(new: statements from the press conference, analyst and trader, price)

DÜSSELDORF (dpa-AFX) - After a good fiscal year, real estate group LEG is looking ahead to 2023 with caution. The company increased its earnings target for the current year. Despite the good business development in 2022, however, the LEG board wants to suspend the dividend. In view of the situation characterized by high interest rates and continuing uncertainty about the valuation of the real estate portfolio, the balance sheet should be strengthened in this way, the MDax group announced in Düsseldorf on Wednesday evening.

On Thursday, the share slumped 13 percent to 59.02 euros in the afternoon. It thus slumped to its lowest level since the end of 2022. This weighed on the entire real estate sector. Observers fear that other groups could also suspend or at least cut dividends, including Europe's largest residential landlord Vonovia.

One trader, for example, said the suspension was not entirely surprising, but he viewed the decision as very negative. He said the market had expected a cut, but was still hoping for a decent payout. Even the fact that LEG is formulating its targets for the operating indicator Affo more optimistically does not outweigh the negative aspects.

Expert Simon Stippig of Warburg Bank reacted with astonishment, especially since LEG had posted the best result in its history. Financing costs had recently stagnated at the same level as at the end of November. He also criticized that future dividends were more difficult to predict with the changed forecast basis.

For the current year, LEG is now targeting 125 to 140 million euros for Affo, the key earnings indicator as of this year. The reason for this is less expenditure on investment projects. Previously, LEG had assumed 110 to 125 million. In the case of Affo, the industry-standard FFO 1 figure is adjusted for capital expenditure.

In 2022, operating profit (FFO 1) had climbed 13.9 percent to EUR 482 million thanks to higher rental income and met the company's forecast. Rents have been rising for years, particularly in major cities, but numerous medium-sized cities are now also catching up strongly. Rents rose to an average of 6.33 euros per square meter by the end of December, up from 6.13 euros a year earlier, the Group added. The vacancy rate remained low at 2.9 percent. Excluding the Adler portfolio, the vacancy rate was below two percent, said CEO Volker Wiegel. Operating profit (Affo) adjusted for investments rose by 18 percent to 108.8 million euros in 2022. In addition to the increase in FFO 1, this was due to lower investment costs. At just under EUR 41 per square meter, these were below both the prior-year figure and LEG's expectations. Net income was a good 237 million euros, compared with 1.7 billion euros in the previous year. This was mainly due to a significantly lower valuation result for the real estate portfolio.

The residential real estate market continues to be characterized by buying restraint and great uncertainty regarding the further development of inflation and interest rates, the company further announced. LEG was able to sell around 600 apartments in 2022. In the process, the Group realized more than the book value, said company CEO Lars von Lackum. In the future, too, apartments will not be sold below book value, even if this takes more time than originally planned. LEG plans to sell around 5,000 apartments. This would include around 1300 units from the Adler portfolio purchased in 2021.

In addition to the annual figures, LEG also announced a change at the top of the finance department. Susanne Schröter-Crossan will step down from the board for family reasons on March 31 and leave the company, it said. She is to be succeeded by Kathrin Köhling, who has been managing director in operations to date./mne/ngu/jha/