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LEG Immobilien SE
Investor Presentation • Aug 9, 2024
260_ip_2024-08-09_4c3156e3-15bb-4a60-9562-79eea120d2f7.pdf
Investor Presentation
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LEG Immobilien SE H1-2024 Results
H1-2024 Results - Agenda
1 Highlights H1-2024
2 Portfolio \& Operating Performance
3 Financial Performance
4 Outlook
Disclaimer
While LEG Immobilien SE ("The Company") has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature and is intended to provide an introduction to, and an overview of the Company's business. Any opinions expressed in this presentation are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information contained in this presentation. Where this presentation quotes any information or statistics from any external sources, you should not interpret that the Company has adopted or endorsed such information or statistics as being accurate.
This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realised from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation, and supply and demand. The Company has based these forwardlooking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and the Company does not undertake any duty to update the information and forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.
This presentation does not constitute an offer or invitation to purchase or sell any shares in the Company and neither this presentation or anything in it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever.
Highlights H1-2024
Financial Summary
LEG
H1-2024
| Operating results | H1-2024 | H1-2023 | $+/-$ \% | Balance sheet | 30.06.2024 | 31.12.2023 | $+/-$ \% | ||
|---|---|---|---|---|---|---|---|---|---|
| Net cold rent | €m | 427.9 | 414.3 | $+3.3 \%$ | Investment properties | €m | 17,745.7 | 18,101.8 | $-2.0 \%$ |
| NOI (recurring) | €m | 350.2 | 339.4 | $+3.2 \%$ | Cash and cash equivalents ${ }^{5}$ | €m | 355.9 | 405.5 | $-12.2 \%$ |
| EBITDA (adjusted) | €m | 323.9 | 335.2 | $-3.4 \%$ | Equity | €m | 7,260.2 | 7,488.2 | $-3.0 \%$ |
| FFO I | €m | 217.9 | 226.0 | $-3.6 \%$ | Total financing liabilities | €m | 9,328.8 | 9,375.8 | $-0.5 \%$ |
| AFFO | €m | 109.7 | 118.6 | $-7.5 \%$ | Net debt ${ }^{4}$ | €m | 8,959.0 | 8,954.4 | $+0.1 \%$ |
| AFFO per share | € | 1.48 | 1.60 | $-7.5 \%$ | LTV | \% | 49.0 | 48.4 | +60 bps |
| Operating cashflow | € | 278.0 | 264.2 | $+5.2 \%$ | Average debt maturity | years | 6.0 | 6.2 | $-0.2 y$ |
| NOI margin (recurring) | \% | 81.8 | 81.9 | -10 bps | Average debt interest cost | \% | 1.66 | 1.58 | +8 bps |
| EBITDA margin (adjusted) | \% | 75.7 | 80.9 | -520 bps | Equity ratio | \% | 38.1 | 38.8 | -70 bps |
| FFO I margin | \% | 50.9 | 54.5 | -360 bps | EPRA NTA, diluted | €m | 9,129.2 | 9,379.9 | $-2.7 \%$ |
| AFFO margin | \% | 25.6 | 28.6 | -300 bps | EPRA NTA per share, diluted | € | 122.59 | 126.57 | $-3.1 \%$ |
| Portfolio | 30.06.2024 | 30.06.2023 | $+/-$ \% | ||||||
| Residential units | number | 165,823 | 166,890 | $-0.6 \%$ | |||||
| In-place rent (I-f-I) | €/sqm | 6.72 | 6.53 | $+2.9 \%$ | |||||
| Investments (adj.) ${ }^{2}$ | €/sqm | 15.41 | 14.08 | $+9.4 \%$ | |||||
| EPRA vacancy rate (I-f-I) | \% | 2.5 | 2.6 | -10 bps |
| 30.06.2024 | 31.12.2023 | $+/-$ \% |
|---|---|---|
| 30.06.2024 | 31.12.2023 | $+/-$ \% |
| 30.06.2024 | 31.12.2023 | $+/-$ \% |
Guidance raise to €190 - 210m AFFO
Continued strong operations point to AFFO per share growth of $c .+10 \%{ }^{1}$
Financials
- AFFO-7.5\% to $€ 109.7 \mathrm{~m}$
- Operating cashflow $+5.2 \%$ to $€ 278.0 \mathrm{~m}$
- FFOI-3.6\% to $€ 217.9 \mathrm{~m}$
- Adj. EBITDA-Margin 75.7\%
- LTV 49.0\%/48.3\% pro-forma²
- Debt @ 1.66\% for $\varnothing 6.0 \mathrm{y}$
- NTA p.s. $€ 122.59$
Operations
- Net cold rent $+3.3 \%$
- I-f-I rental growth $+2.9 \%$, thereof freefinanced $+3.4 \%$
- I-f-I vacancy 2.5\% ( 10bps)
ESG
- Score of Sustainalytics ESG Risk Rating further improved to 5.1 and ranked no. 6 out of 1,030 real estate companies globally
- LEG was awarded a special prize for targeted learning and employee development (DW Future Prize of the Real Estate Industry)
- LEG ranked no. 1 in DAX 50 ESG for ESG achievements, no. 3 in STOXX Global ESG Social Leaders
Guidance increase to €190 - 210m (€180 - 200m)
Strong fundamentals allow also to lift investments to €34/sqm (€32/sqm)
Roughly €285m of disposals YTD
Recovery of the residential transaction market continues
Valuations bottoming out at around 5\% gross yield for LEG
Minor devaluation of $1.6 \%$ for H1-2024 - trough in sight
Free financed segment with 3.4\% (I-f-I) rent growth
Free financed rents to grow by 3.8 - 4.0\% for FY24e
Early and decisive but neither drastic nor dilutive measures
LEG
taken
A broadly stable portfolio preserves current and future earnings base
1 Based on midpoint of new guidance range 2 Pro-forma as of today. Based on reported H1 LTV and taking YTD disposals into account.
