German listed residential landlord LEG Immobilien said it is pushing ahead with its regionally focused expansion strategy and has upgraded its earnings outlook for 2016.
German listed residential landlord LEG Immobilien said it is pushing ahead with its regionally focused expansion strategy and has upgraded its earnings outlook for 2016.
The company, which was the target of an aborted takeover attempt by Deutsche Wohnen in October, reaffirmed its business targets for the current year and raised its forecast for 2016. In addition, the company said it is projecting a further significant earnings increase in 2017.
Capital increase
On Thursday, LEG also raised €307 mln in a capital increase to help fund its acquisition of 13,800 residential units in North Rhine-Westphalia from Vonovia, the largest listed apartment owner in Germany.
The €600 mln acquisition came as a confidence booster for the market in November and a sign LEG could prosper as a stand-alone company shortly after a hostile bid by Vonovia for Deutsche Wohnen sapped shareholder support for the proposed Deutsche Wohnen-LEG merger.
'The success of the capital increase again re-affirms the trust of investors in our strategy, and that they firmly believe in the future potential of the market in North Rhine-Westphalia,' said CEO Thomas Hegel. 'LEG stands for organic and external growth, attractive returns and sustainable portfolio management. We will remain fully committed to that approach in the future.'
Performance
For the 2015 fiscal year, LEG has confirmed its projection for funds from operations (FFO) to come out at between €200 mln and €204 mln. For 2016, LEG now expects an increase in FFO in the range of €254 mln to €259 mln (previously €233 mln to €238 mln). The company also anticipates continued growth in 2017, with FFO expected in the range of €279 mln to €284 mln. This projection does not include additional effects from planned future acquisitions.
‘The developments in the current fiscal year clearly highlight the success of our regionally focused growth strategy,’ commented Hegel. ‘We will therefore consistently pursue our approach and concentrate on what we've done best for years: competently and efficiently managing our portfolio, exploiting internal and external growth opportunities in a disciplined manner, and continuing to expand value-added services for tenants.’
In the first nine months of the year, FFO increased by 27.8% to €158.5 mln. This reflects the dynamic growth in rental income, the economies of scale from acquisitions and decreasing interest expenses, LEG said.
LEG has stepped up its growth strategy since the start of the year, signing deals to purchase about 20,000 residential units since January. This includes the agreement early this month to purchase around 13,800 residential units in North Rhine-Westphalia from Vonovia for some €600 mln.