LWB Increases Investment in Existing Housing - New Launch of Promotion is Basis for Affordable Housing

The Leipziger Wohnungs- und Baugesellschaft mbH (LWB) has begun building subsidized rental apartments. In addition, refurbishment work continued, particularly in the prefabricated housing estates. A significant increase in construction expenditure is planned for the current fiscal year. The basis for this growth is the company's continuing positive economic development. The 2018 balance sheet was adopted by the shareholders' meeting on 10 July 2019.

"LWB has continued its very good business development and achieved the targets set by the shareholder City of Leipzig," said Leipzig's Mayor of Construction and LWB Supervisory Board Chairman Dorothee Dubrau immediately after the annual financial statements of the GmbH were adopted by the shareholders' meeting on 10 July 2019. She added that it was important and of great benefit to the city to be able to actively influence developments in Leipzig in the areas of housing policy and urban development with the municipal LWB.

"The LWB manages the assets of the city of Leipzig and its citizens with a great sense of responsibility," said Ute Schäfer, LWB Director of Finance and Asset Management. This means that our investments must be economical and sustainable. The municipal housing stock is "a treasure" which the LWB is also looking after and developing to meet the housing needs of the future. "We must also derive our entrepreneurial decisions from the relevant market developments. These include population figures, household incomes and costs. We cannot think the housing industry without the people who have to pay the rent."

"With regard to the current framework conditions, we see our greatest challenge in the continuing rise in construction costs," said Iris Wolke-Haupt, LWB Director Housing and Construction. According to Wolke-Haupt, these costs cannot be covered by the rents achievable on the market: "We see it as our joint responsibility here, together with our shareholder the City of Leipzig and the Free State of Saxony, to find solutions for affordable housing and create the conditions for the necessary growth".

"Sustained economic stability is a prerequisite for the LWB to be able to continue to meet its many and varied tasks in Leipzig in the future," explained Managing Director Schäfer. The past fiscal year has helped to keep the LWB on a stable course.

In 2018 the LWB has continued to develop positively. At EUR 9.9 million, the operating result was well above expectations and almost nine percentage points higher than in 2017. Net income remained almost stable at EUR 35.5 million and, according to Schäfer, was, as in the previous year, the result of the sharp rise in the standard land values of the City of Leipzig.
The equity ratio, which is an important indicator of a company's creditworthiness, continued to rise. After years of privation-stricken years of debt relief and consolidation, LWB is a healthy company, said Schäfer.

Operating business is the basis for a positive trend
"The basis for the positive trend is once again good operating business", said Iris Wolke-Haupt. The number of LWB apartments rose by 136 to 35,304 units between the end of December 2017 and the end of 2018. At 95.7 percent, the LWB occupancy rate almost reached the 2017 level, while the net cold rent per square meter for the entire LWB portfolio rose by 1.7 percent year-on-year to 5.23 euros. LWB's rent level remains below the comparable figure for the city as a whole (2018: EUR 5.88 per square meter of rent excluding heating). "Last year, the LWB once again contributed to dampening housing costs in Leipzig with a responsible and very moderate development of rents," says Managing Director Wolke-Haupt.
The LWB also continued to invest in its portfolio and almost doubled its investment in new construction. In the current 2019 financial year, expenditure on the existing stock and new construction will continue to rise.

Subsidy guideline must be reissued
"Leipzig is growing and the trend in rental prices is going up", says Supervisory Board Chairman Dubrau. In order to keep living affordable, he said that public funding for new construction and refurbishment is necessary. "The currently still valid subsidy guideline for tied rental housing, according to which the Free State of Saxony currently supports new construction, refurbishment and conversion projects, must be made permanent and re-issued and must be oriented to the current market conditions. With money from the Free State's current funding guidelines, the City of Leipzig is securing, among other things, a 15-year rent and occupancy commitment from the LWB for holders of a residential entitlement certificate.

"In the first three new building projects alone, the share of subsidized housing amounts to a total of 43 percent," says Managing Director Wolke-Haupt. One project is located at Bernhard-Göring-Straße 17, where the