On Wednesday, LEG Immobilien AG (LEG:GR) (OTC: LEGIF) saw its price target increased by a CFRA analyst from EUR78.00 to EUR85.00, while the Hold rating on the stock was maintained. The revised price target is based on a 2024 Price/Net Tangible Assets (P/NTA) ratio of 0.67x, which is slightly below the company's three-year historical average. This adjustment reflects an anticipation of an end to property value declines in the second half of 2024.
LEG Immobilien reported its Q1 2024 Funds From Operations (FFO) at EUR99 million, a 4% decrease year-over-year, which aligned with expectations. The company experienced a 3.8% year-over-year increase in net cold rent, amounting to EUR214 million, while in-place rent per square meter rose by 3.5% to EUR6.67. Despite a slight reduction in the number of residential units, down 0.6% year-over-year to 165,953, the overall rent increase outpaced this decline.
The company's operating cash flow showed a healthy growth of 7.4% year-over-year, reaching EUR134 million. The analyst has projected a 2024 FFO of EUR6.43 and a 2025 FFO of EUR6.62. LEG Immobilien's management has confirmed its guidance for 2024, projecting positive rental growth between 3.2% and 3.4%. Additionally, the company expects a minimal property devaluation of 1% to 3% in the first half of 2024, which is significantly lower than the 11.9% devaluation experienced in 2023.
The analyst noted the improvement in LEG Immobilien's operating cash flow and a stronger balance sheet, highlighted by a 0.8% quarter-over-quarter decrease in net debt. The Hold rating reflects the analyst's view that, despite the forecast for a slight devaluation in the near term, the company's financial health appears stable.
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