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Investing.com -- Shares of LEG Immobilien AG (ETR:LEGn) (ETR:LEG) dropped by 2.7% as the market responded to the company’s latest earnings report, which showed a 7.2% year-on-year (YoY) increase in cold rents but a more modest like-for-like (LFL) rental growth. The German real estate company reported LFL rental growth of 3% YoY, which is lower than the previous fiscal year’s growth of 4%.
Despite the increase in cold rents to €229.5 million, LEG’s LFL rental growth did not meet the higher rates seen by competitors such as Vonovia and Covivio in the German Residential segment in the first quarter of 2025. LEG anticipates LFL growth for 2025 to be between 3.4% and 3.6%, with market adjustments expected mainly in the third quarter.
The company’s EPRA vacancy rate showed a slight quarter-over-quarter increase to 2.6%, while the LFL vacancy rate rose to 2.4%. However, LEG did see a 3% YoY increase in LFL in-place rent per square meter, reaching €6.87. The recurring net operating income (NOI) rose by 8.7% to €186 million, with an improved NOI margin of 81%.
LEG’s funds from operations (FFO 1) increased by 15.7% YoY to €114.8 million, and the adjusted funds from operations (AFFO) saw a significant 28.3% YoY jump to €62.3 million. The company confirmed its 2025 AFFO guidance, projecting €205 million to €225 million, aligning with analyst estimates.
The company also reported the sale of 1,255 units for a total of €125 million and plans to market an additional 1,350 units. Recurring capital expenditures were up 3.6% to €52 million, and the EPRA Net Tangible Assets per share (NTAps) increased by 2% compared to the end of 2024. LEG expects a 0.5% to 1% increase in asset values in the first half of 2025.
Despite these positive aspects, the loan-to-value (LTV) ratio increased to 48.4%, with the company maintaining a target LTV of 45%.
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