LEG Immobilien AG October 2018

Transcription

1 CAPTURE CHANCES DRIVE INNOVATION LEG Immobilien AG October 2018

2 Disclaimer While the company has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature and is intended to provide an introduction to, and an overview of the Company s business. Any opinions expressed in this presentation are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information contained in this presentation. Where this presentation quotes any information or statistics from any external sources, you should not interpret that the Company has adopted or endorsed such information or statistics as being accurate. This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realised from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation, and supply and demand. The Company has based these forward-looking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and the Company does not undertake any duty to update the information and forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations. This presentation does not constitute an offer or invitation to purchase or sell any shares in the Company and neither this presentation or anything in it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. 2 I October 2018

3 Key Investment Highlights c. 3.9% Dividend Yield 1) from Stable Residential Cash Flows with Sound Growth Prospects Leading cash flow profitability in German residential industry driven by attractive scale effects in our core markets Significant potential for stable, above average growth (structural organic + external growth) Leading Operating Performance Based on Regionally Focused Platform Regional focus on attractive NRW market basis for sustained outperformance (rent growth %) Favourable demand/supply and high affordability in NRW basis for structural growth Strong beneficiary from net immigration (right product in the right region) Creating Tangible Value from Acquisitions with High Potential for Synergies Acquisition of c.50,000 units since IPO with immediate value contribution and a very low execution risk (FFO per share accretion, no NAV dilution) Regional expertise and broad presence (synergies) in NRW as key success factors Leader in Innovation / Successfully Leveraging Value of Customer Base Launched Multimedia, Energy Services and Craftsmen Services businesses as additional earnings drivers Strong Balance Sheet / Long Term Secured Financing at Very Attractive Terms LTV of 41.9% secures defensive profile Average cost of debt of Ø 1.75% with average maturity of c.7.8 years Secures high visibility for future earnings and dividend growth 1) Based on mid-point guidance 2019, share price as of 11 October 2018 ( 95.76) 3 I October 2018

4 Highlights H Overall company development in H1 Portfolio revaluation: Valuation uplift of +4.1% ( 384m) in H1, further capital growth in H2 expected Acquisition: Acquisition of c. 3,750 units in core markets close to signing Accelerating rent momentum ahead In-place rent, l-f-l 5.54/sqm (+2.7%; free financed units +3.5%); FY-2018 target c.3.0% EPRA-Vacancy, l-f-l 3.4% (-10 bps YOY) Maintenance/Capex 11.3/sqm (+56.9% YOY) Financials: On track for FY growth targets; Higher H1-18 maintenance expenses Net cold rent 277.4m (+5.2% YOY from 263.7m) Adjusted EBITDA 199.9m (+3.1% YOY from 193.8m) Adj. EBITDA pre-maintenance (+5.4% YOY) FFO I 156.4m (+5.1% YOY from 148.8m), 2.48 per share (+5.1% YOY from 2.36) FFO I pre-maintenance (+7.6% YOY) EPRA-NAV (excl. goodwill) per share (up from in Q4; +5.5% YTD despite DPS payout of 3.04) 4 I October 2018

5 LEG at a Glance Leading residential platform across Germany s largest state Overview One of the largest German residential real estate companies with 130,224 residential units and market leader in the NRW market NRW is one of the largest metropolitan areas in Europe accounting for 21% of German GDP Regional focus bears structural competitive advantages for operating efficiency and performance 93% of LEG s portfolio is located in the catchment area of growth cities such as Cologne, Düsseldorf or Münster Key Financial Metrics (H1-2018) Net Cold Rent 277.4m Adj. EBITDA 199.9m FFO I 156.4m GAV 9,985.6 m EPRA-NAV per share 1) LTV 41.9% Key Data (H1-2018) Geographic Reach across NRW Number of residential units: 130,224 Residential sqm: 8.3m In-place rent (l-f-l): 5.54 /sqm EPRA-vacancy (l-f-l): 3.4% Rent free financed/ restricted units (l-f-l): 5.86/4.76 /sqm Apartment size: 64 sqm Apartments per building: 7 units Number of rooms per unit: 3 rooms Münster Bielefeld Dortmund Duisburg Essen Düsseldorf Wuppertal Cologne Bonn 1) Fully diluted, excluding goodwill (EPRA-NAV (incl. goodwill)) 5 I October 2018

6 Agenda I. LEADING OPERATING PERFORMANCE Leading operating performance and profitability on basis of a regionally focused business model II. ATTRACTIVE NRW MARKET Metropolitan region benefitting from sound growth prospects; net immigration as key growth driver III. MARKET LEADING PLATFORM WITH EXTERNAL GROWTH POTENTIAL Proven track record for value accretive acquisitions in core markets with high synergies IV. INNOVATION & VALUE-ADDED SERVICES Creating additional value by leveraging value of the customer base; aspiration to become a digital leader V. FINANCIALS: HIGH PROFITABILITY STRONG BALANCE-SHEET Sound FFO and dividend growth on basis of leading operating profitability and long term secured financing VI. BUSINESS UPDATE & OUTLOOK 6 I October 2018