Attractive risk return profile of German residential
Above average organic growth at low volatility of LEG
CAGR I-f-I rent growth ${ }^{1}$
Volatility of I-f-I rent growth (standard dev.) ${ }^{1}$
2013-23
Growth per unit of volatility (CAGR / standard dev.)
2013-23
[^0]
[^0]: 11.-F-I growth based on company reporting since 2013 where available or since IPO/ first time reporting respectively.
2 Portfolio \& Operating Performance
Roughly $€ 285 \mathrm{~m}$ and almost 2,900 units of disposals YTD
Majority to be transferred in the second half of the year
Portfolio development - Divestments
Number of units
- From the start of our disposal programme in Q1-2022 until H1 2024 c.2,700 units transferred for c.€182m
- So far $\mathbf{2 , 1 4 5}$ units expected to be transferred in the course of the year with corresponding proceeds of $c . € \mathbf{2 3 4 m}$
- More disposals in the pipeline
Signed disposals YTD (not yet transferred)
| Price €m | Units | |
|---|---|---|
| Existing portfolio | ||
| Krefeld (NRW) | 16 | 236 |
| Warburg (NRW) | 5 | 86 |
| Hanover area (Lower Saxony) | 61 | 766 |
| Dortmund/ Essen (NRW) NEW | 10 | 170 |
| Recklinghausen (NRW) NEW | 22 | 409 |
| Other incl. commercial UPDATE | 20 | 128 |
| New built | ||
| Essen/ Duesseldorf (NRW) | 63 | 211 |
| Bremen (Bremen) NEW | 37 | 139 |
| Total | c. 234 | 2,145 |
- Signings reflect recovery of transaction markets
- Disposals at low end as well as high end of quality spectrum
- Rigorous price discipline continued - in total, disposals transacted above book values
- One disposal with a volume of $c . € \mathbf{3 5} \mathrm{~m}$ regarding a commercial complex (announced in Q4-23) did not close
- Buyers range from HNWIs, pension funds to smaller domestic and international institutionals
Portfolio transactions H1: 730 units transferred in H1
More transfers to come for H2 based on YTD signings
Number of units based on date of transfer of ownership ${ }^{1,2}$
1 Residential units. 2 Note: The date of the transaction announcement and the transfer of ownership are usually several months apart. The number of units may therefore differ from other disclosures, depending on the data basis.
Disposals
- Disposal incl. transfer of ownership for $\mathbf{7 3 0}$ units above book value at $€ 51 \mathrm{~m}$-translating into net proceeds of $€ 26 \mathrm{~m}$
- Signed disposals in H1 include two bigger block sales with around 400 units. Remainder consists of smaller tickets to maximise price and safeguard shareholder value
- Signed disposals make up for $\mathbf{2 , 1 4 5}$ / c $€ \mathbf{2 3 4 m}$ - to be transferred in the course of the year
- The additions to the portfolio ytd solely relate to conversions
Rent growth guidance confirmed
Scale-up in H2-2024, previous year's reporting date marked by early implementation of rent increases
I-f-I rent development
€/sqm/month
I-f-I free financed rent development
€/sqm/month
- Fully on track for $\mathbf{3 . 2 \%}-\mathbf{3 . 4} \%$ I-f-I rent growth guidance
- Based on strong $\mathbf{3 . 8 \%}$ - $\mathbf{4 . 0 \%}$ I-f-I rent growth for the free financed units
- 2.9\% rent growth in H1-24 affected by last year's peak in rent increases in Q2 with a strong rent growth of $\mathbf{4 . 3 \%}$ due to earlier publication of rent tables
- Despite lower rent growth yoy as of H1-24, rent growth at year-end will be at least on the level of FY-23 excl. the cost-rent effect of $\mathbf{8 0}$ bps back then
Rental growth guidance confirmed
Free financed rent growth for FY-2024 expected to be 3.8 - 4.0\% (excl. new construction)
I-f-I rent development
€/sqm/month
Residential rent
Free financed rent
- Free-financed part increased by $\mathbf{3 . 4 \%}$ - slowdown vs. Q1 as Q2-2023 was marked by high rent increases - guidance unchanged
- New rent table example: Gütersloh (Westphalia) +13\% for typical LEG apartment
- No cost rent adjustment in 2024; next increase will be in 2026
- Tenant fluctuation stays at low level of $\mathbf{9 . 3} \%$ yoy
Capex and Maintenance
Moderate increase in first half - FY-2024 guidance raised to c.€34 per sqm
Value-added services with solid AFFO contribution
Higher investment into energy business will affect AFFO generation in H2
3
Financial Performance
Financial highlights H1-2024
