LEG successfully continues sustainably profitable growth strategy in 2015 financial year

  • FFO I improves by 25.9% to EUR 206.0 million
  • Rental growth of 2.7% (like-for-like) and reduction in vacancy rate to 2.5%
  • EPRA NAV per share (not including goodwill) rises by 11.8% to EUR 58.92
  • Dividend (proposal) up 15.3% to EUR 2.26 per share
  • Outlook for 2016 confirmed: FFO I of between EUR 254 and EUR 259 million
  • Outlook for 2017 confirmed: FFO I of between EUR 279 and EUR 284 million 

LEG Immobilien AG has successfully concluded the 2015 financial year. Funds from operations (FFO I), a key performance indicator for earnings, were up by 25.9% at EUR 206.0 million (previous year: EUR 163.6 million) as a result of organic and external growth, positive effects from lower financing costs and strict cost discipline. At the same time, the company made further progress in its focused expansion strategy. Thus, portfolio acquisitions for around 21,000 residential units were signed as at the end of 2015. LEG therefore significantly outperformed its annual acquisition target of at least 5,000 residential units. 

“The excellent results for the past financial year are a clear confirmation of our regionally focused growth strategy,” said Thomas Hegel, CEO of LEG Immobilien AG. “As the market leader on the attractive North Rhine-Westphalia residential market, we will continue to pursue our successful strategy and in doing so concentrate on our strengths: the efficient management of our portfolio, systematically leveraging internal and external growth opportunities and further expanding our tenant-oriented services. This way we create sustainable value added for tenants, shareholders and communities alike.”

Further substantial improvement in operating performance indicators

LEG’s leading management expertise, its focused approach, the quality of the property portfolio and the attractiveness of its markets are corroborated by the development its operating performance indicators in 2015. 

For example, net rent increased by 11.8% year-on-year to EUR 436.1 million (previous year: EUR 390.1 million). This was thanks partly to the positive effects of acquisitions and also to the ongoing dynamic and organic growth in rents. LEG therefore achieved rent growth of 2.7% per square metre on a like-for-like basis. Rents for free financed apartments, a stronger indicator of the underlying growth momentum, rose by as much as 3.6% on the core NRW market. At the same time, the like-for-like vacancy rate decreased further to 2.5% (previous year: 2.7%). These results were achieved with selective investment in the portfolio of around EUR 16 per square metre (previous year: around EUR 14). 

The EPRA net asset value (NAV) attributable to shareholders not including goodwill increased by 11.8% to EUR 58.92 per share (previous year: EUR 52.69). The residential property portfolio continues to provide an attractive rental yield of 6.9%.

Increase in dividend

In light of this successful business performance, the Management Board and the Supervisory Board of LEG Immobilien AG will be proposing a dividend payment of EUR 2.26 per share (previous year: EUR 1.96) at the Annual General Meeting for the 2015 financial year. This corresponds to a distribution ratio of 68.9% and a dividend yield of 3.0% (previous year: 3.2%) based on LEG’s closing share price at the end of the year.

Balanced, long-term financing structure

In the 2015 financial year LEG utilised the highly favourable capital market environment to restructure existing financing of around EUR 900 million. Its future interest expenses have therefore been reduced significantly by around EUR 17 million per year and the remaining terms of loan agreements have been extended considerably to an average of 11 years. The effects of the financing measures will be fully reflected in profit and loss in 2016. 

As a result of these measures, LEG is ensuring its balanced financing structure on the basis of a strong balance sheet with a low loan-to-value (LTV) ratio of 44.2% as at the end of the reporting period (31 December 2014: 47.3%).

Expansion of tenant-oriented services continuing

With the integration of acquired residential units, LEG is simultaneously expanding its platform for innovative tenant-oriented services. Thus, the multimedia business again posted higher earnings contributions in the second year of its existence. The start of 2016 also saw the launch of EnergieServicePlus, a joint venture with RWE that covers all of LEG properties’ energy and energy-related needs. Moreover, LEG has set up a pilot project for its older tenants in conjunction with K&S, a leading provider of outpatient care. 

Further significant earnings growth forecast for 2016 and 2017

LEG is geared towards leading profitability and value added on the basis of a high-quality portfolio and its focused business model. LEG made better progress than expected in its ongoing efficiency enhancement programme in 2015. As a result, the cost savings target has been raised from EUR 5 to EUR 10 million per year. The effects are expected to be fully visible in the 2017 financial year. Thus, the target for the EBITDA margin in 2017 has been raised from 71% to 72%.

LEG is assuming that the market environment will remain positive in the 2016 financial year. In light of this, the company is reiterating its forecast for FFO I of between EUR 254 and EUR 259 million in 2016. LEG also still anticipates that its growth momentum will continue in 2017. A further rise in FFO I to between EUR 279 and EUR 284 million is expected. However, additional effects from planned future acquisitions have not yet been taken into account in this forecast.


About LEG

With around 110,000 rental properties and about 300,000 residents, LEG is one of Germany’s leading property companies. It has a comprehensive presence in North Rhine-Westphalia, with ten branch offices, 23 customer centres and around 100 tenant offices providing personal local contact. LEG generated rental and lease income of around EUR 645 million in the 2015 financial year.

Press contact:

Britta Maria Schell

Phone +49 211 45 68-325
e-mail: britta.schell[at]­leg-wohnen.de

Investor Relations contact:

Burkhard Sawazki

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

Download the LEG Annual report here: 

http://www.leg-wohnen.de/en/corporation/investor-relations/

Disclaimer

This information may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realised from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation, and supply and demand. The Company has based these forward-looking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. This information is subject to change without notice and the Company does not undertake any duty to update the information and forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations. This information does not constitute an offer or invitation to purchase or sell any shares in the Company and neither this information or anything in it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever.

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