Thursday, 12 November 2026
German residential property company LEG Immobilien SE reported an increase in rental income and adjusted operating earnings during the first nine months of 2026, supported by higher rents and lower vacancy across its housing portfolio. The company also confirmed its full-year financial targets and issued earnings guidance for 2027.
Adjusted funds from operations after capital expenditure (AFFO) reached €190.1 million between January and September, an increase of 4.9% compared with €181.3 million during the same period in 2025. Funds from operations before capital expenditure (FFO I) remained broadly unchanged at €370 million, while recurring net operating income increased by 5.2% to €607.1 million.
Rental income excluding service charges rose by 3.6% to €712.4 million, compared with €687.7 million a year earlier. On a comparable-property basis, rents increased by 3.9%, including a contribution of 0.5 percentage points from adjustments to regulated rents within the subsidised housing portfolio.
The company managed 170,796 residential units at the end of September, compared with 171,781 a year earlier. Average monthly rent on a comparable-property basis reached €7.29 per sq m, equivalent to approximately €460 for an apartment measuring 63 sq m. The comparable-property vacancy rate declined from 2.7% to 2.5%, reflecting continued demand for rental accommodation.
Expenditure on maintenance and modernisation totalled €292.2 million during the first nine months. LEG expects investment in its existing properties to exceed €35 per sq m for the full year, with spending directed towards building maintenance, technical improvements and energy-related upgrades.
Property disposals remain part of the company’s financial strategy. During 2026, LEG agreed or completed transactions involving approximately 1,300 apartments, with most ownership transfers expected around the end of the year. The company is pursuing a broader disposal programme covering approximately 5,000 residential units, although transaction activity has been affected by slower market conditions.
A separate transaction involved the sale of a 193,000 sq m site in Düsseldorf, known as the Glasmacher property, to a joint venture between Hines and Vastint. The purchase price will be paid in stages as the development progresses, with an additional payment possible if the future residential scheme exceeds an agreed development threshold. Total property sale proceeds agreed during the year amounted to approximately €190 million.
The company’s residential portfolio recorded a gross yield of 4.9% at the end of September, while net tangible assets under EPRA methodology increased to €138.25 per share, compared with €137.14 at the end of 2025. However, LEG expects a negative property valuation adjustment of up to 1% during the second half of 2026, potentially offsetting gains recorded earlier in the year.
The loan-to-value ratio stood at 46.5% at the end of September, compared with 48.3% a year earlier. LEG no longer expects to reduce the ratio to approximately 45% before the end of 2026, citing slower property disposals and anticipated valuation changes. The company intends to continue reducing leverage during 2027.
Average financing costs were 1.82%, with an average remaining debt maturity of 5.4 years. According to the company, existing liquidity and completed financing arrangements are sufficient to cover debt maturities until autumn 2027. Its next bond repayment, amounting to €500 million, falls due in November 2027. Moody’s upgraded LEG’s credit rating from Baa2 to Baa1 with a stable outlook in September.
LEG has also reviewed its activities outside traditional residential property management. The company plans to discontinue RENOWATE, its refurbishment joint venture, after concluding that the business would not achieve its financial objectives. Other activities involving heating systems, building technology and property services will continue.
For the full year 2026, LEG maintained its AFFO forecast of €220 million to €240 million. The company expects comparable rental growth of between 3.8% and 4.0%.
For 2027, management forecasts AFFO of €230 million to €250 million, representing approximately 4% growth when comparing the midpoints of the two annual guidance ranges. Rental growth is expected to moderate to between 2.9% and 3.1%, while investment in existing properties is planned at approximately €35 per sq m.
The results reflect continued rental income growth and relatively low vacancy across Germany’s residential market, alongside the financial constraints associated with property valuations, borrowing costs and slower investment transactions. For LEG, the coming year will involve balancing further rental income growth with portfolio disposals, maintenance expenditure and debt management.
