LEG Immobilien AG (LEG), Germany’s second-largest residential landlord by market value, said first-half profit rose 10.9 percent after the company increased rental income and lowered financing costs.
Funds from operations excluding asset sales, a measure of a property company’s ability to generate cash, climbed to 68.4 million euros ($91 million) from 61.7 million euros a year earlier, the company said in a statement today.
“We expect rents to keep rising in the second half,” the Dusseldorf-based company said in the statement. “We even expect a further reduction in the vacancy rate due to current demand levels.”
LEG was taken public by former owner Goldman Sachs Group Inc. in February in the German property industry’s biggest initial public offering. The country’s residential landlords are benefiting from rising rents as household growth in Germany outpaces new-home construction.
Net income was 34.7 million euros compared with a loss of 10.3 million euros a year earlier, the company said. Profit from LEG’s main business of renting apartments rose to 123.7 million euros from 117 million euros a year earlier. Net financing costs fell to 60.9 million euros from 110.5 million euros.
Rental income was boosted by rising occupancy and higher rents. The vacancy rate fell to 3 percent from 3.9 percent a year earlier. Average monthly rent climbed 1.9 percent to 4.92 euros a square meter, LEG said.
The company repeated that it expects full-year FFO to increase to 137 million euros to 140 million euros from 136.5 million euros in 2012. LEG predicted a 10 percent increase in FFO next year.
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