LEG Immobilien SE Elevator Pitch | Focused Affordable Housing in Germany

LEG Immobilien SE – Affordable Housing with Impact and Long-Term UpsidePresented by Frank Kopfinger, Head of Investor Relations and StrategyIn this compelling elevator pitch on seat11a.com, Frank Kopfinger, Head of Investor Relations and Strategy at LEG Immobilien SE, delivers a clear and data-backed insight into one of Germany’s leading residential real estate companies.🏢 Who is LEG Immobilien SE? - LEG is Germany’s second-largest pure-play residential real estate company, managing a portfolio of approx. 172,000 units and housing nearly 500,000 tenants. - LEG operates exclusively in Germany, with a strong regional focus: ~80% of assets are located in North Rhine-Westphalia (NRW) — the country’s most populous state and an economic powerhouse accounting for 22% of German GDP. - LEG’s strategy is laser-focused on a single asset class: affordable living — a segment with high societal relevance and strong structural demand.💡 Core Value Proposition: Affordable Housing with Impact - Average tenant rent: €6.90/m² or about €440/month per household - 17% of units are rent-restricted, often with state subsidies - LEG’s approach serves a vital role in tackling Germany’s housing shortage and supports lower-income households while delivering consistent returns - The portfolio is attractively valued at €1,656/m², significantly below estimated replacement costs of €4,000–5,000/m² (excluding land)💰 Valuation & NAV Opportunity - Net Tangible Assets (NTA) per share stand at ~€131 - Compared to the current market price of €73, this represents a ~44% discount - Kopfinger notes that this valuation gap reflects past interest rate-driven headwinds, but believes the worst is behind them📈 Crisis Management: From Defensive to Offensive - LEG navigated recent macro pressures with clear, cash-focused steering and strict financial discipline: - Shifted core KPI to AFFO (Adjusted Funds from Operations), the sector’s proxy for free cash flow - Suspended dividend in FY 2022 to conserve capital - Issued scrip dividends in 2023 and 2024, preserving over €100 million in cash - Sold >5,700 non-core units since 2023 for >€550 million, often at or above book value - Halted new development pipeline — last new units to be completed by the end of 2025 - Opportunistically refinanced debt, achieving an average financing cost of 1.54% - Maintained LTV (Loan-to-Value) at 47.6%, with further deleveraging underway🏗️ Growth Outlook: Structural Tailwinds Remain Strong - Germany’s housing sector remains severely undersupplied — and LEG is well-positioned to benefit: - The supply-demand imbalance continues to widen, with construction output declining - LEG expects further organic rent growth, driven by: - Ongoing market rent adjustments - Cost rent adjustments in subsidised units (2026) - Expiry of rent restrictions on ~16,000 units by 2028, creating value uplift potential - LEG also diversifies income through services: energy, multimedia, and maintenance🔄 Capital Allocation: Predictable and Yield-Oriented - LEG’s dividend policy is anchored on 100% of AFFO payout - Also shares proceeds from disposals of non-core assets - In 2025, LEG narrowed its AFFO guidance to €215–225 million, indicating an expected YoY increase of ~10% at the midpoint🎯 Strategic Positioning: A Play on Resilience and Social Relevance - LEG delivers high earnings stability across the cycle - FFO I and AFFO metrics in 2025 are already back at pre-crisis levels - Despite macro headwinds, LEG has maintained operational profitability, preserved liquidity, and defended its balance sheet - The portfolio remains well-balanced across regions, with 67% in normal rent markets and 33% in tense markets — limiting regulatory downsideT&C www.seat11a.com/legal