7 I. Leading Performance Strong track record of outperforming German residential market L-f-l in-place rent ( /sqm) Successful rent management 1) ( ) Germany in-place rent per sqm LEG in-place rent per sqm unrestricted units LEG continuously outperformed the broader German residential market Strong outlook for further growth acceleration LEG s affordable living product in urban areas well suited to market conditions Excess demand and high affordability create headroom for sustained organic growth Source: LEG as of FY ) Sources: LEG, Bundesbank 2) Like-for-like 7 I October 2018

8 I. Leading Performance Portfolio: Attractive combination of yield and growth As of High Growth Markets Stable Markets Higher Yielding Markets Total Portfolio 1) No. of Units 41,341 47,565 39, ,224 % of GAV 47% 31% 21% 100% Gross Yield 4.6% 6.5% 7.1% 5.7% EPRA-Vacancy l-f-l 1.9% 3.1% 5.8% 3.4% In-Place Rent CAGR l-f-l FY-2015 FY-2017 Free Financed Portfolio Rent CAGR l-f-l FY-2015 FY % 2.7% 2.8% 2.8% 3.6% 3.6% 3.5% 3.6% High exposure to attractive economic centers and university cities (e.g. Cologne, Düsseldorf, Münster) Higher Yielding markets attractive cash cows with decent growth profile Source: LEG as of FY-2015 and FY-2017 Note: Statistics shown above refer to company data, not to market data. Only residential units shown 1) Total includes an additional 1,850 residential units located outside NRW 8 I October 2018

9 I. Leading Performance Positive rent development across all submarkets Steinfurt Minden- Lübbecke Herford Strong results on the basis of tailor-made management strategies Borken Bielefeld Lippe Munster Gütersloh Coesfeld Warendorf High-Growth Markets (YOY) Kleve Düren Aachen Hamm Wesel Recklinghausen Unna Gelsenkirchen OberhausenHerne Dortmund Bochum DuisburgEssen Euskirchen Rhein-Sieg-Kreis Soest Krefeld Hagen Viersen Mettmann Hochsauerlandkreis Düsseldorf Wuppertal Märkischer Kreis Monchengladbach Remscheid Solingen Rhein-Kreis Neuss Olpe Heinsberg Leverkusen Rheinisch-Bergischer Kreis Oberbergischer Cologne Siegen- Rhein-Erft-Kreis Kreis Wittgenstein Bonn Paderborn Hoxter # of units 41, % In-place rent (sqm), l-f-l % EPRA-Vacancy, l-f-l 1.9% +20 bps Stable Markets (YOY) # of units 47, % In-place rent (sqm), l-f-l % EPRA-Vacancy, l-f-l 3.1% -20 bps Total Portfolio Higher-Yielding Markets (YOY) # of units 130, % In-place rent (sqm), l-f-l % EPRA-Vacancy, l-f-l 3.4% -10 bps (YOY) # of units 39, % In-place rent (sqm), l-f-l % EPRA-Vacancy, l-f-l 5.8% -20 bps 9 I October 2018

10 I. Leading Performance Well diversified portfolio with attractive reversionary potential High Growth Markets As of H LEG NRW 2) No. of Residential Units 41,341 4,112,461 NORTH RHINE- WESTPHALIA Stable Markets As of H LEG NRW 2) No. of Residential Units 47,565 2,910,961 Occupancy Rate (%) 97.4% 97.4% In-Place Rent per sqm ( ) Rent Potential 1) 13% n/a Borken Steinfurt Munster Coesfeld Warendorf Gütersloh Minden- Lübbecke Herford Bielefeld Lippe Occupancy Rate (%) 96.5% 96.2% In-Place Rent per sqm ( ) Rent Potential 1) 7% n/a The LEG portfolio offers a 9% average rent upside potential 1) Kleve Hamm Wesel Recklinghausen Unna Gelsenkirchen Oberhausen Herne Dortmund Bochum Duisburg Essen Soest Krefeld Hagen Viersen Mettmann Hochsauerlandkreis Dusseldorf Wuppertal Märkischer Kreis Monchengladbach Remscheid Solingen Rhein-Kreis Neuss Olpe Heinsberg Leverkusen Rheinisch-Bergischer Kreis Oberbergischer Cologne Siegen- Kreis Rhein-Erft-Kreis Wittgenstein Paderborn Hoxter Higher Yielding Markets As of H LEG NRW 2) No. of Residential Units 39,468 1,905,824 Occupancy Rate (%) 93.7% 95.3% Aachen Düren Bonn Rhein-Sieg-Kreis In-Place Rent per sqm ( ) Rent Potential 1) 5% n/a Euskirchen Source: LEG as of H1-2018, CBRE, Empirica, IT.NRW 1) Market rent (CBRE) compared to LEG portfolio 2) No. of residential units as of 2016, occupancy rate as of I October 2018

