LEG focuses on the asset category affordable housing in Germany and is one of the largest German housing companies with around 145,000 units. By concentrating on one asset category and thus a homogeneous customer group, LEG can implement standardised processes, pool investments and use them target-oriented. In addition, LEG focusses exclusively on Germany, as expanding into markets abroad would result in lower efficiency due to different regulatory, accounting and in many cases language requirements.
LEG provides a home to around 400,000 people. With an average rent of EUR 6.09 per square metre (H1-2021), LEG is clearly positioned in the affordable range on the German rental market. Around a quarter of all units are subsidised housing, guaranteeing tenants that rent will stay low in the long term. During the Covid-19 crisis, LEG proved that it can find the right balance between supporting its customers, for example by suspending rent increases, and meeting the returns expectations of its investors. Starting in 2021, Management Board remuneration components will also be linked to ESG criteria for the first time. By building around 500 new units each year from 2023, LEG is also helping relieve the housing shortage in Germany.
LEG believes there are still attractive growth opportunities, both organic and external. For 2021, LEG is aiming to increase rents by around 3.0 %. LEG also thinks there are attractive opportunities to acquire portfolios on the market and intends to purchase approximately 7,000 units in 2021 – both in NRW and outside its domestic market. Value-added customer services also offer a further source of potential growth, with a growing portfolio, increased coverage within the portfolio and new services. LEG is aiming to increase its FFO I to between EUR 410 million and EUR 420 million in 2021 (specified towards upper end of the range with H1-2021).
With a gross yield of 4.4 % (H1-2021) as measured by the GAV for the portfolio, LEG generates attractive yields in a capital market environment shaped by low to negative interest rates. At the same time, its business model has proven to be very robust, especially in the Covid-19 crisis. Shareholders have enjoyed a share in LEG’s success since its IPO at the start of 2013 thanks to steadily increasing dividends. A dividend of EUR 3.78 per share was approved for the 2020 financial year. The dividend yield thus amounts to 3.0 % based on the closing price on 30 December 2020 of EUR 127.06.
LEG operates on the basis of a strong balance sheet. This is reflected in a conservative financing structure with a very low LTV of 36.4 % as of H1-2021 (pro-forma: 39.0%) and a long maturity for liabilities of 7.7 years with an average interest rate of 1.24 %. The portfolio is valued at an average of EUR 1,641 per square metre (H1-2021). This strong financial position creates room for further growth while also providing a sufficient risk buffer in the volatile current environment.