9M 2018 RESULTS 09 NOVEMBER 2018 TLG IMMOBILIEN AG 9M 2018 RESULTS

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1 TLG IMMOBILIEN AG 9M 208 RESULTS

2 DISCLAIMER This presentation includes statements, estimates, opinions and projections with respect to anticipated future performance of TLG IMMOBILIEN ("Forward-Looking Statements") which reflect various assumptions concerning anticipated results taken from TLG IMMOBILIEN s current business plan or from public sources which have not been independently verified or assessed by TLG IMMOBILIEN and which may or may not prove to be correct. Any Forward-Looking Statements reflect current expectations based on the current business plan and various other assumptions and involve significant risks and uncertainties and should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Any Forward-Looking Statements only speak as at the date this presentation. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of TLG IMMOBILIEN and the estimates given here. These factors include those discussed in TLG IMMOBILIEN s public reports which are available on TLG IMMOBILIEN s website at It is up to the reader of this presentation to make its own assessment of the validity of any Forward-Looking Statements and other assumptions and no liability is accepted by TLG IMMOBILIEN in respect of the achievement of such Forward-Looking Statements or other assumptions. TLG IMMOBILIEN has no obligation whatsoever to update or revise any of the information, Forward-Looking Statements or the conclusions contained herein or to reflect new events or circumstances or to correct any inaccuracies which may become apparent subsequent to the date hereof. 2

3 AGENDA Highlights 9M 208 Portfolio Financials Outlook Strategic Appendix update 3

4 HIGHLIGHTS 9M 208 0

5 KEY HIGHLIGHTS 9M 208 Portfolio and Operations TLG IMMOBILIEN is continuing to execute its growth strategy, delivering a 4.8% growth YoY in rental income to EUR 66.3 m for 9M 208 compared to 9M 207 Acquisitions as key driver for 43.3% YoY FFO increase from EUR 70. m to EUR 00.4 m in 9M 208 Persistently strong like-for-like portfolio rental growth of 3.7% and like-for-like vacancy reduction to 2.7% YoY Balance Sheet EPRA NAV/s of EUR increased by 8.0% compared to 3- Dec-207 as a result of revaluations and delivering strong operating performance Solid balance sheet with conservative leverage structure with Net LTV of 39.0% provides room for value-enhancing investments into TLG IMMOBILIEN portfolio and further acquisitions Growth Property acquisitions closed mainly in Western German core markets with a total volume of EUR 40.2 m YTD TLG IMMOBILIEN with significant potential for portfolio investments which are currently in the process of being assessed in detail 5

6 PORTFOLIO 02

7 TLG IMMOBILIEN PORTFOLIO AS OF 30 SEPTEMBER 208 PERSISTENTLY STRONG PARAMETERS ACROSS THE PORTFOLIO KEY INDICATORS OFFICE RETAIL HOTEL OTHER TOTAL 30-Sep-8 TOTAL 3-Dec-7 CHANGE TOTAL 30-Sep-7 CHANGE OFFICE Leipzig Property value (EUR m),89.3, ,722. 3, % Properties (number) units Annualised in-place rent (EUR m) % In-place rental yield (%) pp EPRA Vacancy Rate (%) pp WALT (years) yrs In line with values disclosed according to IAS 40, IAS 2, IAS 6 and IFRS 5 2 The annualised in-place rent is calculated using the annualised rents agreed as at the reporting date not factoring in rent-free periods 2, % units % pp pp yrs Property Value Split by Asset Class In EUR m Property Value Split by Region In EUR m RETAIL Berlin Other Locations,235.2 Berlin,258.4 HOTEL Dresden,475.7,89.3 OFFICE RETAIL HOTEL OTHER Leipzig 83.7 Rostock Dresden Frankfurt/Main

8 DEVELOPMENT OF PROPERTY VALUES DURING 9M 208 REVALUATIONS AND ACQUISITIONS AS KEY DRIVERS FOR YTD PORTFOLIO GROWTH 3,400.6 Property Value Reconciliation In EUR m 40.2 (2.0) ,722. Comments In 208 acquisitions in Western German core markets, primarily in the Rhine-Main region as well as in Hamburg IFRS Property value 3-Dec-7 Acquisitions Disposals Revaluations Other IFRS Property value 30-Sep-208 Capex Breakdown 9M 208 vs. 9M 207 (like-for-like) 2 In EUR m Main revaluation driver continues to be Berlin office which is showing persistently strong market dynamics Increase in ordinary capex resulting from fire protection measures for acquired properties Increase in tenant improvements predominantly stemming from new lettings (e.g. Kapweg in Berlin and Astropark in Frankfurt) Ordinary Capex Expansion Capex Tenant Improvements Total Capex 9M 207 9M 208 Incl. capitalization of refurbishments and depreciation of self-used properties 2 Like-for-like excl. effects from consolidation of WCM 8

