Le mie ricette per la real estate communityLEG Immobilien SE is acquiring around 15,400 apartments from Adler Group with a regional focus on Lower Saxony, Bremen and Schleswig-Holstein. This represents a continuation of its successful expansion strategy and significantly extends its market presence in Northern Germany. The average rent for the purchased properties is EUR 5.93 per square metre and clearly in LEG’s target segment of housing for people on low- and medium-income levels. Following the transfer of the portfolio, 20 percent of the entire properties held by the company will be outside its home market of North Rhine-Westphalia (NRW). With this transaction, LEG is underlining its ambition of providing affordable living in Germany – made in NRW.
In a second transaction LEG purchased a 31 percent stake in the residential company BCP, which runs a highly
attractive German portfolio with more than 12,000 units, thereof 6.8 percent from majority shareholder Adler and
another 24.1 percent from institutional minority investors, that were led by Brosh Capital Partners.
The Adler portfolio in detail
15,362 residential and 185 commercial units will be purchased with total rental space of approximately 960,000 square meters. In 2020, the portfolio generated total rental income of around EUR 65.2 million (in-place rent). The five largest locations/location clusters (in descending order) are Wilhelmshaven, East Friesland, Wolfsburg, Göttingen and Brunswick. Overall, 90 percent of the apartments are located in or in close proximity to regions that are already part of LEG’s current holdings in Northern Germany. The other parts of the portfolio are predominantly located in metropolitan areas in South-Eastern Germany and will be managed by an external management company. Within 12 months, LEG is planning to sell around 1,300 units, which lack major regional links to the rest of LEG’s portfolio.
With an average rent of below EUR 6, the acquired properties offer affordable housing in a range of different markets. As the rest of LEG’s portfolio, they are clustered into high growth, stable and higher yielding markets. According to this clustering, 30 percent of the new units are located in high growth markets, 20 percent in stable markets and about 50 percent in higher yielding markets. Stable and higher yielding markets have experienced a particularly dynamic performance in the last two years. In particular, LEG considerably reduced vacancy rates in higher yielding markets in NRW, partly through targeted neighbourhood development and is now almost fully let with an occupancy rate of 97.4 percent overall. LEG is now looking to increasingly prove its efficient management of units in all market clusters outside NRW. The current occupancy rate of the purchased portfolio is 94.1 percent.
The transfer of the new units is scheduled for 29 December 2021.
With around 145,000 rental properties and approximately 400,000 residents, LEG is one of Germany’s leading listed housing companies. The company has seven branch offices in its home state of North Rhine-Westphalia and is represented by personal local contacts at locations in other states in western Germany.
LEG generated income of around EUR 861 million from its core rental and lease business in the 2020 financial year. As part of the new construction campaign it launched in 2018, LEG wishes to make a social contribution towards creating both privately financed and publicly subsidised housing, and to build or acquire at least 500 new apartments per year from 2023 onwards. From 2026 onwards the number of newly build or acquired apartments will be increased to 1.000 units per year.
Source : LEG