LEG Immobilien : confirms positive outlook for 2024 - disposals of EUR 210 million year to date

• Strong demand continues to drive core business:
• • Rent per square metre (l-f-l) rises by 4.1% in the free financed part of the portfolio (total portfolio: +3.5%)
  • Vacancy rate (l-f-l) declines by 30 bps to 2.5%
• Affordable net cold rent for a typical average LEG flat stands at EUR 420 per month
• AFFO on target at around EUR 49 million - outlook confirmed at EUR 180 to 200 million
• 2,200 units sold to date in 2024 for approx. EUR 210 million
• NTA per share at EUR 127.69 - slight devaluation in H1 2024 by 1 to 3 % and bottoming out of the property valuations expected this year
• Largest coherent tenant electricity project ("Mieterstromprojekt") in North Rhine-Westphalia for more than 1,100 flats completed

LEG Immobilien SE has made a good start to the 2024 financial year and can confirm its earnings forecast for the full year. Demand for affordable housing in Germany continues to rise. This was once again reflected in higher net cold rents and another very good rental result in the first quarter of 2024. Furthermore, the first quarter was characterized by a series of successful sales. Given LEG's strong focus on price discipline, the sales could overall be realized above book value.

Lars von Lackum, CEO of LEG Immobilien SE, says: "LEG has made a good start to the 2024 financial year. With an AFFO of around EUR 49 million, we are clearly on track to reach our full-year guidance for our key earnings indicator, which is at EUR 180 to 200 million. Our sales program has gained further momentum since the beginning of the year. In total we have sold 2,200 units with a volume of EUR 210 million year to date. In addition to first signs of an upturn on the transaction markets, the bottoming out of property valuations is providing further optimism. This is also reflected in LEG's expectation of a moderate devaluation of only between 1 and 3 per cent for the first half of the year."

Dynamic rental growth

Like-for-like rents rose significantly by 4.1 per cent for the free financed part of the portfolio, whereas cost rents for subsidized housing remained stable due to the regular adjustment in the previous year. In total, like-for-like rent rose by 3.5 per cent for the overall portfolio. The expectation for the year as a whole is 3.2 to 3.4 per cent (l-f-l). The average net cold rent per square meter is currently EUR 6.67 per square meter (l-f-l) or around EUR 420 for an average LEG apartment of roughly 63 square meters. LEG thus continues to focus clearly on the "affordable housing" segment for people on low and medium incomes.

The like-for-like vacancy rate was down by a further 30 basis points year-on-year to 2.5 per cent.

AFFO fell by 11.5 per cent to EUR 48.6 million (Q1-2023: EUR 54.9 million). In the prior-year quarter, the company benefited from a one-off effect from the forward sale of LEG's own green electricity (EUR 7 million) and a disproportionately low level of investment expenditure, which only was offset in the further course of last year.

Without these extraordinary effects, AFFO in the first quarter of 2024 would be above the previous year's level. In the current financial year, the company is aiming to distribute investment expenditure more evenly over the four quarters. Accordingly, investments in the first quarter of 2024 amounted to EUR 7.58 per square meter and were therefore 15 percent higher than in Q1-2023 (EUR 6.59 per square meter). LEG continues to plan investments of around EUR 32 per square meter for 2024.

NTA per share amounts to EUR 127.69 - portfolio valuation broadly unchanged

The EPRA NTA per share was EUR 127.69 as of 31 March 2024 and is therefore broadly unchanged compared to the balance sheet date of 31 December 2023 (EUR 126.57 per share). As usual, LEG's residential portfolio is revalued in the 2nd and 4th quarter. Based on a slight upturn in transaction activity and the foreseeable bottoming out of residential property prices, LEG anticipates a moderate decline of the asset value of its portfolio in the range of 1 to 3 per cent as of 30 June 2024.

LEG shares the view of numerous industry experts and specialist institutions that the valuation of residential property will bottom out in the course of 2024. This development could result in a further closing of the still significant gap between NTA and market value per share.

PWC will value the LEG Group's property portfolio for the first time as of 30 June 2024. PWC won the valuation mandate as part of a structured tender process, replacing CBRE. LEG will continue to base the valuation for the balance sheet on its own valuation model, while PWC will prepare an independent second opinion, which LEG will use to validate its own results.

The gross yield on the entire property portfolio as of 31 March 2024 was 4.8 percent (Q1-2023: 4.2 per cent), providing already an attractive spread over the risk free 10-year BUND yield.

LEG has taken advantage of the incipient recovery in the residential property market and has agreed or completed the sale of around 2,200 apartments for around EUR 210 million year to date and above book value in total. In some cases, the transfer of ownership will not take place until later in the year. In total, LEG's disposal program comprises of more than 5,000 units.

LEG's disposal activities are primarily focused on properties at the lower and the upper end of the quality spectrum (properties in need of refurbishment or marginal properties as well as new builds). In addition to strengthening the balance sheet, the sales activities therefore also serve to further focus and optimize the overall portfolio. Due to its liquidity-preserving measures, the company will continue to endeavor not to sell any holdings below book value in the future.