11 I. Leading Performance Attractive portfolio + operational excellence = strong rent growth L-f-l residential rent ( /sqm/month) Rent growth drivers +2.7% 0.2% 0.5% Cost rent adjustments Re-letting Q Q % Modernisation L-f-l free financed rent ( /sqm/month) +3.3% +3.5% 1.9% Mietspiegel adjustments Q Q Further growth acceleration expected in H2 Rent restricted units: +0.3% year-on-year (like-for-like) High capital efficiency maintained (growth relative to capex) High exposure to structural growth markets and respective commuter belts supports outperformance FY-2017 Well diversified mix of growth drivers (low execution risk) Growth not boosted by overspending (capex) 11 I October 2018

12 I. Leading Performance Well-maintained portfolio tailored to demand with rising capex Well-maintained, capital efficient portfolio 59.9m ( 7.2/sqm) 30.2m 29.7m H H maintenance 96.8m ( 11.3/sqm) 61.2m 35.6m capex Rising potential for value enhancing capex Excess demand creates headroom for rent increases Leading capital efficiency as key value driver (rent growth relative to capital expenditure) Target return of c. 6% on modernisation projects (IRR) Rising capital expenditure leads to portfolio valuation upside and FFO accretion in /sqm: ~30 ~30 ~30 ~30 in m: maintenance capex 12 I October 2018

13 I. Leading Performance Value enhancing modernisation programme Additional value enhancing capex programme initiated in 2017 Total volume of 360m (2017: c. 40m, : c. 80m per year) with 75% energy efficiency measures and 25% other measures (bathrooms, balconies, staircases etc.) 90% building, 10% apartments First visible effect as rent growth driver from H L-f-l rent growth Enhanced capex split by market in % ~3.0% 50bp ~3.5% ~ % ~ % 90bp 50-90bp 50-90bp High Growth Higher Yielding 5.7% 12.5% Stable Other e.g. : Monheim Cologne Münster Bonn Regular rent growth Contribution from enhanced capex 24.3% 57.4% Dortmund Koblenz Düsseldorf 13 I October 2018

14 I. Leading Performance Unlocking value potential through construction on own land Münster Four buildings with 51 units in Münster: seizing value potential through densification on vacant plots of own land Construction cost 7.7m or c. 2,200/sqm; IPR c /sqm Respecting the environment and responding to demographic changes: Low-energy buildings (64 kwh/sqm/year) located in car-free settlement with green areas and playgrounds close to the city center Living space from 46 to 82 sqm ( rooms) with barrier-free living on ground and first floors Apartments with balconies or terraces, bathrooms with daylight and at-grade shower, high quality design flooring, underfloor heating, intercom systems, electric shutters Further opportunities Two larger projects in planning phase (in Cologne, Essen); pipeline with a total volume of c.800 units, yield on cost >4.5% 14 I October 2018

15 Agenda I. LEADING OPERATING PERFORMANCE Leading operating performance and profitability on basis of a regionally focused business model II. ATTRACTIVE NRW MARKET Metropolitan region benefitting from sound growth prospects; net immigration as key growth driver III. MARKET LEADING PLATFORM WITH EXTERNAL GROWTH POTENTIAL Proven track record for value accretive acquisitions in core markets with high synergies IV. INNOVATIVE VALUE-ADDED SERVICES Creating additional value by leveraging value of the customer base V. VI. FINANCIALS: LEADING CASH FLOW PROFITABILITY STRONG BALANCE- SHEET BUSINESS UPDATE & OUTLOOK Sound FFO and dividend growth on basis of leading operating profitability and long term secured financing 15 I October 2018

16 II. Attractive NRW Market NRW: economic engine in Germany with liquid labour market Key facts Large German corporates based in NRW Key metropolitan area in Germany, and one of the largest areas in Europe (17.9m inhabitants) Largest economy: Germany in Europe, NRW in Germany Germany s economic powerhouse generating approx. 21% of German GDP About one third of the largest companies in Germany are based in NRW (30% of the DAX30 companies and 10 of Germany s 30 largest companies by revenue in 2016/17) Centrally located in Europe, excellent infrastructure and a key transport hub (with multiple airports, dense railway system, motorway network and waterways) Robust labour market with decreasing rate of unemployment (-40% since 2006) Highest population density key advantage for efficient property management Source: Federal Statistical Office, Federal Employment Agency 12% 11% 10% 9% 8% 7% 6% Bielefeld Gütersloh Essen Mulheim/Ruhr Düsseldorf Leverkusen Cologne Bonn Decreasing unemployment in NRW 11.4% 9.5% 8.9% 8.7% 8.3% 7.8% 8.5% 7.7% 8.1% 8.1% 7.0% 6.8% 7.4% (May) unemployment rate 16 I October 2018