Net cold rent growth offsets higher energy costs
Net cold rent
€m
EBITDA (adjusted)
€m
H1-2023
Net operating income (recurring)
€m
AFFO
€m
Net cold rent
- Growth mainly driven by $\mathbf{2 . 9 \%}$ I-f-I rent growth
Net operating income (recurring)
- Increase by $\mathbf{3 . 2 \%}$ mainly driven by higher net cold rent
- Margin of $\mathbf{8 1 . 8} \%$ virtually unchanged as costs, e.g. personnel expenses, increased in-line
EBITDA (adjusted) and AFFO
- Lower contribution from the green electricity production ( $€ 16.0 \mathrm{~m}$ ). Forward sale business at peak prices in 2022 for 2023
- Decline in AFFO by $\mathbf{7 . 5 \%}$ to $€ 109.7 \mathrm{~m}$ further driven by higher cash interest expenses $(-€ 4.9 \mathrm{~m})$
AFFO Bridge H1-2024
Lower contribution from green energy production results in AFFO decline
Portfolio valuation H1-2024
Valuation bottoming out - trough in sight
Valuation decline by markets ${ }^{1}$
Peak to trough $(\%)$
| Total | ||||
|---|---|---|---|---|
| H1 | FY | H2 | H1 | H2 |
| 24 | 23 | 23 | 22 | |
| $-1.6$ | ||||
| -4.9 | $-7.4$ | |||
| High-growth | ||||
| H1 | FY | H2 | H1 | H2 |
| 24 | 23 | 23 | 23 | 22 |
| $-1.7$ | ||||
| $-5.3$ | ||||
| $-9.0$ | ||||
| $-15.8$ | ||||
| Higher-yielding | ||||
| H1 | FY | H2 | H1 | H2 |
| 24 | 23 | 23 | 22 | |
| $-1.8$ | ||||
| $-5.1$ | $-6.3$ | $-5.0$ | ||
Higher-yielding
H1
24
$-1.8$
$-10.1$
$\qquad$
$-13.7$
[^0]
Highlights
- Devaluation of $\mathbf{- 1 . 6 \%}$ in H1-2024, pressure easing off; similar trend in all markets
- Residential transaction market with slight recovery in Q2-2024² (€3.3bn in H1-2024, $+25 \%$ yoy)
- Since peak in H1-2022 combined devaluation effect of c.16.8\%
- Average object-specific discount rate increased to 5.0\% (FY-2023 4.7\%), cap rate increased to 5.8\% (FY-2023 5.7\%)
[^0]: 1 Property valuation with cut-off date as of 31 March 2024 and revaluation date as of 30 June 2024.
2 Source: BNP Real Estate for transactions $\times 30$ units
Portfolio values H1-2024
Back at attractive levels of c.5\% gross yield, 4\% net yield
| Market segment | Residential Units | GAV Residential Assets (€m) |
GAV/ sqm (€) |
Gross yield |
In-Place Rent Multiple | GAV Commercial/ Other (€m) | Total GAV (€m) |
|---|---|---|---|---|---|---|---|
| High- Growth Markets |
49,789 | 7,103 | 2,202 | 4.1\% | 24.6x | 295 | 7,398 |
| Stable Markets | 66,672 | 6,346 | 1,491 | 5.1\% | 19.6x | 246 | 6,592 |
| Higher- Yielding Markets |
49,362 | 3,323 | 1,122 | 6.3\% | 15.9x | 90 | 3,413 |
| Total Portfolio | 165,823 | 16,772 | 1,606 | 4.9\% | 20.4x | 631 | 17,403 |
Gross yields
8\%
[^0]
[^0]: 1 GAV of IAS 40 portfolio (including leasehold, land value and assets under construction) was $\$ 17.746 \mathrm{~m}$.
Financial Performance
Financial profile
2024 maturities completely refinanced - 60% of 2025 maturities covered by pro-forma excess cash
Maturity Profile ${ }^{1}$
Average debt maturity
years
Highlights
- All 2024 maturities refinanced - opportunistic refinancing of the 2025 maturities now in focus
- Upcoming secured maturities in 2025 reduced to $c € 458 \mathrm{~m}$ after early redemption of $c € 100 \mathrm{~m}$
- Convertible bond in the amount of $€ 400 \mathrm{~m}$ due in September 2025
- Undrawn RCFs in the amount of $€ 750 \mathrm{~m}$ as well as an unused CP program of $€ 600 \mathrm{~m}$
- Robust liquidity position of $>€ 350 \mathrm{~m}^{2}$
- $60 \%$ of the 2025 maturities already covered with cash and cash from sales proceeds ( $>€ 500 \mathrm{~m}$ ), i.e. next maturities in September 2025
- Average debt maturity of 6.0 years with average interest cost of $1.66 \%$
- Average interest hedging rate c.94\%
- LTV at $49.0 \%$ as of 30 June 2024 (pro-forma $48.3 \%)^{2}$
- Interest Coverage Ratio (ICR) at 4.3x
Guidance 2024: AFFO improvement to €190m - €210m
LEG
Investments increase to $34 € / \mathrm{sqm}$ to optimise operational results
Guidance 2024 ${ }^{1}$
| AFFO | UPDATE | €190m-210m (before: $€ 180 \mathrm{~m}-200 \mathrm{~m}$ ) | |
|---|---|---|---|
| Adj. EBITDA margin | c.77\% | ||
| I-f-I rent growth | $3.2 \%-3.4 \%$ | ||
| Investments | UPDATE | c.34€/sqm (before: c.32€/sqm) | |
| LTV | Medium-term target level max. 45\% | ||
| Dividend | 100\% AFFO as well as a part of the net proceeds from disposals | ||
