DÜSSELDORF (dpa-AFX) – Apartment purchases and rising rents have helped the real estate group LEG to achieve a significant increase in profits in the past year. “2021 is the year with the best rental result to date, the largest portfolio purchase in LEG’s history and the strongest increase in the value of the portfolio since the IPO,” wrote the LEG board of directors around company boss Lars von Lackum in a shareholder letter on Thursday when the company was presented Pay. The stock was down half a percent in early trading in a weaker market environment.
For the current year, the Management Board continued to be confident. In 2022, the operating profit from current business (FFO1) should increase to 475 to 490 million euros, the management confirmed its annual targets. The company assumes that rents for a comparable area will increase by around three percent.
Last year, the operating profit from ongoing business (FFO1) climbed by 10.4 percent year-on-year to around 423 million euros, as the MDax-listed company announced. The shareholders should also benefit from this. The dividend is expected to increase by almost eight percent to EUR 4.07 per share.
Rents have been rising for years, especially in the big cities, but many medium-sized cities are now also catching up. In 2021, the rent for a comparable area rose to an average of EUR 6.13 per square meter after EUR 5.94 a year earlier, as the group further announced. Excluding the price-restricted apartments, which make up around a quarter of LEG’s real estate portfolio, rents increased by an average of 3.9 percent to EUR 6.54.
Modernizations that enable landlords to turn the screw on prices also contributed to this. Part of the costs for energy-related measures such as new windows or insulation of the facade can be passed on to the tenants. LEG spent around 16 percent more on maintenance and modernization last year, at around EUR 452.1 million.
The vacancy rate on a like-for-like basis fell by 0.4 percentage points to 2.3 percent. “We are practically fully rented, even in many areas of the market where demand is weaker,” said company boss Lars von Lackum.
The result for the period in 2021 was around 1.72 billion euros after 1.36 billion in the previous year. This was mainly due to a higher valuation of the real estate portfolio.
At the end of the year, LEG acquired a residential portfolio with around 15,400 apartments and 185 commercial units with a regional focus on Lower Saxony, Bremen and Schleswig-Holstein from its competitor, the Adler Group, which got into difficult waters. In addition, the group secured access to the Adler subsidiary Brack Capital Properties (BCP) and thus to a further 12,100 apartments. In a first step, LEG acquired a 31 percent stake in BCP for EUR 328 million.
Overall, the LEG portfolio will increase to around 166,000 apartments in Germany by the end of 2021. With the residential and business units taken over directly from Adler with the large locations in Wilhelmshaven, Ostfriesland, Wolfsburg, Göttingen and Braunschweig, the group is significantly expanding its presence in northern Germany. This means that around 20 percent of the inventory is now outside the home market of North Rhine-Westphalia, LEG said.
In addition to acquisitions, LEG is also focusing on new construction. In the future, the company will also develop plots of land with or without building rights, it said. The volume of 500 new apartments per year should double to 1000 units from 2026./mne/men/jha/
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