17 II. Attractive NRW Market Portfolio highly exposed to structural growth markets Geographic reach of growth cities (60 km radius) Key data Borken Steinfurt Münster Coesfeld Warendorf Gütersloh Minden- Lübbecke Herford Bielefeld Lippe Approx. 93% of LEG s portfolio is located in the catchment area of growth cities (60 km) and around 64% in the commuter belts (60 km) of Düsseldorf and Cologne, the most populous cities in NRW Many principal university cities are located in NRW, e.g. Cologne, one of Germany s Universities of Excellence or Bonn, Aachen and Münster Kleve Krefeld Viersen Mettmann Düsseldorf Wuppertal Mönchengladbach Solingen Rhein-Kreis Neuss Leverkusen Heinsberg Aachen Düren Hamm Wesel Recklinghausen Unna Gelsenkirchen Oberhausen Herne Dortmund Bochum Duisburg Essen Cologne Rhein-Erft-Kreis Euskirchen Rhein-Sieg-Kreis Bonn Hagen Hochsauerlandkreis Märkischer Kreis Oberbergischer Kreis Olpe Soest Siegen- Wittgenstein Paderborn Höxter Structural growth cities Number of 1-2 person households constantly growing in swarm cities and outperforming Germany (2015: 75.6% in Germany) Opposite trend in age structure in growth cities compared to Germany: share of people under the age of 40 steadily increasing (2015: 42.3% in Germany) and percentage of people above the age of 60 steadily shrinking (2015: 27.4% in Germany) Source: Federal Statistical Office 17 I October 2018

18 II. Attractive NRW Market NRW: leading position in future industries Highlights Direct investments: #1 in Germany for foreign investors 28.5% of direct investments in Germany Chemicals: #1 in Germany, #5 in Europe (sales) NRW generates 30.8% of German sales Biotechnology: #1 in Europe, #9 worldwide (patents) Highest number of biotech patent applications in Europe NRW generates 44.4% of German sales Microsystems Technology: top position 28% of all German players are located in NRW with focuses in Aachen, Cologne/Bonn, Münster, and Dortmund as a hotspot Key markets showing sound household growth 1) Germany Inhabitants +1.7% Households +2.1% Inhabitants +2.3% Households +2.8% Inhabitants +1.8% Households +3.3% Inhabitants +2.4% Households +4.6% Gütersloh 1,270 units Nanotechnology: top position in Germany and Europe More than 200 companies, thereof 50 large companies 220 institutes (of which 9 Fraunhofer, 3 Max Planck and universities) Mobile communication: #1 in Germany NRW companies account for 83% of the German mobile communication market Education: 5 of 10 largest universities located in NRW 2) e.g. RWTH Aachen, one of the largest technical universities in Europe, renowned for engineering, IT and natural sciences 1) Federal Statistical Office, 2015 vs ) Cologne, Aachen, Münster, Bochum, Duisburg/Essen. Measured by number of registered students. Source: Federal Statistical Office, winter term 2015/16 Düsseldorf 3,476 units Mönchengladbach 6,035 units Inhabitants +1.8% Households +3.9% Cologne 3,902 units Bonn 2,285 units Dortmund 12,437 units Inhabitants +2.4% Households +6.9% Inhabitants +2.6% Households +4.8% 18 I October 2018

19 II. Attractive NRW Market NRW: high quality of life in the Rhine area NRW s capital Düsseldorf, international trade and business hub Münster Belefeld Ranked #6 worldwide in Mercer Quality of Living Ranking 2018 especially for its good infrastructure and its vast offering for cultural and leisure activities. Its excellent medical care, vibrant art scene and fashion industry represent other benefits. Duisburg Düsseldorf Cologne Dortmund Essen Wuppertal Bonn Ranked #18 worldwide in Monocle Quality of Life Survey 2018 especially for its excellent infrastructure (road, rail, air) and vast opportunities for leisure activities and shopping. According to Monocle, Düsseldorf is a rare combination of a local community and an enthusiastic cosmopolitan city. Düsseldorf offers an international airport, a well-known trade fair and is home to companies such as Henkel, Metro, Ceconomy, Uniper or Gerresheimer. The city is a hub for international businesses with 5,000 German or European headquarters, especially from Japan and multiple telecommunication firms such as Vodafone or Ericsson. Düsseldorf Population % Households +15.5% Düsseldorf 2016 Population 613,230 Vacancy 1) 1,5% Asking rent 1) 10,00 /sqm Many consultancies have their German headquarters (e.g. McKinsey, A.T. Kearney, Booz Allen Hamilton) or large offices in Düsseldorf Düsseldorf Medienhafen: Architecture by Frank Gehry, first-class restaurants and various offices occupied by media and consulting turned this former harbor area into a city hotspot. 1) Market vacancy and market asking rent 2) According to Wirtschaftswoche and ImmobilienScout24 Photo credits: Michael Gaida Source: LEG Housing market report 19 I October 2018

