LEG Immobilien AG: Strong operating performance continues – earnings outlook raised

  • FFO I rises significantly by 24.3% year-on-year to EUR 101.4 million in the first half of 2015
  • Rent per square metre increases by 2.6% like-for-like; rent in the free-financed property portfolio up 3.5%
  • EPRA NAV (not including goodwill) of EUR 52.12 per share, up 2.6% year-to-date adjusted for the dividend distribution
  • Refinancing of EUR 900 million successfully concluded; attractive terms underscore LEG's strength
  • FFO I outlook raised to a range of EUR 200 million to EUR 204 million for 2015 (previously EUR 195 million to EUR 200 million) and to a range of EUR 233 million to EUR 238 million for 2016 (previously EUR 223 million to EUR 227 million)

Dusseldorf, 14 August 2015 – The strong operating performance of LEG's focussed business model continued in the second quarter. With dynamic growth in the free-financed property portfolio, organic rent growth increased slightly again overall. Despite the volatile interest rate environment, the early refinancing was implemented successfully and the planned significant reduction of average interest expenses to just under 2.3% was achieved. In this context and taking into account the recent acquisitions, the earnings outlook for 2015 and 2016 can be raised accordingly. 

LEG's rental income increased by 13.7% year-on-year to EUR 214.8 million in the first half of the year. In addition to positive effects from the acquisitions concluded, organic rent growth remains a major driver of this development. Rent growth per square metre continued to develop very positively on a like-for-like basis, rising by 2.6% compared with the previous year. The free-financed property portfolio recorded continued dynamic growth of 3.5%. Based on this development, the outlook for rent growth on a like-for-like basis for fiscal year 2015 was increased slightly to between 2.4% and 2.6%. This result can be achieved on the basis of the planned total investment of EUR 15 per square metre, emphasising LEG's outstanding capital efficiency.

The like-for-like EPRA vacancy rate was at a low level of 3.2% as at the end of the quarter and thus remained stable in relation to the previous year's figure. The occupancy rate is expected to increase in line with planning to around 97.2% over the remainder of the year.

The operating key metrics therefore once again demonstrate the leading performance of LEG's regionally focussed business model.

The financial key performance indicator FFO I rose significantly by 24.3% to EUR 101.4 million in the first six months. This disproportionately high increase in earnings was driven by further expansion of the leading operating margin and a reduction in average financing costs.

The EPRA net asset value (not including goodwill) was EUR 52.12 per share at the end of the quarter, up 2.6% year-to-date adjusted for the dividend distribution. With regard to the upcoming revaluation of the property portfolio as at the end of the year, a yield compression is assumed.

In July 2015, the refinancing of loans with a total volume of approximately EUR 900 million was successfully concluded with the final tranche. With an average loan maturity of around 10 years, average financing costs of less than 2.1% were achieved despite the rise in interest rates. Very attractive margins for the long loan maturity of less than 100 basis points on average were negotiated with the banks, demonstrating LEG's good positioning on the financing market. With this result, LEG's average financing costs were reduced significantly as planned to around 2.3% with an average maturity of around 11 years.

“Our strategy of value-oriented growth is again proving successful, with our operating performance continuing to outperform the market. Following the purchase of around 6,300 residential units this year, we are working on further acquisitions. In addition, the financing we have secured for the long term has also strengthened our basis for generating further attractive earnings and dividend growth,” commented Thomas Hegel, CEO of LEG Immobilien AG.

Outlook

Based on the positive business performance and the recent acquisitions, LEG is raising its earnings outlook for the 2015 and 2016 financial years. FFO I is expected in a range of EUR 200 million to EUR 204 million (EUR 3.47 to EUR 3.54 per share) in 2015 and a range of EUR 233 million to EUR 238 million (EUR 4.00 to EUR 4.09 per share) in 2016. This outlook does not yet factor in any positive effects anticipated from future acquisitions.


About LEG

With around 110,000 rental properties and approximately 300,000 tenants, LEG is one of Germany's leading housing companies. It has a comprehensive presence in North Rhine-Westphalia with ten branches, 23 customer centres and approximately 100 tenant offices providing personal local services. LEG generated rental and letting income of around EUR 577 million in the 2014 financial year.


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