LEG Immobilien SE makes a strong start to the 2025 financial year - AFFO increases by 28 percent – guidance confirmed

 

• Sustained high demand drives core business:
• Rental growth (l-f-l) of 3.5 % in the free-financed sector (total portfolio: +3.0 %)
• Vacancy rate (l-f-l) falls by 20 bps to 2.4 %
• AFFO at EUR 62.3 million – guidance of EUR 205 to 225 million confirmed
• NTA per share at EUR 128 – portfolio valuation continues to stabilize
• Acquisition and integration of Brack Capital Properties completed – sale of Eastern German locations started
  
  

LEG Immobilien SE has made a very good start to the 2025 financial year and can confirm its earnings forecast for the year. Demand for affordable housing in Germany continues to rise steadily. In the first quarter of 2025, this was once again reflected in an increase in net cold rent and another very good letting result. In addition, the company has now successfully completed the full acquisition of BCP and the integration of over 9,000 apartments.

Lars von Lackum, CEO of LEG Immobilien SE, says: "LEG has made an excellent start to the 2025 financial year with significant earnings growth. With a great performance, the LEG team has succeeded in completing the acquisition of BCP within a few months, integrating over 9,000 new residential units into our management platform and starting to market the BCP East portfolio around Leipzig. The continued recovery in real estate prices provides additional optimism. In these uncertain global political times, German residential real estate is a safe haven for investors and the sector remains a reliable partner for tenants, employees and society."

Stable cash flows 

The actual rent on a like-for-like basis increased by 3.5 percent in the free-financed sector. As the cost rents for subsidized housing will remain stable this year due to the regular adjustment in the coming year, the increase in relation to the overall portfolio amounted to 3.0 percent. The expectation for the year is 3.4 to 3.6 percent (l-f-l), whereby adjustments to market prices and thus rent table adjustments will take place particularly in the third quarter. The average basic rent per square meter is currently EUR 6.87 per square meter (l-f-l) or around EUR 440 for an average LEG apartment measuring 65 square meters. LEG thus continues to focus clearly on the "affordable housing" segment for people on low and medium incomes.

The vacancy rate on a like-for-like basis fell by a further 20 basis points year-on-year to 2.4 percent.

AFFO increased by 28.2 percent to EUR 62.3 million in the traditionally strong first quarter
(Q1/2024: EUR 48.6 million). The strong growth in AFFO is driven by the integration of the BCP portfolio, rental growth in LEG's core portfolio, high cost discipline and a slightly lower level of investment in the first quarter compared to the full-year ambition. Investments in the first quarter of 2025 amounted to EUR 7.51 per square meter (Q1/2024: EUR 7.58 per square meter). LEG expects the investment volume to increase over the next three quarters as projects from the former BCP portfolio are now also being processed. For 2025, LEG continues to expect a slight increase in investments from EUR 34 per square meter in 2024 to at least EUR 35 per square meter in line with its existing guidance.

NTA per share is around EUR 128 

The EPRA NTA per share was EUR 128.44 as of March 31, 2025, and has thus increased significantly compared to the balance sheet date of December 31, 2024 (EUR 125.90 per share).

As in previous years, the next regular portfolio valuation will take place on June 30. In the second half of 2024, the valuation result amounted to +0.4 percent. LEG assumes that property values will continue to stabilize and expects its residential portfolio to appreciate and a valuation result of +0.5 to +1.0 percent in the first half of 2025.

The gross yield of the total property portfolio amounted to 5.0 percent as of March 31, 2025 (Q1/2024: 4.8 percent), and thus continues to offer an attractive premium compared to the yield on risk-free 10-year German government bonds.

LEG is continuing its sales program in the new financial year. Since the beginning of the year, ownership of 1,456 units worth EUR 125 million has been transferred. The sales program was also revised in the first quarter, taking into account the BCP holdings. In addition to strengthening the balance sheet, LEG's sales activities also serve to further focus and optimize the overall portfolio. Against this background, the company has decided to start marketing the Eastern German BCP portfolio of c. 1,350 units despite the high attractiveness of Leipzig. This will increase LEG's sales program to c. 5,000 units. Due to its liquidity-preserving measures, the company will continue to aim to sell its portfolios at or above book value. For this reason, a good sales price and the transfer to suitable hands take precedence over time pressure.

All maturities for 2025 addressed - strong liquidity position

The average financing costs as pf March 31, 2025, were at a low 1.55 percent with an average term of the liabilities of 5.6 years (December 31, 2024: 1.49 percent, 5.7 years). This already considers the effects of the refinancing for BCP . The company has a solid investment grade rating of Baa2 with a stable outlook.

The ratio of net debt to real estate assets (loan to value/LTV) as of March 31, 2025, was 48.4 percent and has therefore risen slightly compared to the reporting date of December 31, 2024 (47.9 percent). This is mainly due to effects from the full consolidation of BCP . With its cash-oriented management in accordance with AFFO, the continued stabilization of property values and the expanded sales program of 5,000 units, LEG believes it is well positioned to achieve its medium term target for the LTV of 45 percent.

