Dusseldorf, 10 March 2019

LEG Immobilien AG: Lars von Lackum to take over as CEO, earnings growth as planned

- Thomas Hegel departs as CEO at the end of the next Annual General Meeting on 29 May 2019. As of 1 June 2019 his successor is Lars von Lackum (CDO)

- Dr. Volker Wiegel to join the Management Board as Chief Operating Officer (COO) with effect from 1 June 2019

- FFO I reaches target range with further growth of 7.9% to EUR 318.6 million

- Like-for-like rent per square metre up 3.0% as forecast

- Adjusted pro forma NAV, which makes the effects of a potential conversion of the 2014/2021 convertible bond even more transparent, rises by 15.4% to EUR 93.40 per share

- Dividend (proposal) to be increased significantly by 16.1% to EUR 3.53 per share

- FFO I forecast confirmed at EUR 338-344 million for 2019 and EUR 356-364 million for 2020

At its meeting today, the Supervisory Board of LEG Immobilien AG appointed Lars von Lackum (currently Chief Digital Officer, CDO, 43) as Chief Executive Officer (CEO) with effect from 1 June 2019. At the same time, the Supervisory Board and Thomas Hegel (who turns 63 in April), CEO of LEG Immobilien AG, agreed that Hegel will step down from the Management Board at the end of the next Annual General Meeting on 29 May 2019. After 13 years at the head of the company, Thomas Hegel agreed this early internal succession in close consultation with the Supervisory Board. He will remain available to the company as an advisor in key areas and will actively support the succession process.

A new appointment was also made to the position of Chief Operating Officer (COO). The Supervisory Board has appointed Dr. Volker Wiegel (42) to the Management Board as COO for a term of three years starting on 1 June 2019. Since 2013, Dr. Volker Wiegel, a lawyer and economist, worked at LEG Immobilien AG as General Counsel and established the Legal, Structure and Organisation department, which is primarily responsible for the ongoing development of operational processes. Prior to joining LEG, Dr. Volker Wiegel worked for the international law firm Sullivan & Cromwell LLP.

The responsibilities of Eckhard Schultz (54) as Chief Financial Officer (CFO) and Deputy Chairman of the Management Board remain unchanged.

"Thomas Hegel has accomplished exceptional work for LEG over the past 13 years. The successful transformation from a state-owned company into a leading MDAX-listed housing company under his management is testament to what he has achieved. Thomas Hegel has earned the particular gratitude of the Supervisory Board," commented Michael Zimmer, Chairman of the Supervisory Board of LEG Immobilien AG. "In ensuring a natural successor in the interests of the company's long-term development, the Supervisory Board is delighted to welcome Lars von Lackum as the new Chief Executive Officer. With his proven expertise in corporate management, his conceptual skills when it comes to corporate development and his transaction experience, Lars von Lackum is predestined for the task of further developing LEG."

"With the appointment of Dr. Volker Wiegel as COO, the Supervisory Board is also laying the foundations for the continued optimisation of its operating processes. Dr. Volker Wiegel has in-depth knowledge of all relevant business processes at LEG and has already successfully enhanced them with his analytical skills in his work for the company to date. In this way, the Supervisory Board is supporting the aim of achieving a further significant improvement in operating efficiency in the coming years," continued Michael Zimmer.

Thomas Hegel: "Over the past decade, LEG has undergone a significant evolution and achieved ambitious targets. I would like to thank all of the employees who made this possible and with whom I have greatly enjoyed working over so many years. Lars von Lackum is the right successor to continue this growth strategy."

As forecast, LEG Immobilien AG closed the 2018 financial year with positive earnings and value development. Key drivers of the positive earnings performance remain structural organic rental growth, effects from acquisitions in core markets and a further decline in interest expenses. Positive fundamental development and the high level of demand for residential properties in investment markets also contributed to the significant increase in the value of the portfolio.

"We achieved our ambitious targets once again and will continue to growth with prudent, value-adding investments in our portfolio as well as acquisitions. We expect our stable, sustainable growth to continue in the coming years," commented Thomas Hegel, CEO of LEG Immobilien AG.