| Disposals | Not reflected ${ }^{1}$ | ||
| Environment | 2024-2027 | Installation and commissioning of $\mathbf{2 , 0 0 0}$ air-to-air heat pumps in 2027 in LEG's portfolio and in third-party portfolios | |
| 2024 | 4,000 tonnes $\mathrm{CO}_{2}$ reduction from modernisation projects and customer behaviour change | ||
| Social | 2024-2027 | Acceleration of the processing time of total LEG tenant complaints by $\mathbf{1 0 \%}$ by 31 December 2027 based on the averaged processing time of resolved complaint tickets from March 2024 and September 2024 | |
| 2024 | Use of 100 LEG staff hours to design, organise or implement intercultural projects until 31 December 2024 | ||
| Governance | 2024 | 85\% of TSP employees, 99\% of employees in staff holding LEG group companies have completed the "IT Security" training until 31 December 2024 |
FFO I/ AFFO calculation
| €m | H1-2024 | H1-2023 |
|---|---|---|
| Net cold rent | 427.9 | 414.3 |
| Profit from operating expenses | $-10.7$ | $-9.8$ |
| Personnel expenses (rental and lease) | $-57.5$ | $-52.6$ |
| Allowances on rent receivables | $-7.9$ | $-9.7$ |
| Other income (rental and lease) | $-5.9$ | $-5.0$ |
| Non-recurring special effects (rental and lease) | 4.3 | 2.2 |
| Net operating income (recurring) | 350.2 | 339.4 |
| Net income from other services (recurring) | $-0.5$ | 17.5 |
| Personnel expenses (admin.) | $-18.6$ | $-15.0$ |
| Non-personnel operating costs | $-11.5$ | $-12.1$ |
| Non-recurring special effects (admin.) | 4.2 | 5.4 |
| Administrative expenses (recurring) | $-25.9$ | $-21.7$ |
| Other income (admin.) | 0.1 | 0.0 |
| EBITDA (adjusted) | 323.9 | 335.2 |
| Net cash interest expenses and income FFO I | $-67.9$ | $-63.0$ |
| Net cash income taxes FFO I | $-0.1$ | $-2.7$ |
| Maintenance (externally-procured services) | $-50.2$ | $-47.6$ |
| Subsidies recognised in profit or loss | 7.4 | - |
| Own work capitalised | 6.3 | 5.9 |
| FFO I (including non-controlling interests) | 219.4 | 227.8 |
| Non-controlling interests | $-1.5$ | $-1.8$ |
| FFO I (excluding non-controlling interests) | 217.9 | 226.0 |
| FFO II (including disposal of investment property) | 216.6 | 222.7 |
| Capex (recurring) | $-108.2$ | $-107.4$ |
| AFFO (capex-adjusted FFO I) | 109.7 | 118.6 |
Net cold rent
- $+€ 13.6 \mathrm{~m}$ or $+3.3 \%$ driven by rent increases
Personnel expenses (rental and lease; admin)
- Increase mainly driven by higher wages and one-time inflation compensation payment in Q1 ( $€ 3.9$ m treated as non-recurring special effect)
Net income from other services (rec.)
- Lower income due to absence of positive effects from forward sale of green electricity ( $€ 16.0$ m yoy AFFO impact)
Net cash interest expenses and income
- Moderate increase $(-€ 4.9 \mathrm{~m})$ due to refinancings partly offset by higher cash interest income
Investments (maintenance and capex)
- Lower level in previous year, steering adjusted to equally spread expenses over the four quarters of 2024
Subsidies
- Subsidies expected to be in a range of €20 - 25m for full year 2024
EPRA NRV - NTA - NDV
€m
| EPRA NRV - diluted |
30.06.2024 | 31.12.2023 | |||
|---|---|---|---|---|---|
| EPRA NTA ${ }^{1}$ | EPRA NDV | EPRA NRV | EPRA NTA | ||
| - diluted | - diluted | - diluted | - diluted | ||
| IFRS equity attributable to shareholders (before minorities) | 7,235.2 | 7,235.2 | 7,235.2 | 7,463.2 | 7,463.2 |
| Hybrid instruments | 28.5 | 28.5 | 28.5 | 28.5 | 28.5 |
| Diluted NAV (at Fair Value) | 7,263.7 | 7,263.7 | 7,263.7 | 7,491.7 | 7,491.7 |
| Deferred tax in relation to fair value gains of IP and deferred tax on subsidised loans and financial derivatives | 1,926.4 | 1,923.7 | - | 1,943.4 | 1,935.2 |
| Fair value of financial instruments | $-53.9$ | $-53.9$ | - | $-42.0$ | $-42.0$ |
| Intangibles as per the IFRS balance sheet | - | $-4.3$ | - | - | $-5.0$ |
| Fair value of fixed interest rate debt | - | - | 839.9 | - | - |
| Deferred taxes of fixed interest rate debt | - | - | $-183.6$ | - | -156.7 |
| Estimated ancillary acquisition costs (real estate transfer tax) | 1,739.7 | - | - | 1,759.4 | - |
| NAV | 10,875.9 | 9,129.2 | 7,920.0 | 11,152.5 | 9,379.9 |
| Fully diluted number of shares | 74,469,665 | 74,469,665 | 74,469,665 | 74,109,276 | 74,109,276 |