In the new financial year, LEG was once again able to benefit from its excellent access to all capital market participants. In January, for example, the company successfully issued a ten-year bond of EUR 300 million with a coupon of 3.875 percent. The company has also addressed all maturities until the end of 2025, considering its high liquidity with cash and cash equivalents of more than EUR 800 million. This demonstrates the great solidity and robustness of the company's financing structure.

LEG credo "emissions efficiency instead of energy efficiency" reaches politicians

Dealing with regulatory requirements remains challenging also under the new federal government. For example, the coalition agreement provides for a four-year extension of the rental brake that has been in place since 2015 for new rentals in so-called “tight markets”, as well as extended documentation requirements for landlords. The instrument of the rental brake was introduced as a temporary measure. It has proven to be largely ineffective and would otherwise have expired at the end of 2025. LEG assumes that the extension of the rental brake will continue to reduce the incentives to invest in new buildings. As a result, the housing market will not ease in the future and the imbalance between supply and demand will persist.

In contrast, the plans for efficient and affordable climate protection in the building sector - in the interests of landlords and tenants - are encouraging. The planned abolition of the so-called Heating Act (GEG), greater openness to technology and a stronger focus on emissions efficiency instead of energy efficiency, i.e. on measurable CO₂ reduction instead of ever higher insulation standards, will make it possible to decarbonize existing buildings much more cost-effectively. It remains important to pursue these approaches at European level with regard to the EU Buildings Directive as well. The alignment of German building efficiency classes with those of neighboring European countries planned by the new German government can make a decisive contribution here.

With its green ventures termios, dekarbo and RENOWATE, LEG has long been successfully pursuing the goal of avoiding as much CO₂ as possible with every euro it invests in climate protection while minimizing the impact on tenants. Termios reached a special milestone in March 2025: following successful field tests in the LEG portfolio, the joint venture began to market its first product "termios Pro" to other housing companies and has already signed orders for more than 20,000 thermostats. Termios Pro is an AI-supported thermostat specially developed for the needs of the housing industry that guarantees automatic hydronic balancing and long-term optimization of the heating output of water-bearing heating systems. It enables energy savings of up to 30 percent with an investment of just a few hundred euros per apartment.

LEG is also committed to using intelligent, digital solutions in its day-to-day business. Around 28,000 tenants have already taken advantage of the opportunity to rate the reliability and quality of external service providers via the so-called “LEG Hausportal” developed by LEG subsidiary youtilly, thereby helping to improve customer satisfaction. The “LEG Hausportal” is a daily updated, virtual bulletin board that informs tenants about maintenance appointments, planned work around the building or even temporary disruptions. Following the successful roll-out in its own portfolio, LEG is now also marketing this service externally to other housing companies and has already acquired its first customers.

To further promote digital innovations and the targeted use of AI, the company bundled its relevant expertise even more strongly at the beginning of the year and reorganized its in-house IT service provider, which now operates under the name of LEG Technology and Digitalization.         

Positive outlook for 2025

Against the backdrop of the good fundamental development in the core business, LEG confirms the annual guidance for AFFO in the range of EUR 205 to 225 million. Effects from possible future portfolio acquisitions and disposals are not yet taken into account here. This would increase AFFO per share by more than 7.0 percent compared to 2024 - based on the mid-point of the AFFO guidance range for 2025.

Final note: Occasionally, this communication refers to customers, tenants, employees, investors and others. This serves to simplify readability and includes all genders.

Key figures Q1-2025

About LEG

With around 172,000 rental flats and around 500,000 residents, LEG SE is a leading listed housing company in Germany. The company has eight branches and is also represented at selected locations with personal contacts on site. LEG SE generated income of EUR 1.303 billion from its core business of letting and leasing in the 2024 financial year, with an average rent of EUR 6.80 (l-f-l) per square metre. With a share of around one fifth of social housing and its ongoing commitment to efficient climate protection in the housing industry, including the establishment of green, digital start-ups for the smart control of existing heating systems (termios), the installation and maintenance of highly efficient air-to-air heat pumps (dekarbo) and digital, serial full refurbishment (RENOWATE) and the first virtual industry solution for transparent service management and Germany-wide contract awarding in the areas of green maintenance, cleaning and winter services (youtilly), LEG underlines its digital and sustainable commitment in various areas.

Contact Investor Relations:
Frank Kopfinger
Phone +49 211 45 68-550
E-Mail: frank.kopfinger@leg-se.com

Contact Press:
Sabine Jeschke
Phone +49 211 45 68-325
E-mail: sabine.jeschke@leg-wohnen.de

Disclaimer

This publication constitutes neither an invitation to buy nor an offer to sell securities.
To the extent that we express forecasts or expectations in this document or make forward-looking statements, these statements may involve known and unknown risks and uncertainties. These statements express the intentions, opinions or current expectations and assumptions of LEG Immobilien SE. The forward-looking statements are based on current plans, estimates and forecasts which LEG Immobilien SE has made to the best of its knowledge, but make no statement as to their future accuracy. Actual results and developments may therefore differ materially from the expectations and assumptions expressed.