LEG Immobilien : acquires around 7,500 apartments in northern and south-western Germany

• Two portfolios purchased with rental income of around EUR 35 million
• Purchases in Brunswick, Hanover and Flensburg as a follow-up on 2019 acquisitions in northern Germany; Cologne, Rhine-Neckar region and Koblenz strengthen market presence in the South-West
• FFO I for 2020 expected in the upper half of the EUR 370-380 million target range
• LEG to offer affordable living in more German states

LEG Immobilien AG is acquiring around 7,500 residential units in Brunswick, Hanover, Flensburg, Cologne, Koblenz and the economically strong Rhine-Neckar region in two transactions. LEG continues its successful expansion strategy outside its home market, NRW. The portfolios acquired are either in or, in many cases, adjacent to regions where LEG already owns properties. At the same time, the acquisitions strengthen the company's market presence in northern Germany, where LEG made major acquisitions in 2019, and in the South-West of Germany. By acquiring those portfolios, LEG is going to provide affordable living in even more German states.

At mid-year, LEG has already surpassed its goal of acquiring around 7,000 residential units in 2020. Transfer of ownership is scheduled for the end of the year. Therefore, LEG anticipates a first positive earnings' contribution for the 2020 financial year. On this basis, LEG currently assumes that it will see FFO I in the upper half of the EUR 370-380 million target range.

'We are delighted that with these transactions, we are making considerable progress in implementing our strategic agenda and can expand substantially beyond our home market in North Rhine-Westphalia. This underlines LEG's ability to meet our growth targets while adhering to our strict acquisition criteria, even in today's tight housing markets, and to make attractive, value-adding acquisitions. By continuing the professional management of the previous owners, our new customers can continue to rely on us to provide good housing at fair prices and to fulfil our social responsibility as a major landlord,' said LEG CEO Lars von Lackum.

Approximately 6,400 apartments acquired from Deutsche Wohnen SE

The largest portfolio includes 6,380 residential units and 38 commercial units from Deutsche Wohnen SE with a total rental space of around 420,000 square metres. The acquired assets are based at the following locations (in descending order by number of residential units acquired): the economically strong region of Rhine-Neckar with a focus on Ludwigshafen and Mannheim, in Brunswick, in the Koblenz region, in Hanover/Laatzen and in Cologne. The acquisition is focused on regions adjacent to LEG's existing asset stock, making it possible to manage these effectively using the current platform. At the same time, the scale of the acquisitions allows the company to establish its own local management teams and its own regional presence in Hanover/Brunswick and in the Rhine-Neckar region.

Michael Zahn, CEO of Deutsche Wohnen SE, explains: 'The sale underscores our strategy of building a high-value portfolio in Germany's growth centres and metropolitan areas, while also securing additional liquidity for further investments, especially in new construction. Furthermore, we are putting our assets in LEG's professional hands, thus guaranteeing our tenants reliable and customer-focused support into the future.'

The properties acquired offer affordable housing and all benefit from attractive market conditions. The classification of the locations using the market cluster method, which LEG applies to its entire portfolio (high growth markets, stable markets and higher yielding markets), proves that. According to this segmentation, almost two thirds of the portfolio is based in high growth markets and a third in stable markets. Both clusters reflect varying degrees of excess demand and structural rental growth. Some properties offer additional potential for increasing rent and value by way of investing in maintenance and modernisation to provide living that is more comfortable.

The apartments have an occupancy rate of almost 98 percent and an average monthly rent of around EUR 5.95 per square metre. About 2,000 of the units are subsidised units. The acquisition clearly fits LEG's target segment: affordable living for broad sections of the population. In 2019, the portfolio generated rental income of around EUR 30 million (in-place rent).

Large, geographically concentrated portfolio purchased in Flensburg

The second portfolio comprises 1,075 residential units and 7 commercial units in Flensburg and the surrounding area with total rental space of around 70,000 square metres from a private sale. The apartments currently have an occupancy rate of 97 percent and an average monthly rent of around EUR 5.79 per square metre. This living space is also targeted at medium- and low-income households, in line with LEG's target segment.

The geographically concentrated portfolio of more than 1,000 units allows high efficiency in managing and developing the portfolio in a new and attractive housing market for LEG. In this market, the scale of the acquisition also allows the establishment of a new regional presence in the city. In 2019, the portfolio generated rental income of around EUR 4.9 million (in-place rent).

Transaction framework

Both portfolios are being acquired by way of an asset deal. The purchase prices for the two acquisitions total around EUR 767 million or EUR 1,540 per square metre. This equates to a multiplier of 21.9x based on in-place rents. Both transactions are still subject to approval by the responsible antitrust authorities.

The table below gives an overview of the key figures for the individual locations:

Region	Number of units	In-place rent in EUR/m2	Vacancy rate in percent	LEG market cluster
Rhine-Neckar	1,964	6.11	1.7	Stable and high growth markets
Braunschweig	1,533	5.83	3.6	High growth markets
Koblenz region	1,504	5.53	1.3	Stable markets
Hanover/Laatzen	1,215	5.94	2.2	High growth markets
Cologne	164	8.90	10.8	High growth markets
Flensburg	1,075	5.79	3.0	Stable markets
Total	7,455	Approx. 5.92	Approx. 2.6	High growth markets (approx. 55%) and stable markets (approx. 45%)

About LEG

With around 136,000 rental properties and more than 365,000 residents, LEG is one of Germany's leading listed housing companies. The company has seven branch offices in North Rhine-Westphalia, providing personal local contact. LEG generated income of around EUR 809 million from its core rental and lease business in the 2019 financial year. As part of the new construction campaign it launched in 2018, LEG wishes to make a social contribution towards creating both privately financed and publicly subsidised housing, and to build or acquire at least 500 new apartments per year from 2023 onwards.

Investor Relations contact: Frank Kopfinger

Tel. [phone]
E-mail: frank.kopfinger[at]­leg.ag

Press contact: Sabine Jeschke

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E-mail: sabine.jeschke[at]­leg-wohnen.de

Disclaimer

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