Real estate: This is how Grand City Properties comments on joining LEG

Dusseldorf. It was a surprising start with many unanswered questions. At the end of October, Aroundtown subsidiary Grand City Properties (GCP), a major landlord with around 60,000 apartments in its portfolio, announced a 20 percent stake in its much larger competitor LEG. He, in turn, is Germany's second-largest listed landlord with more than 160,000 apartments in his portfolio.

This Wednesday, GCP presented figures for the first time since joining - and provided at least a few new details.

One of the open questions was how the company financed the purchase of the share package worth around 700 million euros. Aroundtown board member Timothy Wright told Handelsblatt after the announcement of the entry that the purchase had been financed with cash reserves.

As GCP has now announced, a two-year bridge financing amounting to 600 million euros has been taken out for entry into the MDax-listed LEG. In addition, they have liquidity of 613 million euros and a further 215 million euros of unused credit lines with banks. The refinancing of the debt has already been completed for the coming year.

As with the announcement of its entry, GCP emphasized that it was a purely financial investment and was the best way to invest money at the moment. As expected, GCP has therefore slightly increased its operating profit forecast. The SDax group announced that operating profit (FFO I) should now be between 185 and 195 million euros in the current year. This increased the forecast range by ten million euros. In 2025, GCP earned 188 million euros operationally.

When the LEG investment was announced in October, Grand City Properties had already announced that the investment would have a positive impact on the operating result. Since the investment was only announced in October and therefore in the fourth quarter and outside the reporting period for the third quarter, further details will not be published until the 2026 annual figures, the company said.

Commenting on the figures, Refael Zamir, CEO of Grand City Properties, said: “The first nine months of 2026 demonstrate the strength of our business model and our ability to create value in different market phases.” He expects there will be strong earnings growth in the coming periods while protecting liquidity, financial flexibility and credit quality.

Experts believe it is at least possible that LEG will ultimately be swallowed. Pierre-Emmanuel Clouard, an analyst at US bank Jefferies, said: "We had identified LEG as a likely takeover candidate given the high discount to net asset value (NAV)." He adds: “However, we did not expect that interest would come from another listed residential real estate group – especially given the high level of debt in the sector.”

Even an experienced real estate manager, who did not want to be named, does not rule out the possibility that Aroundtown could grab a majority stake in LEG Immobilien, despite assurances to the contrary. In the investor call at ten a.m. on Wednesday, the GCP board will have to answer its first questions from analysts. Maybe some of the open questions will be answered there.