20 II. Attractive NRW Market NRW: successful structural change of the Ruhr area Example 1: Dortmund Münster Belefeld The former center of the mining and steel industry has developed into an innovative and future oriented science and technology city: Duisburg Essen Dortmund It has become a top location for future oriented sectors e.g., biotechnology/biomedicine, energy efficiency technology, production technology, IT. Its microsystems technology cluster is the largest in Germany and one of the largest in Europe. 900 logistics companies with 27,000 employees benefit from the good infrastructure. Excels in scientific research (e.g., Max Planck Institute of Molecular Physiology (MPI) as one of the world s leading institutions or Dortmund s Fraunhofer Institut for Material Flow and Logistics as Europe s top institute for logistics solutions). The science and technology campus in Dortmund includes 16 faculties and >33,000 students as well as the technology center with c.350 companies and c.10,000 employees in the areas of IT, logistics, microsystems, nanotechnology, production technology. Düsseldorf Wuppertal Cologne Bonn Dortmund Population +5.1% Households +6.5% Dortmund 2016 Population 585,813 Vacancy 1) 2,5% Asking rent 1) 6,15 /sqm The Phoenix lake is one of Germany s largest urban development projects on a former blast furnace and steel production site offering a vast recreational area for water sports and leisure, premium residential units, commercial units, offices and a marina with restaurants. 1) Market vacancy and market asking rent Source: LEG Housing market report Photo credits: evgenit 20 I October 2018

21 II. Attractive NRW Market NRW: successful structural change of the Ruhr area Example 2: Essen The former coal mining and steel city (Krupp) has developed into an important business, service and trade center: Duisburg Münster Belefeld Dortmund Essen 8 of the 100 largest German companies (by sales) are headquartered in Essen (e.g. E.ON; RWE; Thyssenkrupp; Aldi Nord; Schenker; Evonik; Brenntag; Hochtief); also c.13,000 small and medium sized companies. The industrial focus is on future-oriented industries. Essen is one of Germany s top locations for energy (RWE, E.ON and many small/medium-sized companies), for healthcare, medical research and health management as well as for environment and water management and an important center for creative businesses. Research from the University of Duisburg-Essen is highly regarded (in particular biomedicine, nanotechnology, urban development). As a specialist centre for medical provision it employs top-class doctors in nearly every specialty 40,000 jobs in the health services industry and. Düsseldorf Wuppertal Cologne Bonn Essen Population +3.4% Households +4.4% Essen 2016 Population 583,084 Vacancy 1) 3,4% Asking rent 1) 6,07 /sqm The European Commission has awarded Essen The European Green Capital 2017 thanks to its successful transformation from a coal and steel city to the greenest city in NRW. Zollverein UNESCO World Heritage Site: More than 25 years after its closure, the once largest colliery in Europe combines culture and dining, design and architecture, handicraft and the creative industry as the only World Heritage Site of the Ruhr Area. 1) Market vacancy and market asking rent Source: LEG Housing market report 21 I October 2018

22 II. Attractive NRW Market Positive demographics with stabilising net immigration Cities entering upswing mode Index = ~1.0 m 1) (approx. +80% yoy) NRW Net immigration to Germany ~25% 0.5 m 2) End of declining population ~0.5 m 3) 0.4% 0.5% 0.4% 0.5% 0.6% E Sources: 1) Interview with director of Federal Agency of Migration and Refugees (Aug 2016) 2) Federal Statistical Office, press release 13 Mar ) Deutsche Bundesbank, Monthly Report June ) Federal Statistical Office, press release 2 Nov ) Bundesamt für Migration und Flüchtlinge, March 2018 and Federal Statistical Office, April 2018 Bielefeld Mönchengladbach Krefeld Dortmund Essen CAGR m 3) Key facts Federal Agency of Migration and Refugees collected data that net immigration of foreigners to Germany amounted to about 0.25 million in H1-2017, thereof 0.12 million non-eu nationals 3) Deutsche Bundesbank forecasts 1.2 million additional immigrants (net) for ) End of 2016, 1.6 million people seeking protection (incl. asylum seekers) were registered in Germany (+113% vs 2014), the majority living in NRW (27%) 4) Stabilising net immigration expected for the years to come with decreasing share of refugees (c. -70% asylum seekers 2017 YOY; c. 0.1 million of refugees (net) in 2017 estimated) 5) Immigration is driving overall population growth, triggering additional growth in net new households Additional pressure on affordable housing segment Outperformance of German economy attracts qualified new immigration Liquid labour market and affordable living as pull-factors for NRW 22 I October 2018