9 DEVELOPMENT OF KEY METRICS (/3) LFL RENTAL GROWTH IS STRONG AND CONTINUOUS TO BE PRIMARILY DRIVEN BY THE OFFICE ASSET CLASS Annualised In-place Rent In EUR m LIKE-FOR-LIKE DEVELOPMENT Comments Annualised in-place rent YoY improvement of EUR 64.8 m or 40.3% to EUR m 60.7 EUR 56.4 m (4.4) Sep-207 Disposals 30-Sep-207 (excl. disposals) Like-for-like Development by Asset Class in % 7.2% 0.7% Like-for-like Development 2.% Sep-208 (excl. acquisitions) Acquisitions 30-Sep-208 (incl. acquisitions) EUR 62.2 m EUR 5.8 m like-for-like rental growth (+3.7%) across the portfolio compared to the previous year Office asset class as the major contributor to rental growth (c. 87%) In terms of region, Berlin remains key contributor (c. 75%) followed by Frankfurt (c. 6%) due to reduction in vacancy and new lettings 30-Sep-7 (excl. disposals) -0.9% Office Retail Hotel Other 30-Sep-8 (excl. acquisitions) Like-for-like development excl. effects from consolidation of WCM 9

10 DEVELOPMENT OF KEY METRICS (2/3) TLG IMMOBILIEN PORTFOLIO CURRENTLY SHOWING 2.7% LFL EPRA VACANCY RATE EPRA Vacancy Rate In % 3.7 LIKE-FOR-LIKE DEVELOPMENT (.0) Comments 2.7% like-for-like EPRA Vacancy Rate.0 pp lower YoY Reduction primarily a result of active asset management of TLG IMMOBILIEN and positive market fundamentals 30-Sep-207 Disposals 30-Sep-207 (excl. disposals) 3.7% Like-for-like Development 30-Sep-208 (excl. acquisitions) Acquisitions Like-for-like Development by Asset Class in p.p Sep-208 (incl. acquisitions) 2.7% Signed and closed acquisitions since Q3 207 with a weighted vacancy rate of c. 6.0% continue to provide opportunity for further letting upside 30-Sep-7 (excl. disposals) (2.7) Office Retail Hotel Other 30-Sep-8 (excl. acquisitions) Like-for-like development excl. effects from consolidation of WCM 0

11 DEVELOPMENT OF KEY METRICS (3/3) WALT AT A CURRENT LEVEL OF 5.9 YEARS Sep-207 Disposals 30-Sep-207 (excl. disposals) WALT In years LIKE-FOR-LIKE DEVELOPMENT (0.5) Like-for-like Development Sep-208 (excl. acquisitions) Acquisitions Like-for-like Development by Asset Class in years 30-Sep-208 (incl. acquisitions) Comments Portfolio WALT almost unchanged and remains at approx. 6.0 years Executed portfolio acquisitions and disposals resulting in a positive impact on the WALT profile TLG IMMOBILIEN able to deliver ongoing letting success with early lease extensions allowing to soften ongoing WALT reduction Sep-207 (excl. disposals) (0.4) (0.5) (0.9) 30-Sep-8 (excl. acquisitions) Office Retail Hotel Other Like-for-like development excl. effects from consolidation of WCM

12 FINANCIALS 03

13 EXCELLENT OPERATING PERFORMANCE DURING 9M 208 YOY COMPARISON OF KEY METRICS UNDERLINES STRONG PERFORMANCE OF TLG IMMOBILIEN Key Metrics In EUR m 9M 208 9M 207 CHANGE Rental income % Net Operating Income In EUR m % FFO In EUR m +43.3% 00.4 NOI % FFO % 9M 207 9M 208 9M 207 9M 208 FFO/s (EUR) % In-place rental yield 6.% 6.6% -0.5 p.p. 39.7% YoY increase driven by acquisitions and WCM consolidation Portfolio growth and letting activity further driving strong FFO growth Sep 208 Dec 207 CHANGE Property Value 3,722. 3, % Property Value In EUR m 3, % 3,722 EPRA NAV/s 2.84 In EUR +8.0% EPRA NAV/s (EUR) % Net LTV 39.0% 39.2% -0.2 pp FY 207 9M 208 FY 207 9M 208 9M 208 growth primarily due to revaluations and asset acquisitions Growth in EPRA NAV driven by revaluations and excellent operating performance Based on weighted average number of shares outstanding 2 EPRA NAV not adjusted for goodwill 3

