LEG acquires 3,500 German residential units for €220m

German listed residential landlord LEG Immobilien has agreed to acquire a 3,500-unit portfolio in its core market of North Rhine-Westphalia. The investment volume of €220 mln reflects a net initial yield of 6.4%.

LEG will partially fund the investment from the proceeds of the sale of almost 1.2 million new shares to institutional investors on Tuesday. The company added that the capital increase would also ensure financial flexibility for additional acquisitions.

Portfolio
LEG said that the portfolio is in 'above-average technical condition' and is clustered around two top locations in NRW. The annual rent comes to €14.2 mln, with a vacancy rate of 3.6%. The average in-place rent of €5.22 per m2 is lower than the market average but LEG expects to improve the performance due to its good condition of the buildings and attractive locations.

CEO Thomas Hegel: 'The acquisition shows once again that LEG is decisively taking opportunities for value enhancing growth. Thanks to the strong regional presence and high level of synergy, this transaction will create directly visible added value for the shareholders. In light of the current pipeline, we assume that we will again exceed our acquisition target of at least 5,000 units in 2015.'

LEG is one of the largest listed residential property owners in Germany. The company owns 110,000 rental properties that generated €577 mln of rent in 2014.