growth, effects from acquisitions in core markets and a further decline in interest expenses. It is also expected that the positive fundamental development will be reflected once again in a significant valuation uplift of the portfolio at the end of the year. 

“We remain on track to achieve our ambitious targets. The first guidance for 2020 shows that we are also anticipating stable, sustainable growth to continue in the years to come. Value-adding effects from our high level of portfolio investment and acquisitions are becoming increasingly visible. The prospects for a continued capital growth remain positive,” commented Thomas Hegel, CEO of LEG Immobilien AG.

Clear increase in FFO I despite higher maintenance costs

Funds from operations (FFO I), a key performance indicator for the company, rose sharply by 7.0% year-on-year to EUR 242.2 million in the first three quarters of 2018, in line with planning (previous year: EUR 226.3 million). FFO I per share saw similar development, also increasing by 7.0% year-on-year to EUR 3.83 on an unadjusted basis. Expenses for maintenance work increased despite a higher capitalisation ratio but were clearly offset by the mentioned earnings drivers. 

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 5.62 per square metre. The rent in the free-financed portfolio increased by 3.4% on a like-for-like basis. Like-for-like rental growth is still expected to amount to around 3.0% for 2018 as a whole. The like-for-like vacancy rate fell slightly year-on-year, down 40 basis points at 3.7%. A further modest rise in the like-for-like occupancy rate is also anticipated for 2018 as a whole.

Good prospects for further NAV growth

EPRA net asset value (not including goodwill) amounted to EUR 90.21 per share as at 30 September 2018 (31 December 2017: EUR 83.81 per share), representing an increase of 7.6% in the first nine months. The major driver was the increase in value of the property portfolio, with appreciation of 4.1% by the middle of 2018. The portfolio is also set to continue enjoying value development at the next revaluation in Q4, with appreciation anticipated at around 4%. The gross rental yield on the portfolio remained an attractive 5.7% as at the end of the quarter. 

Long-term financing with attractive terms secured

The average remaining term of liabilities remained unchanged at a good seven years as at the end of the quarter, 30 September 2018. Average interest costs are at a low 1.63%. This contributes to a high degree of visibility for stable medium-term earnings and dividend growth, particularly in a scenario of rising market interest rates. As part of acquisition financing and refinancing, we aim to continue to extend the remaining maturities to secure currently favourable financing conditions. This has also a smaller positive effect on FFO.

Net debt in relation to property assets (loan-to-value/LTV) was at a low level of 42.7% as at the end of the quarter. This serves to underline LEG’s low risk profile and continues to offer scope for financing the company's future growth. 

Confirmation of earnings forecast for 2018 and 2019, positive earnings guidance for 2020 as well

On the basis of its solid business development and the further mentioned factors, 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. The first earnings guidance for the 2020 financial year anticipates the positive profit growth to continue, with FFO I of between EUR 356 million and EUR 364 million.

Rent projections for the current year remain unchanged, with an increase of 3.0%. Growth is anticipated at between 3.0% and 3.2% in 2019 (previously approx. 3.5%) and 3.2% to 3.4% in 2020.

About LEG

With over 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 (0) 211 45 68 204
E-mail: burkhard.sawazki[at]­leg.ag

Press contact:

Sabine Jeschke

Tel. +49 (0) 211 45 68 325
E-mail: sabine.jeschke[at]­leg-wohnen.de

The quarterly report is available to download at: http://leg.ag/Q3-2018-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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