LEG focuses on the asset category affordable housing in Germany and is one of the largest German housing companies with around 166,000 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 500,000 people. With an average rent of EUR 6.19 per square metre (Q1-2022), 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. Since 2021, Management Board remuneration components are also linked to ESG criteria. 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 2022, LEG is aiming to increase rents by around 3.0 %. In addition, LEG is pursuing an opportunistic acquisition strategy - depending on the market situation and supply - after the growth spurt in 2021. 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 475 million and EUR 490 million in 2022.
With a gross yield of 4.3 % (Q1-2022) as measured by the GAV for the portfolio, LEG generates attractive yields. At the same time, its business model has proven to be very resilient, 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 4.07 per share was approved for the 2021 financial year. The dividend yield thus amounts to 3.3 % based on the closing price on 30 December 2021 of EUR 122.70.
LEG operates on the basis of a strong balance sheet. This is reflected in a conservative financing structure with a LTV of 43.1 % as of Q1-2022 and a long maturity for liabilities of 7.3 years with an average interest rate of 1.16 %. The first higher funding will expires not until 2024. With an average of EUR 1,713 per square metre (Q1-2022) the portfolio is rather conservatively valued.