14 FFO RECONCILIATION 9M % YOY INCREASE PRIMARILY DRIVEN BY ACQUISITIONS FFO Value Drivers 9M 208 / 9M 207 in EUR m 42.7 (8.) (4.7) (0.9) ANNUAL GROWTH +43.3% FFO 9M 207 Change in Result from Letting Activities Change in Platform Costs Change in Net Financial Result Change in Minority Interests Change in Taxes FFO 9M 208 Including other operating expenses and income as well as personnel expenses 4

15 EPRA NAV/S GROWING TO EUR INCREASE MAINLY DRIVEN BY OPERATING PERFORMANCE AS WELL AS REVALUATIONS EPRA NAV 9M 208 Development In EUR m (84.6) 4. 2, , ,39.3 9M 208 GROWTH EPRA NAV/s +8.0% EPRA NAV 3-Dec-207 FFO Remeasurement of Investment Properties Dividend Others EPRA NAV 30-Sep-208 Adj. EPRA NAV (excl. Goodwill) 30-Sep-208 EPRA NAV/s (in EUR) Adj. EPRA NAV/s (excl. goodwill, in EUR) 5

16 CONSERVATIVE FINANCING STRUCTURE HIGHLY COMFORTABLE NET LTV OF 39% COUPLED WITH AVERAGE CASH COST OF DEBT AT.83% 9 Maturity Profile as of 30 Sep 208 In EUR m Development of Average Cash Cost of Debt In % 2.% %.83%.83%.83% Q3 207 Q4 207 Q 208 Q2 208 Q3 208 Debt Structure and Debt Service Net LTV Development In % As of 30 June 208 Gross debt (EUR m),587 Net LTV (%) 39.0 Avg. cash cost of debt (%).83% Avg. weighted maturity (years) 5.7 Interest rate fixed or hedged (%) 00.0% Q3 208 Q2 208 Q 208 Q4 207 Q3 207 Q % 39.0% 39.2% 38.7% 39.9% 39.6% 30% 35% 40% 45% Excluding regular amortisation payments 6

17 OUTLOOK 04

18 OUTLOOK 208 FFO Guidance FFO guidance for FY 208 around EUR 33 m Fair value Ongoing dynamic market environment to drive further expected fair value uplift by year end 8

19 STRATEGIC UPDATE 05

20 TLG IMMOBILIEN'S STRATEGIC FOCUS SUPERIOR TOTAL SHAREHOLDER RETURNS ACROSS CYCLES AND ASSET CLASSES IN GERMAN COMMERCIAL REAL ESTATE Focus on key commercial areas and hubs OFFICE RETAIL HOTEL Rental and value growth EUR.9bn EUR.5bn EUR 0.3bn Active asset management Value-enhancing investments into portfolio and developments Disposals of non-strategic (mature) assets 40% Berlin + region 33% Frankfurt / Rhine-Main 8% other key commercial hubs 52% in key commercial hubs 84% food anchored retail 7 high quality hotels in Berlin, Leipzig, Dresden and Rostock NOI growth Value and rental growth Realising value Attractive asset and portfolio acquisitions Usage of scalability and synergies 20