23 II. Attractive NRW Market NRW cities showing significant upside potential 31.5% Purchasing power 1) / household Gross rent / household 27.2% % 24.5% Gross rent ratio 24.1% EUR 4, % 18.6% 18.2% 3,828 3,692 3,752 2,971 3,167 3,395 1, Munich* Berlin Dusseldorf Cologne Dortmund Essen NRW Source: CBRE housing market report 2016 (data as of 2015) *Own calculation based on CBRE housing market report 1) Net income pre tax and social insurance contributions and including received transfer payments 23 I October 2018

24 Agenda I. LEADING OPERATING PERFORMANCE Leading operating performance and profitability on basis of a regionally focused business model II. ATTRACTIVE NRW MARKET Metropolitan region benefitting from sound growth prospects; net immigration as key growth driver III. MARKET LEADING PLATFORM WITH EXTERNAL GROWTH POTENTIAL Proven track record for value accretive acquisitions in core markets with high synergies IV. INNOVATION & VALUE-ADDED SERVICES Creating additional value by leveraging value of the customer base; aspiration to become a digital leader V. FINANCIALS: HIGH PROFITABILITY STRONG BALANCE-SHEET Sound FFO and dividend growth on basis of leading operating profitability and long term secured financing VI. BUSINESS UPDATE & OUTLOOK 24 I October 2018

25 III. Market Leading Platform with External Growth Potential Strong acquisition track record since IPO Creating tangible value Acquisition Juno by Vivawest, August 2018 Acquisition in LEG core markets allows for high synergies/scale effects with existing portfolio as properties are mainly located in the Greater Ruhr area Off-market deal of c. 3,750 units due to strong network and reputation in the NRW market despite the current market environment Rental income of c. m 13.5 in 2017 Deal expected to be FFO per share accretive and NAV neutral Due to initial investments full earnings impact is expected to become visible in FY-2020 (smaller positive FFO PS effect in FY-2019) No need to raise fresh equity due to strength of LEG balance sheet Portfolio development since IPO (in units) ~43,000 ~ 134,000 Attractive initial yields + operational improvements + low risk = Creation of tangible value 90,926 Portfolio 1) : average in-place rents +10.0% (average 35.3 months, CAGR of 3.3%); e.g. : Vitus portfolio: rent/sqm +14.9% (44.6 months, CAGR of 3.8%) Charlie portfolio: rent/sqm +9.1% (27.3 months, CAGR of 3.9%) 2012 Acquisitions (net of disposals) August 2018 Lifting attractive value potential also in Stable and Higher Yielding markets 1) Acquisitions since year end 2012; excl. acquisitions in I October 2018

26 III. Market Leading Platform with External Growth Potential Scalability of platform + cost discipline support value accretive growth Strong volume growth at decreasing overhead cost Recurr. admin costs 35m # of units 150, ,000 90,926 94, , , , ,085 50, leads to a significant drop of the administrative costs ratio Recurr. admin costs/ net cold rent Net cold rent 12 % 10.2% 9.8% 500m 9 % 8.5% 8.4% % % 6.2% I October 2018

27 Agenda I. LEADING OPERATING PERFORMANCE Leading operating performance and profitability on basis of a regionally focused business model II. ATTRACTIVE NRW MARKET Metropolitan region benefitting from sound growth prospects; net immigration as key growth driver III. MARKET LEADING PLATFORM WITH EXTERNAL GROWTH POTENTIAL Proven track record for value accretive acquisitions in core markets with high synergies IV. INNOVATION & VALUE-ADDED SERVICES Creating additional value by leveraging value of the customer base; aspiration to become a digital leader V. FINANCIALS: HIGH PROFITABILITY STRONG BALANCE-SHEET Sound FFO and dividend growth on basis of leading operating profitability and long term secured financing VI. BUSINESS UPDATE & OUTLOOK 27 I October 2018

28 IV. Innovation & Value-Added Services Leveraging LEG s strong customer base with additional services Partner Partner Partner Partner Cooperation Multimedia: TV, internet and telephone Joint venture (51%) Electricity, heating, metering Joint venture (51%) Small repair work, craftsmen services Elderly care services Emergency call system Launch January 2014 Launch March 2015 Launch January 2017 Pilot launch in FFO contribution Services Growth drivers Increasing penetration rate & portfolio growth 15m 16m New services & third party business Price adjustments 4.6m 6.8m 9m Principles Additional cash flow streams at low risk Stay focused: selective extension of value chain 0.0m E complementary to letting business Value add for tenants and shareholder 28 I October 2018

