Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LEG Immobilien SE (LEGIF, Financial) increased its AFFO guidance to EUR190 million to EUR210 million, indicating a strong 10% increase in AFFO per share year on year.
- The company achieved a record low vacancy rate of 2.5%, reflecting effective operational management.
- LEG Immobilien SE (LEGIF) reported a 3.3% increase in net cold rent, driven by a 2.9% increase in in-place rent on a like-for-like basis.
- The company successfully disposed of EUR285 million worth of assets year-to-date, demonstrating strong progress in its disposal strategy.
- LEG Immobilien SE (LEGIF) maintains a strong ESG rating, being listed as number six within Sustainalytics' global real estate coverage.
Negative Points
- AFFO decreased by 7.5% year over year to EUR109.7 million, impacted by lower contributions from green electricity production and higher interest payments.
- The company's LTV remains above its mid-term target of 45%, currently standing at 48.3%, indicating a need for further deleveraging.
- Despite progress in disposals, the company faces challenges in achieving its LTV target, potentially requiring additional asset sales.
- The devaluation cycle, although moderating, resulted in a 1.6% decline in property values, impacting the company's financial metrics.
- Higher personnel costs and increased operating expenses contributed to a decline in adjusted EBITDA by 3.4%.
Q & A Highlights
Q: Can you provide expectations for disposals for the remainder of the year and details on investment plans for the mixed-use scheme?
A: We are marketing around 3,000 units for disposal, including new developments and lower-end assets. We expect to make significant progress on these disposals as the transaction market opens up. Regarding the mixed-use scheme, the largest part of the additional investment is a single-digit million number, but we cannot provide precise figures due to ongoing negotiations with potential tenants. - Lars Von Lackum, CEO
Q: Why did a recent disposal not complete, and how does this affect your CapEx plans?
A: The disposal fell through because the buyer could not secure financing. We decided to reinvest in the hotel complex due to strong interest from potential tenants, which we learned during the process. This investment is expected to stabilize the asset and increase shareholder value. - Lars Von Lackum, CEO
Q: How do you plan to achieve your mid-term LTV target of 45%?
A: We aim to stabilize and reduce our LTV through disposals and retained earnings. We are committed to achieving the 45% target within a timeframe of more than 12 months but less than five years. Additional disposals beyond the current 3,000 units may be considered to reach this goal. - Lars Von Lackum, CEO
Q: Can you provide a range for disposal yields and explain the focus on gross yield comparisons?
A: The disposal yields range from 9% to 33% net cold rent multipliers, reflecting the quality spectrum of assets sold. We focus on gross yield comparisons because we do not have insight into buyers' internal calculations, and gross yield is the standard reference in negotiations. - Lars Von Lackum, CEO
Q: What is the status of your BCP stake, and do you consider it accretive?
A: Our initial approach was to fully acquire BCP, but due to asset devaluation, we could not execute the call option on shares. We continue to monitor the situation closely, but currently, there is no change in our minority position. - Lars Von Lackum, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