21 CLEAR PORTFOLIO CONCENTRATION ON DYNAMIC COMMERCIAL GROWTH MARKETS CENTRALITY AND SCARCITY OFFER SIGNIFICANT VALUE POTENTIAL Strong exposure to German key commercial hubs Favorable market conditions in the key commercial hubs Rhine-Ruhr < EUR 0.bn Hamburg < EUR 0.bn Rostock EUR 0.2bn Berlin EUR.3bn + region EUR 0.bn Berlin + region Frankfurt / Rhine- Main Prime rent (office): EUR sqm/month (+3% y-o-y) Vacancy (office):.6% Prime investment yield (office/retail): 2.9% / 3.2% High net absorbance Prime rent (office): EUR sqm/month (+2% y-o-y) Vacancy (office): 7.3% Prime investment yield office: 3.2% 2 2 Frankfurt / Rhine-Main EUR 0.6bn Dresden / Leipzig EUR 0.6bn Dresden / Leipzig Prime rent (office): EUR 3.00 sqm/month (+4% y-o-y) Vacancy (office): <7.0% Prime investment yield office: 5.5% 2 Stuttgart < EUR 0.bn Others Secondary markets favorably impacted by current market situation and strong supply-demand-pattern Stable markets across Germany Largely invested in growth markets Key commercial hubs impacted by strong market conditions Based on Catella (Q ) 2 Based on Catella Q 208 Growth markets Growth potential Stable markets 2

22 FOCUS ON ATTRACTIVE ASSET CLASSES AND GROWTH REGIONS PORTFOLIO IN SWEET SPOT OF GERMAN GROWTH MARKETS WITH A CLEAR AGENDA Region TLG IMMOBILIEN portfolio In EUR bn Clearly defined portfolio strategy Berlin + region Portfolio currently mostly underrented Good portfolio locations / high portfolio quality Strong supply market with high future investment potential Office 0.8 Retail 0.5 Hotel 0. Total.4 Focus on core / core+ micro locations Focus on office in key German growth regions Frankfurt / Rhine-Main Dresden / Leipzig Core office portfolio primarily located in Frankfurt Rising demand drives reduction of vacancy TLG IMMOBILIEN with leading market position in East German hubs with high growth potential Portfolio located in CBD or strong micro locations Excellent future development potential Office 0.6 Retail - Hotel - Total 0.6 Office 0.2 Retail 0.2 Hotel 0. Total 0.6 Food-anchored retail in growing urbanizations Define strategic and non-strategic portfolio parts Identify investment opportunities into strategic assets Others TLG IMMOBILIEN portfolio located in favorable micro locations of secondary cities Majority of retail locations food-anchored Office 0.3 Retail 0.8 Hotel <0. Total. Including the segment Other 22

23 VALUE-ENHANCING INVESTMENTS INTO PORTFOLIO CENTRALITY AND URBANITY ALLOWING FOR SUPERIOR-RETURN-INVESTMENTS INTO EXISTING ASSET PORTFOLIO Portfolio densification / optimisation / modernisation New- and re-development Capitalizing upon centrality to extract superior portfolio values With existing assets and land, increased value creation margin on investment possible no additional cost of land Investments to include refurbishments, floor addons, increase of lettable area, etc. Re-using existing assets for higher returns New developments on existing TLG IMMOBILIEN city-center-land plots Ownership of land plots simplifies the termination of existing lease contracts Pre-lease opportunity due to existing tenant relationships and asset management Example: Floor add-on for Berlin supermarket Example: Development alongside TLG IMMOBILIEN portfolio plot Development TLG IMMOBILIEN portfolio plot We see significant potential for portfolio investments and are currently in the process of assessing our potential in detail 23

24 Superior NOI yield profile Superior NAV creation 9M 208 RESULTS 09 NOVEMBER 208 SUPERIOR TOTAL RETURN POTENTIAL FROM OWN PORTFOLIO VALUE CREATION OF EXISTING ASSETS VS. GREEN FIELD DEVELOPMENTS AND ACQUISITIONS TLG IMMOBILIEN investments in own portfolio Developer investments into land and development Construction costs / others Book value of existing property Invested capital % Construction costs / others Cost of property Invested capital % Pre-investment value Value creation Post-development value Pre-investment value Value creation Post-Investment value TLG IMMOBILIEN investments in own portfolio Acquirer asset acquisitions High yield profile Value creation Low yield profile Invested capital % % Invested capital Book value of existing property Market rent Fair market value Market rent Fair market value 24

25 COMMITMENT TO CONTINUOUSLY FOCUS ON TOTAL RETURNS TLG IMMOBILIEN FOCUSED TO DELIVER BALANCED TOTAL RETURN OF DIVIDENDS AND EPRA NAV GROWTH Illustration of total return components Total return Investment into portfolio Sustainable dividend Active asset 2 Densification and 2 New- and redevelopments 3 Mature asset 4 management optimisation disposals Attractive acquisitions TOTAL RETURN NOI / dividend growth Short- / mid-term NOI / dividend dip EPRA NAV growth 25