Financing remains strong -LTV falls slightly

LEG is benefiting from its good access to all participants in the financial market in what remains a challenging market phase. Covered or uncovered maturities are due only from mid-2025 onwards.

Average financing costs on 31 March 2024 were at 1.59 per cent with an average maturity of 5.9 years (31 December 2023: 1.58 per cent, 6.2 years). The company has a solid investment grade rating of Baa2 with a stable outlook.

Net debt in relation to property assets (loan to value/LTV) amounted to 47.9 per cent as at 31 March 2024 and has therefore fallen slightly compared to the reporting date of 31 December 2023 (48.4 per cent). Taking all disposals year to date into account, the pro-forma LTV stands at 47.5 per cent.

At 38.9 per cent, the company also has a high equity ratio compared to many other industries.

Tenant electricity projects ("Mieterstromprojekt") as one building block of LEG's decarbonization measures

LEG is continuously developing its sustainability and climate protection measures. The focus is always on tenant acceptance and performance as well as profitability for the company. The most recent example is the completion of the largest coherent photovoltaic installation for tenants in North Rhine-Westphalia in the LEG neighborhood in the city of Monheim on the Rhine with a total output of 2 MW peak. 118 apartment blocks with altogether 1,117 flats in the so-called "Berliner Viertel" neighborhood have been equipped with photovoltaic systems in recent months. The surface area of the 4,774 PV modules installed covers 10,000 square meters which is as much as the size of two soccer fields. The systems were inaugurated in mid-April in the presence of the Minister for Economic Affairs and Climate Action of the county of North-Rhine Westphalia, Mona Neubaur.

Overall, LEG is working very successfully on a whole range of measures to decarbonize residential buildings as efficiently as possible, for example with LEG's own green start-ups RENOWATE, termios and dekarbo. Reliable political and regulatory framework conditions are crucial to ensure that the socially responsible housing industry can achieve its climate targets. Among other things, the company considers a fair and unbureaucratic structure of the modernization levy that is comprehensible for tenants and landlords as well as continued start-up support for the still young, serial refurbishment processes to be essential.

Positive outlook for 2024 confirmed

Against the backdrop of the positive fundamental development in its core business, LEG confirms its annual guidance for AFFO in the range of EUR 180 to 200 million. Effects from further potential portfolio acquisitions and disposals in the future are not yet considered here.

This corresponds to - based on the mid-point of the range - an earnings growth of around 5 per cent compared to the AFFO achieved in the 2023 financial year.

Financial key figures		Q1 2024	Q1 2023	+/- %
Net cold rent	€ million	214.1	206.3	3.8
Net operating income (recurring)	€ million	171.1	161.4	6.0
EBITDA	€ million	130.9	131.2	- 0.2
EBITDA adjusted	€ million	157.6	157.0	0.4
EBT	€ million	77.7	126.3	- 38.4
Net profit or loss for the period	€ million	57.8	96.3	- 39.9
FFO I	€ million	98.8	103.2	- 4.3
FFO II	€ million	98.0	101.0	- 3.0
AFFO	€ million	48.6	54.9	- 11.5
AFFO per share	€	0.66	0.74	- 11.5
Balance sheet key figures		31.03.2024	31.12.2023	+/- %/bp
Investment properties	€ million	18,164.5	18,101.8	0.3
Cash and cash equivalents	€ million	285.2	277.5	7.3
Equity	€ million	7,550.4	7,488.2	0.8
Total financing liabilities	€ million	9,369.2	9,375.8	- 0.1
Current financing liabilities	€ million	443.5	445.7	- 0.5
LTV	%	47.9	48.4	- 50
Equity ratio	%	38.9	38.8	10
EPRA NTA, diluted	€ million	9,462.9	9,373.9	0.9
EPRA NTA per share, diluted	€	127.69	126.57	0.9
Other key figures		31.03.2024	31.03.2023	+/- %/bp
Number of residential units		165,953	166,987	- 0.6
In-place rent	€/sqm	6.68	6.44	+3.8
In-place rent (l-f-l)	€/sqm	6.67	6.45	+3.5
EPRA vacancy rate	%	2.9	3.0	- 10
EPRA vacancy rate (l-f-l)	%	2.5	2.8	- 30
bp = basis points

About LEG
With around 167,000 rental apartments accommodating some 500,000 residents, LEG SE is a leading listed housing company in Germany. The company maintains eight branches and is also represented at select locations with personal local contacts. From its core business of renting and leasing, LEG SE generated revenue of around €1.241 billion in fiscal year 2023, with an average rent of 6.58€/sqm (l-f-l). 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), LEG emphasises its sustainable commitment in various areas.

Investor Relations contact:

Frank Kopfinger
Tel. [phone]
e-mail: [e-mail]

Press contact:

Sabine Jeschke
Tel. [phone]
e-mail: [e-mail]

Disclaimer

This publication is 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 SE. The forward-looking statements are based on current planning, estimates and forecasts, which LEG Immobilien SE 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.