LEG on target to buy further 10,000 residential units

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The Düsseldorf-based listed housing company LEG Immobilien had its first official annual general meeting as a publicly-owned company earlier this month, six months after being floated on the stock market by previous owner Goldman Sachs.

With shareholders overwhelmingly voting to pass 99% of the resolutions on the table, perhaps the most newsworthy item on the agenda was the resolution to pay out a dividend of €0.41 for the full-year 2012. This puts the company on a dividend yield of more than 4%, with a higher rate expected for full-year 2013, and thus the most generous dividend among its German listed property company peers.

CEO Thomas Hegel announced at the AGM that LEG plans the acquisition of a further 10,000 residential units before end-2014, to add to the company’s existing 94,000 rental properties and 260,000 tenants, which generated rental income of nearly €500m in 2012.

The company was currently looking at nearly 20,000 further units for acquisition, he said, of which several were being actively considered. LEG’s scalable property management platform could integrate between 20,000 and 25,000 new residential units into its structure without having to add any meaningful personnel or organisational costs, he said.

Earlier this month LEG bought a new portfolio of 829 residential units located in Solingen, south-east of Düsseldorf, in a private deal for about €34m. The portfolio generates annual rental income of over €2.6m with an FFO yield of more than 10%. The average rent works out at €4.92 per sqm, and the portfolio has a 6% vacancy rate. More than 450 of the apartments are suitable for the elderly, a segment which LEG has been making special efforts to promote.

This was the company’s third acquisition within two months, totalling 3,500 apartments, and generating an average FFO yield of more than 8%. Hegel stressed at the AGM that the company would not need any fresh capital yet to reach its 2014 expansion goals.