LEG Immobilien SE significantly increases AFFO in the first half of the year – AFFO growth of approximately 10 percent expected for the full year

• AFFO rises to EUR 127 million (+15.4%) – full year guidance adjusted to
  upper half of previous target range (EUR 215 to EUR 225 million)
• FFO I expected at EUR 470 to EUR 490 million for the full year 2025, up approximately 5% and back to pre-crisis level
• High demand for affordable housing drives core business:
  - Free-financed rent per square meter (l-f-l) rises by 3.7%
  - Vacancy rate (l-f-l) declines by 10 bps to 2.4%
  - Average rent remains below EUR 7 per square meter
• NTA per share at EUR 131 – portfolio revaluation of +1.2% underscores market recovery
• Increased profitability thanks to fast integration of BCP properties and encouraging development of LEG's value-add services
• LEG is a member of the BRYCK Startup Alliance, which is supported by the German federal government

LEG Immobilien SE achieved strong results in the first half of the year and expects to reach the upper half of the previously communicated AFFO guidance for the full year. With an AFFO now expected to be between EUR 215 million and EUR 225 million, the increase in earnings based on AFFO is around 10 percent. The continued high demand for affordable housing in Germany was again reflected in higher net cold rents and another very good letting result in the first half of 2025. The rapid integration of more than 9,000 apartments from Brack Capital and the encouraging development of value-add services also contributed to the operating success.

Lars von Lackum, CEO of LEG Immobilien SE, said: “I am very satisfied with our half-year results and proud of what the LEG team has achieved. In addition to the very good performance in our core business, the newly integrated BCP portfolio is already contributing to the company’s success, significantly earlier than expected. Our cash-oriented earnings indicator, AFFO, rose significantly again, enabling us to target the upper half of our original guidance range for the full year and thus an AFFO growth of around 10 percent. FFO I returned to pre-crisis levels for the first time and is expected to increase by around 5 percent in 2025. This once again underlines LEG's excellent ability to manage the cycle. The sustained recovery in the real estate markets is also reflected in a 1.2 percent increase in the valuation of the residential portfolio."

AFFO rises by 15 percent

Actual rents on a comparable basis increased by 3.7 percent in the first half of 2025 in the free-financed sector, following 3.5 percent in the first quarter of 2025. As cost-based rents for subsidised housing will remain stable this year due to the regular adjustment next year, the increase for the total portfolio was 3.2 percent. The expectation for the year is 3.4 to 3.6 percent (l-f-l), with adjustments to market and to rent table developments pending in the third quarter. The average basic rent per square metre is currently EUR 6.93 per square metre (l-f-l) or around EUR 450 for an average LEG apartment with a size of around 65 square metres. LEG therefore continues to focus clearly on the "affordable housing" segment for people with low and medium incomes.

The vacancy rate for comparable space fell again by 10 basis points to 2.4 percent compared with the same quarter of the previous year.

AFFO increased by 15.4 percent to EUR 126.6 million (H1/2024: EUR 109.7 million). The significant growth in AFFO was driven by the rapid integration of the BCP portfolio, rental growth in LEG's core portfolio and strong momentum in value-add services.

In the wake of the noticeable recovery of the markets following the previous crisis years, 
FFO I is once again becoming more important. The key figure rose by 10.7 percent year-on-year to EUR 241.2 million. Due to the rise in interest rates in recent years and its focus on cash, LEG has linked its corporate performance to AFFO since 2023. In view of the sustained stabilisation of property values, the company is now giving an indication for the development of FFO I in 2025.

Total investments rose by 7.1 percent year-on-year to EUR 16.51 per square metre (H1/2024: EUR 15.41 per square metre). The capitalisation rate increased by 90 basis points. LEG expects a further slight increase in investment volume for the next two quarters. For 2025, LEG continues to anticipate an increase to at least EUR 35 per square meter in line with its existing guidance. 

Continued increase in value underscores market recovery 

The EPRA NTA per share was EUR 130.87 as of June 30, 2025, representing a noticeable increase compared with the balance sheet date of December 31, 2024 (EUR 125.90 per share or +3.9 percent).

LEG's residential portfolio was revalued as scheduled on June 30, 2025. With an increase of
1.2 percent, the valuation result was even slightly above the previous expectations of
+0.5 to +1.0 percent. This underscores the clear signs of recovery on the overall market.   

The gross yield on the entire property portfolio amounted to 4.9 percent as of June 30, 2025, thus continuing to offer an attractive premium over the yield on risk-free 10-year German government bonds.

LEG will continue its sales programme in 2025. Since the beginning of the year, ownership of 1,800 units worth EUR 143 million has been transferred. In the first quarter of 2025, the company expanded its sales programme to include the BCP portfolio in Eastern Germany, increasing it to around 5,000 units. Marketing has now begun. Due to its liquidity-preserving measures, the company aims to continue selling its portfolio at least at book value or above in the future. Therefore, the focus of the sales efforts remains on achieving an optimal sales price and finding suitable buyers.

LEG has found a reputable company in Sahle Wohnen GmbH to develop and manage a partially vacated housing estate in Cologne-Hoehenhaus. LEG had not pursued the corresponding redensification project in line with its withdrawal from the project development business. Selling the property to a solid and experienced housing company was very important to LEG in the interests of the long-term residents and the city.   

