LEG Immobilien raises 2025 earnings outlook as AFFO climbs 15% in H1

LEG Immobilien SE reported a solid performance in the first half of 2025, driven by strong demand for affordable housing, portfolio integration, and growth in value-add services. Adjusted funds from operations (AFFO) rose 15.4% year-on-year to €126.6 million, prompting the company to raise its full-year AFFO guidance to between €215 million and €225 million, the upper half of its previous forecast range. This represents expected growth of around 10% compared with 2024. Funds from operations (FFO I) increased 10.7% to €241.2 million and is projected to reach €470 million to €490 million for the year, returning to pre-crisis levels.

Like-for-like net cold rent in the free-financed segment increased 3.7% in the first half of the year, while the overall portfolio saw an average rise of 3.2%, with a year-end target range of 3.4% to 3.6%. The average basic rent stood at €6.93 per sq m, maintaining the company’s focus on affordable housing. The like-for-like vacancy rate declined by 10 basis points to 2.4%.

The integration of more than 9,000 apartments acquired from Brack Capital Partners and the growth of ancillary service revenues contributed significantly to the results. Investment activity increased to €16.51 per sq m, up 7.1% year-on-year, with further growth expected in the second half.

The company’s EPRA net tangible assets (NTA) per share rose 3.9% to €130.87 as of June 30, 2025, supported by a 1.2% portfolio revaluation, exceeding prior expectations and reflecting improving market conditions. The loan-to-value ratio decreased to 47.6%, and average financing costs remained low at 1.54% with a 5.5-year average maturity.

LEG continued its sales programme, transferring ownership of 1,800 units worth €143 million in the first half and expanding planned disposals to 5,000 units, including properties from the BCP portfolio. The company also sold a housing estate in Cologne-Hoehenhaus to Sahle Wohnen GmbH, in line with its exit from project development.

The regulatory environment remains mixed, with the extension of rent control in tight markets expected to slightly limit rent growth, while planned energy efficiency reforms are seen as positive. LEG has also joined the BRYCK Startup Alliance, supporting innovation in the housing sector through federal funding and collaboration with proptech companies.

For 2025, LEG expects further improvements in operational performance, with an EBITDA margin forecast at 77% and continued progress toward its medium-term target of reducing the loan-to-value ratio to a maximum of 45%. Guidance for 2026 will be provided with the nine-month results.