| NAV per share (€) | 146.04 | 122.59 | 106.35 | 150.49 | 126.57 |
31.12.2023
- diluted
74,109,276
126.57
109.01
Balance sheet
| €m | 30.06.2024 | 31.12.2023 |
|---|---|---|
| Investment property | 17,745.7 | 18,101.8 |
| Other non-current assets | 544.3 | 559.0 |
| Non-current assets | 18,290.0 | 18,660.8 |
| Receivables and other assets | 328.2 | 287.4 |
| Cash and cash equivalents | 225.6 | 277.5 |
| Current assets | 553.8 | 564.9 |
| Assets held for sale | 229.3 | 77.9 |
| Total Assets | 19,073.1 | 19,303.6 |
| Equity | 7,260.2 | 7,488.2 |
| Non-current financing liabilities | 7,973.7 | 8,004.4 ${ }^{1}$ |
| Other non-current liabilities | 2,060.8 | 2,102.3 ${ }^{1}$ |
| Non-current liabilities | 10,034.5 | 10,106.7 ${ }^{1}$ |
| Current financing liabilities | 1,355.1 | $1,371.4^{1}$ |
| Other current liabilities | 423.3 | $337.3^{1}$ |
| Current liabilities | 1,778.4 | 1,708.7 ${ }^{1}$ |
| Total Equity and Liabilities | 19,073.1 | 19,303.6 |
1 Previous year's figure adjusted.
Equity ratio: 38.1\% (FY-2023: 38.8\%)
Investment property
- Capex: $+€ 105.6 \mathrm{~m}$
- New construction: $+€ 32.8 \mathrm{~m}$
- Revaluation: -€293.4m
- Reclassification for assets held for sale (IFRS 5): -€201.1m
Receivables and other assets
- Increase driven by deferral of property tax and operating expenses; partly offset by lower rent receivables
Cash and cash equivalents
- Operating activities: $+€ 278.0 \mathrm{~m}(+5.2 \%)$
- Investing activities: -€111.2m
- Financing activities: -€218.7m
(including dividend of -€153.2m)
Current financing liabilities
- IAS 1 amendments led to a shift in maturities of financial liabilities and the embedded derivatives of convertibles from medium to short-term ( $€ 928.7 \mathrm{~m}$ );
see slide 42 for details
Loan to Value
$\epsilon_{\text {m }}$
Financial liabilities
Excluding lease liabilities (IFRS 16)
Cash \& cash equivalents ${ }^{1}$
Net Debt
Investment properties
Properties held for sale
Participation in other residential companies
Property values
Loan to Value (LTV) in \%
| 30.06.2024 | 31.12.2023 |
|---|---|
| 9,328.8 | 9,375.8 |
| 13.9 | 15.9 |
| 355.9 | 405.5 |
| 8,959.0 | 8,954.4 |
| 17,745.7 | 18,101.8 |
| 229.3 | 77.9 |
| 321.9 | 340.1 |
| 18,296.9 | 18,519.8 |
| 49.0 | 48.4 |
Loan to Value
- Increase by 60bps to $49.0 \%$ ytd, mainly due to devaluation of portfolio by $€ 293.4 \mathrm{~m}$
- Decrease of cash and cash equivalents by $€ 49.6 \mathrm{~m}$ (dividend payment of $€ 153.2 \mathrm{~m}$ )
- Pro-forma LTV of $48.3 \%{ }^{2}$
Participation in other residential companies
- BCP stake ( $\mathbf{3 5 . 7 \%}$ ) included with market value of $€ 150.1 \mathrm{~m}(-€ 18.2 \mathrm{~m}$ ytd) based on a share price of $€ 54.46$ at Tel Aviv Stock Exchange as at 30 June 2024 ( $€ 61.04$ as at 31 Dec 2023)
Income statement
| €m | H1-2024 | H1-2023 |
|---|---|---|
| Net operating income | 303.1 | 286.9 |
| Net income from the disposal of investment property | $-1.4$ | $-0.9$ |
| Net income from the valuation of investment property | $-293.4$ | $-1,496.1$ |
| Net income from the disposal of real estate inventory | $-0.1$ | $-0.1$ |
| Net income from other services | $-0.6$ | 17.2 |
| Administrative and other expenses | $-31.8$ | $-28.7$ |
| Other income | 0.2 | 0.1 |
| Operating earnings | $-24.0$ | $-1,221.6$ |
| Net finance costs | $-87.0$ | $-73.4$ |
| Earnings before income taxes | $-111.0$ | $-1,295.0$ |
| Income tax expenses | 25.5 | 266.9 |
| Consolidated net profit | $-85.5$ | $-1,028.1$ |
Net operating income
- Increase of $+€ 16.2 \mathrm{~m}$ mainly driven by higher net cold rent
Net income from valuation
- Significantly lower devaluation (-1.6\% for residential portfolio) compared to H1-2023 (-7.4\%)
Net income from other services
- Decline due to absence of positive effects from forward sale of green electricity ( $€ 16.0 \mathrm{~m}$ yoy AFFO impact)
Net finance cost
- Average cost of debt increased by 26bps yoy to 1.66\% (H1-2023: 1.40\%)
- Increase in interest income by $€ 6.4 \mathrm{~m}$
- Devaluation of stake in BCP
Income tax expenses
- Effective Group tax rate of 21.9\% (H1-2023: 21.1\%); lower deferred tax impact due to lower devaluations of assets
Latest IAS 1 amendments lead to reclassification of liabilities
No effect on economic maturities, no effect on covenants, no effect on LTV - mere change in disclosure
CHANGE IN
IAS 1
IMPACT ON BALANCE SHEET
NO
IMPACT ON MATURITIES
- Shift in the maturities of financial liabilities from the medium-term to the short-term range
- According to the amendment of IAS 1.69 in conjunction with IAS 1.76 A/B, the liabilities from convertible bonds were reclassified as short-term debt, as a conversion of the instruments is technically possible at any time - regardless the economic rationale
- Changes reflect exclusively the two convertible bonds
- The IAS 1 amendment leads to a shift of $€ 928.7 \mathrm{~m}$ (previous year: $€ 925.7 \mathrm{~m}$ ) from medium-term to short-term financial liabilities, i.e. including to notional and the embedded option
- The reclassification according to IAS 1 has no impact on the contractually agreed residual maturities
- Therefore, the maturity dates of the 2017/2025 €400m as well as the 2020/2028 €550m convertible bonds remain unchanged. The contractual maturities are reflected in the maturity profile on page 21 of this presentation.