Interest costs at a low level – LTV slightly down 

Average financing costs were low at 1.54 percent as of June 30, 2025, with an average maturity of 5.5 years (December 31, 2024: 1.49 percent, 5.7 years). The company has a solid investment grade rating of Baa2 with a stable outlook.

Net debt in relation to real estate assets (loan-to-value ratio/LTV) stood at 47.6 percent as of June 30, 2025, down 30 basis points from the balance sheet date of December 31, 2024
(47.9 percent). In view of the current development of property values and the expanded sales programme of around 5,000 units, LEG considers itself well positioned to achieve its medium-term loan-to-value target of a maximum of 45 percent.

Regulatory framework remains challenging for the industry 

LEG takes a mixed view of the latest political developments. The company considers the four-year extension of the rental brake for new rentals in so-called “tight markets”, which was decided in June and has been in place since 2015, to be negative. The rent control instrument was introduced on June 1, 2015, as a temporary measure and would otherwise have expired at the end of 2025. Even tenant protection organisations do not believe that it has improved access to housing for new tenants in sought-after locations; instead, it reduces return prospects and incentives for investors to invest in much-needed new construction. LEG expects that the extension of the rent control measure and the expansion of the areas in North Rhine-Westphalia and Lower Saxony, which was already implemented in spring, will have a negative impact of around 15 basis points on the rent increase potential for this year. 

On the other hand, the coalition agreement's intention to bring German energy efficiency classes in line with those of neighbouring countries, to curb CO₂-avoidance costs and thus prevent disproportionate burdens on tenants and landlords because of the European Energy Performance of Buildings Directive (EPBD) is welcome.

At the beginning of the year, LEG collaborated with the German Economic Institute (Institut der deutschen Wirtschaft IW) to investigate how more people could be given easier access to home ownership, for example through equity-replacing guarantees. LEG is convinced that higher ownership rates improve the stability of residential neighbourhoods. The fact that the state parliament of North Rhine-Westphalia decided to introduce such guarantees at its last session before the summer recess underscores the company's good access to policymakers.

LEG is part of the BRYCK Startup Alliance

The BRYCK Startup Alliance has set itself the goal of accelerating innovation in Germany and establishing a high-performance, university- and industry-oriented start-up centre with international appeal in the Ruhr region. Thanks to its convincing concept, it was named a Germany's Startup Factory by Federal Minister for Economic Affairs Katherina Reiche and will receive EUR 1 million in federal funding for tech developments. LEG Immobilien SE will be the first member company from the housing industry to steer, drive and support the development of promising proptechs.

Outlook for 2025: AFFO and FFO I set to rise significantly 

Against the backdrop of the positive fundamental development in its core business, LEG is refining its annual guidance for AFFO and now expects to reach the upper half of the original forecast range. The target range is now between EUR 215 and EUR 225 million. This does not yet consider the effects of possible future portfolio acquisitions and disposals. This would represent an increase in AFFO of around 10 percent compared with 2024 based on the midpoint of the new AFFO guidance range for 2025.

Furthermore, the company is raising its 2025 outlook for the EBITDA margin from 76 to 77 percent. The EBITDA margin is an indicator of LEG's operational excellence and benefits from the rapid integration of the BCP portfolio and the encouraging performance of the value-add services. All other key figures are developing as planned.

For the current 2025 financial year, LEG indicates to achieve FFO I in the range of EUR 470 to EUR 490 million. This is roughly in line with the former record level of the last pre-crisis year 2022 and represents an increase of around 5 percent compared with the previous year's figure.

As usual, LEG will provide the guidance for the financial year 2026 together with its nine-month figures.

Final note: This press release occasionally refers to customers, tenants, employees, investors, etc. This is for the sake of readability and includes all genders.

Key figures Q2 2025

About LEG

With around 172,000 rental apartments and approximately 500,000 residents, LEG SE is a leading listed housing company in Germany. The company has eight branches and is also represented by personal contacts at selected locations. In the 2024 financial year, LEG SE generated revenues of €1.303 billion from its core business of renting and leasing, with an average rent of €6.80 (l-f-l) per square metre. With around one-fifth of its portfolio comprising 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), digital, serial complete renovation (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 is underlining its digital and sustainable commitment in various areas.

Investor Relations contact:
Frank Kopfinger
Tel. +49 211 45 68-550
Email:frank.kopfinger@leg-se. com

Press contact:
Sabine Jeschke
Tel. +49 211 45 68-325
Email: sabine.jeschke@leg-wohnen.de

 

Disclaimer

This publication does not, and is not intended to, constitute or form part of, and should not be construed as, an offer to purchase or sell or a solicitation of an offer to purchase or sell any securities in LEG Immobilien SE.

This publication may contain forward-looking statements that are subject to known and unknown risks and uncertainties. LEG Immobilien SE has based these forward-looking statements on its current views and assumptions with respect to future events and financial performance and they shall not be construed as guarantees of future developments and results. Actual results and developments including, in particular, the actual financial performance, could differ materially from that projected or implied 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.