LEG Immobilien’s Earnings Call Highlights Positive Growth

LEG Immobilien ((DE:LEG)) has held its Q3 earnings call. Read on for the main highlights of the call.

LEG Immobilien’s recent earnings call conveyed a positive sentiment, underscored by robust AFFO growth, a favorable rating outlook, and successful asset disposals. However, the company acknowledged challenges such as lower-than-targeted rental growth and rising interest costs.

AFFO Growth on Track

LEG Immobilien is on a promising path to achieve a 10% AFFO growth for 2025, with projections indicating an additional 5% growth in 2026. This reflects the company’s strong focus on cash generation and maintaining AFFO as its core KPI.

Positive Moody’s Rating Outlook

Moody’s has confirmed LEG Immobilien’s Baa2 rating and revised their outlook to positive. This change recognizes the company’s efforts to protect its balance sheet and prioritize cash management, which is crucial for its financial stability.

Strong Rent Growth

The company reported a net cold rent growth of 6.8%, which significantly contributed to a strong EBITDA margin of 79.2% for the first nine months. This growth is a testament to the company’s effective rental strategies.

Successful Disposals

LEG Immobilien successfully sold over 2,200 units for approximately EUR 100 million. These disposals have been instrumental in reducing the Loan-to-Value (LTV) ratio, aligning with the company’s strategic financial goals.

Challenges in Like-for-Like Rental Growth

Despite the overall positive performance, the like-for-like rental growth was 3.1%, falling short of the target range of 3.4% to 3.6% for the year. This indicates a need for further strategic adjustments to meet rental growth objectives.

Higher Interest Costs

The company faced higher interest costs, with absolute net cash interest rising by EUR 5.9 million due to increased debt and new financings. Although the average interest rate remained low at 1.59%, managing these costs remains a priority.

Decrease in Subsidies

Subsidies are projected to decrease to around EUR 10 million by 2026, attributed to the cessation of new construction activities. This reduction will require the company to adjust its financial strategies accordingly.

Forward-Looking Guidance

During the Q3 2025 Conference Call, LEG Immobilien reaffirmed its guidance for the year and outlined expectations for 2026. The company anticipates a 10% AFFO growth for 2025 and an additional 5% for 2026. It aims to achieve a positive valuation result of 1.5% to 2% for the second half of 2025 and reduce its LTV ratio to 45% by 2026 through strategic disposals. The company also highlighted its investment strategy, spending over EUR 35 per square meter to foster future rent growth.

In summary, LEG Immobilien’s earnings call highlighted a positive outlook with strong AFFO growth and strategic financial management. While challenges such as lower rental growth and rising interest costs were noted, the company’s proactive strategies and positive rating outlook signal a promising future.