29 IV. Innovation & Value-Added Services Digitization Digitization as a technology trend is of tremendous importance for the real estate industry and LEG is headed towards a leading position as a driver of innovation. Advanced customer orientation Tenant Portal / App Messenger Service / Chat bot Customer Relationship Management Virtual Flat Viewing & Home Staging Building intelligence Smart Home Energy Efficiency Internet of things (use in facility management) Rethinking business processes Invoice Workflow Utility Charging Turn Cost Management (interface with contractors) Mobile Solutions Digital Tenant Files Value-added services Multimedia Free Wifi in settlements Digital Bulletin Board (Touchscreen for tenants) use instead of own - household appliances leasing LEG s Innovation management approach Internal scope Corporate culture supporting constant development / innovation State-of-the-art processes Collaboration and communication External scope Innovative services and business models Extensive network Alliances and strategic partnerships Transferable innovations and best practices 29 I October 2018

30 Agenda I. LEADING OPERATING PERFORMANCE Leading operating performance and profitability on basis of a regionally focused business model II. ATTRACTIVE NRW MARKET Metropolitan region benefitting from sound growth prospects; net immigration as key growth driver III. MARKET LEADING PLATFORM WITH EXTERNAL GROWTH POTENTIAL Proven track record for value accretive acquisitions in core markets with high synergies IV. INNOVATION & VALUE-ADDED SERVICES Creating additional value by leveraging value of the customer base; aspiration to become a digital leader V. FINANCIALS: HIGH PROFITABILITY STRONG BALANCE-SHEET Sound FFO and dividend growth on basis of leading operating profitability and long term secured financing VI. BUSINESS UPDATE & OUTLOOK 30 I October 2018

31 V. Financials: High Profitability Financial highlights H Net Cold Rent ( m) Adj. Net Rental and Lease Income ( m) Adj. EBITDA ( m) +5.2% +3.4% +3.1% H H H H H H FFO I ( m) +5.1% Capex-Adj. FFO I / AFFO ( m) -21.2% Margin (%) H H Comment Adj. NRI Adj. EBITDA Scale effects offset by higher maintenance See above + lower admin. costs ratio FFO I See above + lower interests H H H H AFFO See above + higher growth capex 31 I October 2018

32 V. Financials: High Profitability Income statement H million H H Net rental and lease income Net income from the disposal of investment property Net income from the valuation of investment property Higher rental income (+ 13.7m YOY/+5.2%) Lower increase of net rental income due to higher maintenance expenses (+ 5.9m YOY) from a low H level Net income from the disposal of real estate inventory Portfolio revaluation resulted in 4.1% appraisal gain Net income from other services Administrative and other expenses Other income Recurring admin. costs also nearly stable ( 16.8m/+ 0.6m YOY) Operating earnings Net finance costs Earnings before income taxes Income tax expenses Consolidated net profit Net income from fair value measurement of derivatives (+ 17.1m; thereof 16.9m from convertibles) Lower cash interests ( 38.8m; - 1.7m YOY) despite rising debt volume Cash taxes (- -4.1m) 32 I October 2018

33 V. Financials: High Profitability FFO calculation H million H H Net cold rent Profit from operating expenses Maintenance (externally-procured services) Staff costs Allowances on rent receivables Other Non-recurring project costs (rental and lease) Recurring net rental and lease income Recurring net income from other services Staff costs Non-staff operating costs Non-recurring project costs (admin.) Recurring administrative expenses Other income and expenses Adjusted EBITDA Cash interest expenses and income Cash income taxes from rental and lease FFO I (including non-controlling interests) Non-controlling interests FFO I (excluding non-controlling interests) FFO II (including disposal of investment property) Capex-adjusted FFO I (AFFO) m/+5.2% Higher share of maintenance measures in comparison to low H level. Growth in staff costs mainly due to additional FTE s e.g. for crafts services and enhanced capex program (also some reorganisation costs) NRI pre-maintenance increased by m YOY (+5.5%) Admin. costs nearly flat (YOY) with slightly higher personnel expenses (e.g. legal) EBITDA pre maintenance increased by + 12m YOY (+5.4%) Lower interest costs (end Q2-2018: 1.75% vs. 1.85% in Q2-2017) 33 I October 2018