26 MEASURES TO BE EXECUTED FOR OUR TOTAL RETURN BASED STRATEGY Actions and measures Define / confirm cities and regions for strategic footprint of TLG IMMOBILIEN 2 Identify investment opportunities into existing portfolio 3 Define strategic and non-strategic portfolio 4 Continuously monitor value-enhancing acquisition opportunities 5 Transparent and constant communication with the capital market regarding measures -4 26

27 APPENDIX 06

28 TLG IMMOBILIEN SHARE INFORMATION Symbol Basic Share Information (as of 30 September 208) TLG Share price (XETRA, 28-Sep-208) EUR ISIN DE000A2B8Z4 Performance in 9M % Primary exchange Shares outstanding 30-Jun-208 Market capitalization Frankfurt Stock Exchange 03.3 million EUR 2.3 bn Free Float 53.69% Shareholder Structure Amir Dayan / Maria Saveriadou 22.47% Prof. Dr. Gerhard Schmidt 4.59% Government of Singapore 9.25% Shareholdings according to latest voting rights announcements. See for further details. Free float: shareholdings < 5% Share Price Performance in 9M 208 Coverage by Analysts Jan-8 Mar-8 May-8 Jul-8 Sep-8 TLG IMMOBILIEN EPRA Germany SDAX EPRA Developed Europe + 7.2% +.5% - 0.2% - 2.3% Commerzbank BAML HSBC Berenberg Kepler Cheuvreux Deutsche Bank J.P. Morgan M.M.Warburg VICTORIAPARTNERS Bankhaus Lampe UBS Baader Bank Kempen & Co. Jefferies 2 Target price (EUR) Buy Buy Buy Buy Buy Hold Neutral Hold n/a Hold Neutral Hold Neutral Hold As of 08 November Average of range: Source: Thomson Reuters and Bloomberg as of 08 November

29 9M 208 EARNINGS UNDERLINING STRONG PERFORMANCE Income Statement In EUR m 9M 208 9M 207 Rental income Net operating income from letting activities Result from the remeasurement of investment property Results from the disposals of investment property Results from the disposals of real estate inventory Other operating income.6.0 Personnel expenses Depreciation Other operating expenses Earnings before interest and taxes (EBIT) Net interest Other financial result Earnings before taxes (EBT) Income taxes Net income Other comprehensive income (OCI) Total comprehensive income Comments. Increase of 39.7% in NOI from letting activities mainly related to the consolidation of WCM as well as the acquisition of new properties 2. Increase mainly due to dynamic market development in Berlin 3. Increase in personnel expenses mainly related to increase in total number of FTEs due to WCM and management exchange 4. Reduction of net interest by EUR 8.3 m compared to 9M 207 due to oneoff payments in connection with refinancing activities in 9M Increased deferred taxes due to higher result from the remeasurement of investment property 29

30 STRONG BALANCE SHEET AS FOUNDATION FOR FUTURE GROWTH Balance Sheet In EUR m 30 Sep Dec 207 Non-current assets 3, ,604.4 Investment property (including advance payments). 3,72.9 3,400.8 Property, plant and equipment Other non-current assets Current assets Real estate inventory Receivables and other current assets Cash and cash equivalents Non-current assets classified as held for sale Total assets 4, ,835.7 Equity 2,048.0,936.6 Liabilities 2,029.0,899.2 Non-current liabilities,932.4,829.2 Non-current liabilities to financial institutions,34.9,20.9 Corporate bond Provisions and other non-current liabilities Deferred tax liabilities Current liabilities Current liabilities to financial institutions Tax liabilities Other current provisions Trade payables Other current liabilities Total equity and liabilities 4, ,835.7 Comments. Increase in investment property mainly related to acquisitions and remeasurements 2. Reduction in cash and cash equivalents primarily related to acquisitions and dividend payment 3. Increase in deferred tax liabilities primarily related to revaluations 30

31 FINANCIAL CALENDAR AND CONTACT DETAILS Financial Calendar TLG IMMOBILIEN AG FY 208 RESULTS 2 March 209 Q May 209 AGM 2 May 209 Q2 209 RESULTS 2 August 209 Q3 209 RESULTS 06 November 209 SVEN ANNUTSCH Head of Investor Relations Hausvogteiplatz 2 07 Berlin Tel. +49 (0) Fax. +49 (0) ir@tlg.de 3