Contractually agreed maturities of financing liabilities from real estate financing according to IAS 1 before amendments
| Remaining term | Total | |||
|---|---|---|---|---|
| < 1 year | $>1$ to 5 years | $>5$ years | ||
| 30.06.2024 | 419.5 | 4,855.4 | 3,946.0 | 9,220.9 |
| 31.12.2023 | 438.5 | 4,450.7 | 4,375.7 | 9,264.9 |
IAS 1 maturities of financing liabilities from real estate financing
| Remaining term | ||||
|---|---|---|---|---|
| € million | < 1 year | $>1$ to 5 years | $>5$ years | Total |
| 30.06.2024 | 1,548.3 | 3,926.6 | 3,946.0 | 9,220.9 |
| 31.12.2023 | 11,364.2 | 13,525.0 | 4,375.7 | 9,264.9 |
| *previous year's figures adjusted |
German residential market
A highly fragmented market - dominated by private owners
Professional owners $34 \%$
$66 \%$ Private owners
Demand - supply imbalance will persist
New supply continues to erode while population will remain at high level
German population at highest level ever in 2023
in million
New apartments completed
No. of building permissions for apartments continues to drop
in $\%$ vs previous year month
LEG's portfolio comprises of c.166,000 units
Well balanced portfolio with significant exposure also in target markets outside NRW
As at 30 June 2024
Total portfolio ${ }^{1}$
(c.166,000 units)
by units
by GAV
€m $20 \%$
by rent regulation
Normal vs. tense markets ${ }^{3}$
Portfolio KPIs
Rent increases alongside vacancy reduction
Market split (GAV)
$\%$
High-growth
Stable
Higher-yielding
In-place rent, I-f-I
High-growth
Stable
Higher-yielding
Vacancy, I-f-I
$\%$
High-growth
Stable
Higher-yielding
Markets
| Total portfolio | High-growth | Stable | Higher-yielding | |||||
|---|---|---|---|---|---|---|---|---|
| HI-2024 | $\Delta$ (YOY) | HI-2024 | $\Delta$ (YOY) | HI-2024 | $\Delta$ (YOY) | HI-2024 | $\Delta$ (YOY) | |
| # of units | 165,823 | $-0.6 \%$ | 49,789 | $-0.3 \%$ | 66,672 | $-0.1 \%$ | 49,362 | $-1.7 \%$ |
| GAV residential assets ( $€ \mathrm{~m}$ ) | 16,772 | $-5.1 \%$ | 7,103 | $-6.0 \%$ | 6,346 | $-3.8 \%$ | 3,323 | $-5.7 \%$ |
| In-place rent $\left(\mathrm{m}^{2}\right), \mathrm{I}-\mathrm{f}-\mathrm{I}$ | €6.72 | $+2.9 \%$ | €7.57 | $+3.0 \%$ | €6.47 | $+3.0 \%$ | €6.14 | $+2.5 \%$ |
| EPRA vacancy, I-f-I | 2.5\% | -10bps | 1.5\% | -30bps | 2.2\% | -20bps | 4.3\% | 0bps |
Rent regulation in Germany
From-tense markets
-110,000 units
Rent increase
- Max. $\mathbf{2 0} \%$ within $\mathbf{3}$ years
- Max. increase to local reference rent ${ }^{1}$
Modernisation levy
- Annual rent can be increased by $\mathbf{8 \%}$ of modernisation costs
- Limit: $€ \mathbf{3}$ per sqm (rent/sqm/month $>€ \mathbf{7}$ ) or $€ \mathbf{2}$ per sqm (rent/sqm/month $<€ \mathbf{7}$ ) over $\mathbf{6}$ years
No regulations
Rent restricted units
$19 \%$ of LEG's units ( 31,000 units)
Cost rent adjustment
- Every third year (i.e. last was in 2023, next will be in 2026)
- After full repayment of the underlying subsidised loan, the residential unit gets out of rent restriction and regular code applies
- In the case of early repayment, rent restriction continues for another 10 years (tenant protection); then regular code for free-financed units applies
Top locations upcoming rent tables (MSP - Mietspiegel)
Offering the basis for further growth
| Location | # Residents | LEG market segment |
# LEG free financed units |
\% of total free financed portfolio |
Current MSP type |
Current MSP valid since |
New MSP expected type (method) |
New MSP expected time of update |
|---|---|---|---|---|---|---|---|---|
| Neuss | $>100,000$ | High-growth | 668 | $0.5 \%$ | Simple | 01/2023 | Qualified (Bottom-Up) | 06/2024! |
| Bonn | $>100,000$ | High-growth | 1,527 | $1.1 \%$ | Qualified | 06/2022 | Qualified (Bottom-Up) | 07/2024! |
| Detmold | $>50,000$ | Stable | 1,117 | $0.8 \%$ | Qualified | 12/2021 | Qualified (Update) | 07/2024! |
| Essen | $>100,000$ | Stable | 3,205 | $2.4 \%$ | Qualified | 08/2022 | Qualified (Bottom-Up) | 08/2024 |
| Gladbeck | $>50,000$ | Higher-yielding | 678 | 0.5 | Qualified | 08/2022 | Qualified (Update) | 08/2024 |
| Braunschweig | $>100,000$ | High-growth | 1,987 | $1.5 \%$ | Qualified | 09/2022 | Qualified (Update) | 09/2024 |
| Herne | $>100,000$ | Higher-yielding | 2,925 | 2.2 | Simple | 01/2023 | Qualified (Bottom-Up) | 11/2024 |
| Remscheid | $>100,000$ | Higher-yielding | 1,521 | $1.1 \%$ | Qualified | 12/2022 | Qualified (Bottom-Up) | 12/2024 |
| Wuppertal | $>100,000$ | Stable | 1,350 | $1.0 \%$ | Qualified | 12/2022 | Qualified (Bottom-Up) | 12/2024 |
