This article first appeared on GuruFocus .
Release Date: May 13, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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LEG Immobilien SE ( LEGIF ) is on track to meet its 2026 targets, with key metrics such as rent growth, EBITDA margin, AFFO, and LTV moving within or towards guidance.
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The company reported a like-for-like rent growth of 3.7%, approaching the guidance corridor of 3.8% to 4%.
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EBITDA margin expanded by 180 basis points to 77.4%, demonstrating strong operational leverage.
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AFFO came in at EUR58.6 million, confirming the full-year guidance range, with operating cash flow rising by 14.5% year-on-year.
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The balance sheet is resilient, with a hedging ratio of around 98% and an interest coverage ratio of 4.2 times, comfortably above covenant requirements.
Negative Points
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AFFO is slightly below last year due to timing and phasing effects, including a more linear CapEx profile and a modest step-up in cash interest.
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Transaction volumes remain subdued, with buyers on the sidelines, potentially softening valuation momentum.
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The company's 45% LTV target has become more ambitious in the current environment, with challenges in precise timing.
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There is a reluctance from financing banks to finalize term sheets, causing delays in deal processes.
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The German residential transaction market is characterized by fewer large volume deals and limited international investor activity, impacting disposal plans.
Q & A Highlights
Q: Are buyers pulling away from prior agreements due to geopolitical tensions, and what happens if planned disposals are not possible? A: (CEO, Lars van Nachum) We haven't seen buyers moving out of processes, but deals are being postponed due to reluctance from financing banks. We remain confident in some transactions, like the Gareth Heim plot in Dusseldorf. If disposals are not possible, reaching our 45% LTV target will be challenging, but we are seeing a valuation increase of up to 1% for H1.
Q: What are the current funding conditions in the market, and are banks valuing portfolios lower than book value? A: (CEO, Lars van Nachum) German residential is still a sweet spot for financing banks, but due diligence is more detailed, delaying processes. Banks use internal valuation points below market value for LTV calculations, but leverage ratios haven't changed due to regulatory constraints.
Q: How are delays in Mitch-Biggle rent tables affecting your rental growth guidance? A: (CEO, Lars van Nachum) Delays are not intentional; they result from data collection and analysis taking longer. Rent tables are eventually published, as seen with Munching-Gladbach. We remain on track to deliver our 3.8% to 4% rental growth guidance.
Q: With the cost of capital increasing, could you aim for higher disposal volumes? A: (CEO, Lars van Nachum) We are open to market interest, but currently, there is limited interest in large transactions. We do not foresee a significant market opening for larger transactions this year.
Q: What is your refinancing strategy, and how do you view the unsecured bond market compared to bank debt? A: (CFO, Katrin Kurling) We will continue to be opportunistic, using secured and unsecured bonds, convertible bonds, and private placements. We aim to be proactive but will consider costs and opportunities as they arise.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