Substantial growth in FFO I
Funds from operations (FFO I), a key performance indicator for the company, amounted to EUR 318.6 million in 2018, thereby increasing by a substantial 7.9% year-on-year as forecast (2017: EUR 295.3 million). FFO I per share was rising accordingly by 7.9% year-on-year to EUR 5.04 on an unadjusted basis (2017: EUR 4.67).

The negative effect of increased costs for craftsmen services was offset by efficiency enhancement measures. Accordingly, the operating EBITDA margin improved slightly once again to 72.3% (2017: 72.1%). We expect to see a further improvement in the operating margin over the coming years.

In the reporting period, in-place rent rose by 3.0% year-on-year on a like-for-like basis to an average of EUR 5.67 per square metre. The rent in the free-financed portfolio increased by as much as 3.9% on a like-for-like basis. Despite slightly higher fluctuation due to modernisation, the like-for-like vacancy rate remained stable year-on-year at 3.3%.

Significant value growth in the property portfolio
EPRA net asset value (not including goodwill) amounted to EUR 96.10 per share as at 31 December 2018 (31 December 2017: EUR 83.81 per share), equating to growth of 15.0%. To ensure the greatest possible transparency in connection with the 2014/2021 convertible bond, the reporting methodology in this area was expanded for the first time. Due to the higher probability of early conversion from 2019 onwards, we want to make the associated economic effects even clearer. Pro forma NAV per share is calculated assuming conversion at the respective reporting date. This figure increased by 15.4% year-on-year to EUR 93.40.

The main factor behind the rise in NAV was the growth in the value of the property portfolio, which appreciated by 8.2% in 2018. This was driven by positive operational performance as well as the high level of demand for German residential properties. The value of the property portfolio corresponds to an attractive gross rental yield of 5.5% and a value of EUR 1,198 per square metre.

Significant increase in dividend planned
Based on the positive business performance and the planned increase in the distribution ratio from 65% to 70% of FFO I starting from the 2018 financial year, the Management Board and Supervisory Board will propose a dividend of EUR 3.53 per share to the Annual General Meeting. This corresponds to an increase of 16.1% on the previous year (EUR 3.04 per share).

Strong balance sheet secures low risk profile
As of 31 December 2018, the average remaining term of the company's liabilities was 7.6 years. Average interest costs are at a low 1.58%. This contributes to a high degree of security for stable medium-term earnings and dividend growth, particularly in a scenario of rising market interest rates.

Net debt in relation to property assets (loan-to-value/LTV) amounted to a low level of 40.7% at the end of the quarter. This serves to underline LEG's low risk profile and continues to offer scope for financing the company's future growth.

Outlook for 2019 and 2020 confirmed
In light of the overall good fundamental conditions, LEG is confirming its outlook for FFO I of between EUR 338 million and EUR 344 million in 2019 and between EUR 356 million and EUR 364 million in 2020. This does not take account of any effects from potential acquisitions and disposals.

About LEG
With around 134,000 rental properties and approximately 360,000 residents, LEG is one of Germany's leading listed housing companies. The company has eight branch offices in North Rhine-Westphalia, providing personal local contact. LEG generated rental and lease income of around EUR 767 million in the 2018 financial year.

 

Investor Relations contact:
Burkhard Sawazki
Tel. +49 211 45 68-204
E-mail: burkhard.sawazki@leg.ag

Press contact:
Sabine Jeschke
Tel. +49 211 45 68-325
E-mail: sabine.jeschke@leg-wohnen.de

The press release is available to download at: http://leg.ag/GB-2018-de

Disclaimer
This publication constitutes neither a solicitation to buy nor an offer to sell securities. To the extent that we express forecasts or expectations or make forward-looking statements in this document, these statements can entail known and unknown risks and uncertainties. These statements reflect the intentions, opinions, or current expectations and assumptions of LEG Immobilien AG. The forward-looking statements are based on current planning, estimates and forecasts, which LEG Immobilien AG has made to the best of its knowledge, but that are not a statement on their future accuracy. Actual results and developments can therefore differ materially from the expectations and assumptions expressed.