Subsidised units account for around 19\% of the portfolio
Reversionary potential amounts to $55 \%$ on average
Rent potential subsidised units
- Until 2028, around 19,000 units will come off rent restriction
- Units show significant upside to market rents
- The economic upside can theoretically be realised the year after restrictions expire subject to general legal and other restrictions ${ }^{4}$
Around 60\% of units to come off restriction until 2028
[^0]
[^0]: 1 Average rent value that could theoretically be achieved, not implying that an adjustment of the in-place rent to the market rent is feasible, as stringent legal and contractual restrictions regarding rent increases exist.
245 years $=2024-2028,6-10$ years $=2029-2033,+10$ years $=2034 \mathrm{ff} \quad 3$ Rent upside is defined as the difference between LEG in-place rent and market. 4 For example rent increase cap of $10 \%$ (tense markets) or $20 \%$ for three years.
New construction - finishing the last projects - small in volume LEG
Small size of projects and investment volume, cash potential from built to sell
Completions
number of units per year
Development on own land
Acquisitions (3rd party developer)
396
0
2024e
Investment volume per year
€m
35
H1-2024
H2-2024e
25
2025e
2026e
Remaining completions until 2025
396 units
Remaining investment volume until 2025
€53m
Carbon Balance Sheet 2023
$27.3 \mathrm{CO}_{2} \mathrm{ekg} / \mathrm{sqm}$ on a market based and climate adjusted basis
Carbon balance sheet
- Bottom-up approach
- BAFA-factors in line with GHG-protocol
- Scope 1 and scope 2
- $27.3 \mathrm{CO}_{2} \mathrm{ekg} / \mathrm{sqm}$ based on heating energy
Heat energy by source ( $100 \%$ of portfolio)
Gas
District heating
Heating oil
Electricity for heating
Coal (local heating)
Other
$68.4 \%$
27.9\%
2.3\%
0.7\%
0.7\%
0.1\%
- Based on actual consumption 2022 ( $61 \%$ actuals, $37 \%$ energy performance certificates (EPC), $2 \%$ estimates)
- Extrapolated for 2023
- Limited assurance by Deloitte
Reflecting our roots
Energy efficiency of our portfolio of $144 \mathrm{kWh} / \mathrm{sqm}$ is a function of corporate DNA \& history:
- Providing affordable housing in post-war Germany
LEG portfolio by construction years vs. LEG market
- before 1948 ■ 1949 - 1978 $\quad \equiv 1979$ - 1994 ■ 1995 - 2009 ■ 2010-
Distribution by energy efficiency classes LEG
On track for our target towards climate neutrality
LEG
Nudging initiative pays-off and leads to strong and cost-effective contribution
- LEG fully committed to German Climate Change Act to achieve climate neutrality by 2045
- Aligned with strategy via STI/ LTIcomponent of compensation scheme
- $\mathrm{CO}_{2}$ reduction in 2023 by $2 \%$ to 32.6 kg (location based) and by $4 \%$ to 27.3 kg (market based)
- Key driver:
- 8,728: $\mathrm{CO}_{2}$ savings of which
- 6,011t from nudging-effects
- 2,717t from energetic refurbishments
- 2023 and 2024 STI component: 4,000 tons $\mathrm{CO}_{2}$ reduction from modernisation projects and customer behavior change
- 2023-26 LTI component envisages a 10\% efficiency improvement for investments undertaken
Among the best in class
Reflecting LEG's strong sustainability commitment
LEG
Sufficient bond covenants headroom
Unsecured financing covenants
| Covenant | Threshold | H1-2024 |
|---|---|---|
| Consolidated Adjusted EBITDA / Net Cash Interest |
$\geq 1.8 \times$ | $4.3 \times{ }^{1}$ |
| Unencumbered Assets / Unsecured Financial Indebtedness |
$\geq 125 \%$ | $164.0 \%$ |
| Net Financial Indebtedness / Total Assets |
$\leq 60 \%$ | $47.7 \%$ |
| Secured Financial Indebtedness / Total Assets | $\leq 45 \%$ | $18.8 \%$ |
Ratings (Moody's)
| Type | Rating | Outlook |
|---|---|---|
| Long Term Rating | Baa2 | Stable |
| Short Term Rating | P-2 | Stable |
Financing mix
Fixed interest
Derivatives
Variable interest
$87.2 \%$
$\square$ $7.2 \%$
$\square$ $5.6 \%$
Key financial ratios
| H1-2024 | H1-2023 | |
|---|---|---|
| Net debt / adj. EBITDA ${ }^{2}$ | $13.7 x$ | $14.0 x$ |
| LTV | $49.0 \%$ | $46.6 \%$ |
| Secured Debt / Total Debt | $39.5 \%$ | $37.2 \%$ |
| Unencumbered Assets / Total Assets | $41.2 \%$ | $39.8 \%$ |
| Equity ratio | $38.1 \%$ | $40.2 \%$ |
[^0]
[^0]: 1 Based on the adjusted EBITDA definition effective until business year 2022. Based on the adjusted EBITDA definition effective since business year 2023, i.e. excluding maintenance (externally-procured services) and own work capitalized, KPI is 4.9x.
2 Average net debt last four quarters / adjusted EBITDA LTM
Capital market financing
Corporate bonds
| Maturity | Issue Size | Maturity Date | Coupon | Issue Price | ISIN | WKN |
|---|---|---|---|---|---|---|
| 2019/2027 | $€ 500 \mathrm{~m}$ | 28 Nov 2027 | 0.875\% p.a. | 99.356\% | DE000A254P51 | A254P5 |
| 2019/2034 | $€ 300 \mathrm{~m}$ | 28 Nov 2034 | 1.625\% p.a. | 98.649\% | DE000A254P69 | A254P6 |
| 2021/2033 | $€ 600 \mathrm{~m}$ | 30 Mar 2033 | 0.875\% p.a. | 99.232\% | DE000A3H3JU7 | A3H3JU |
| 2021/2031 | $€ 700 \mathrm{~m}^{1}$ | 30 Jun 2031 | 0.750\% p.a. | 99.502\% | DE000A3E5VK1 | A3E5VK |
| 2021/2032 | $€ 500 \mathrm{~m}$ | 19 Nov 2032 | 1.000\% p.a. | 98.642\% | DE000A3MQMD2 | A3MQMD |
| 2022/2026 | $€ 500 \mathrm{~m}$ | 17 Jan 2026 | 0.375\% p.a. | 99.435\% | DE000A3MQNN9 | A3MQNN |
| 2022/2029 | $€ 600 \mathrm{~m}^{2}$ | 17 Jan 2029 | 0.875\% p.a. | 99.045\% | DE000A3MQNP4 | A3MQNP |
| 2022/2034 | $€ 500 \mathrm{~m}$ | 17 Jan 2034 | 1.500\% p.a. | 99.175\% | DE000A3MQNQ2 | A3MQNQ |
Financial
Covenants
Adj. EBITDA/ net cash interest $\geq 1.8 x$
Unencumbered assets/ unsecured financial debt $\geq 125 \%$
Net financial debt/ total assets $\leq 60 \%$
Secured financial debt/ total assets $\leq 45 \%$
Capital market financing
LEG
Convertible bonds
| 2017/2025 | 2020/2028 | |
|---|---|---|
| Issue Size | €400m | €550m |
| Term / Maturity Date |
8 years/ | 8 years/ |
| 1 September 2025 | 30 June 2028 | |
| Coupon | 0.875\% p.a. | 0.400\% p.a. |
| (semi-annual payment: | (semi-annual payment: | |
| 1 March, 1 September) | 15 January, 15 July) | |
| # of shares | 3,531,959 | 3,580,370 |
| Initial Conversion Price | €118.4692 | €155.2500 |
| Adjusted Conversion Price ${ }^{1}$ | €113.2516 | €153.6154 |
| (since 2 June 2022) | (since 7 June 2022) | |
| Issuer Call | From 22 September 2022, if LEG | From 5 August 2025, if LEG share |
| share price $>130 \%$ of the then | price $>130 \%$ of the then applicable | |
| applicable conversion price | conversion price | |
| ISIN | DE000A2GSDH2 | DE000A289T23 |
| WKN | A2GSDH | A289T2 |
LEG share information
Basic data
Market segment
Stock Exchange
Total no. of shares
Ticker symbol
ISIN
Indices
Shareholder structure ${ }^{1}$
BlackRock
MFS
Other free float
$11.3 \%$
$10.0 \%$
$78.7 \%$
Share of (07.08.2024; indexed; in \%; 01.02.2013 = 100)
Share price and market capitalisation since IPO
Financial calendar
For our detailed financial calendar, please visit https://ir.leg-se.com/en/investor-relations/financial-calendar
IR Contact
Investor Relations Team
Frank Kopfinger, CFA
Head of Investor Relations \& Strategy
Tel: +49 (0) 2114568 - 550
E-Mail: [email protected]
Karin Widenmann
Senior Manager Investor Relations
Tel: +49 (0) 2114568 - 458
E-Mail: [email protected]
For questions please use [email protected]
Elke Franzmeier
Corporate Access \& Events
Tel: +49 (0) 2114568 - 159
E-Mail: [email protected]
Gordon Schönell, CIIA
Senior Manager Investor Relations
Tel: +49 (0) 2114568 - 286
E-Mail: [email protected]