34 V. Financials: Strong Balance Sheet Balance sheet 30 June 2018 million Investment property 9, ,460.7 Prepayment for investment property Other non-current assets Non-current assets 10, ,633.0 Receivables and other assets Cash and cash equivalents Current assets Assets held for sale Total Assets 10, ,013.0 Equity 4, ,112.4 Non-current financing liabilities 3, ,821.4 Other non-current liabilities 1, ,158.8 Non-current liabilities 5, ,980.2 Current financing liabilities Other current liabilities Current liabilities Total Equity and Liabilities 10, ,013.0 Revaluation m Additions 36.2m Capex 61.2m Cash flow from operating activities 130.1m Investing activities m Financing activities m Loan proceeds 150.2m Repayment of loans m and of commercial paper - 100m 34 I October 2018

35 V. Financials: Strong Balance Sheet LTV 30 June 2018 million Financial liabilities 4, ,299.6 Cash & cash equivalents Net Debt 4, ,014.2 Investment properties 9, ,460.7 Properties held for sale Low gearing below current target LTV (up to 45%) leaves headroom for growth investments without raising fresh equity (c.3,750 units close to signing) Yield compression is likely to trigger a further LTV decline in H Prepayments for investment properties - - Property values 9, ,491.6 Loan to Value (LTV) in % Pro-forma LTV post conversion in % Significant positive impact on LTV from future conversion of 1 st convertible ( 300m nominal) expected (currently -280bps) 35 I October 2018

36 V. Financials: Strong Balance Sheet LT financing secures future earnings growth % Weighted avg. interest (excl. subsidised loans), as of % 1.3% 0m 1.4% 4m 2.8% 77m 2.0% 516m 932m 946m 2.2% 381m 3.5% 210m 1.7% 1.7% 490m 426m 1.5% 186m 0m 263m Swaps 15.0% Variable interest 8.1% Fixed interest 76.1% 1) 2) 3) ff 1) 300 m convertible bond with investor put option ) Corporate bond ( 500 m) 3) 400 m convertible bond Key Facts Average debt maturity 7.8 years Interest costs Ø 1.75% Hedging ratio 91.9% Rating Baa1 (Moody s) Maturities 1-2 years 0.1% 3-5 years 18.1% 6-8 years 51.0% 9 years 30.8% 36 I October 2018

37 V. Financials: Strong Balance Sheet EPRA-Net asset value 30 June 2018 million Equity (excl. minority interests) 4, ,087.4 Effect of exercising options, convertibles and other rights m net profit dividends 7.8m others NAV 4, ,646.6 Fair value measurement of derivative financial instruments Deferred taxes 1) 1, EPRA-NAV 6, ,805.7 Number of shares fully-diluted incl. convertible (m) 2) EPRA-NAV per share in Goodwill resulting from synergies Adjusted EPRA-NAV (excl. goodwill) 6, ,753.0 Adjusted EPRA-NAV per share in Attractive rental yield of 5.7% leaves upside for capital growth (thereof free financed portfolio: 5.9%) Value of services business not included in NAV Scenario: additional value approx per share (discount rate of 4.0%-6.0%) 3) 1) And goodwill resulting from deferred taxes on EPRA-adjustments 2) Actual number of shares outstanding 63.19m 3) Assumption: expected 2019 FFO, growth rate of 0% 37 I October 2018

38 V. Financials: Strong Balance Sheet Portfolio Valuation H1-2018: Broadbased valuation uplifts continue Breakdown revaluation gains Value drivers Rent & vacancy development 267 m Discount rate 177 m Others (e.g. cost adjustments) 1 m 445 m 1) Allocation capital growth Revaluation gains m Capex 61.2 m Valuation uplift by markets (l-f-l) Valuation uplift H1-18 Gross yield High-Growth Markets 4.7% (15.5% in FY-17, l-f-l) 4.6% Stable markets 3.1% (12.5% in FY-17, l-f-l) 6.5% Higher-yielding markets 3.7% (8.8% in FY-17, l-f-l) 7.1% Total portfolio 4.1% (13.0% in FY-17, l-f-l) 5.7% 1) Change in Gross Asset Value, l-f-l Increasingly positive momentum in the B-cities including higheryielding markets Reported IFRS values still show a gap to recently observed market transactions/ asking prices 38 I October 2018

39 Agenda I. LEADING OPERATING PERFORMANCE Leading operating performance and profitability on basis of a regionally focused business model II. ATTRACTIVE NRW MARKET Metropolitan region benefitting from sound growth prospects; net immigration as key growth driver III. MARKET LEADING PLATFORM WITH EXTERNAL GROWTH POTENTIAL Proven track record for value accretive acquisitions in core markets with high synergies IV. INNOVATION & VALUE-ADDED SERVICES Creating additional value by leveraging value of the customer base; aspiration to become a digital leader V. FINANCIALS: HIGH PROFITABILITY STRONG BALANCE-SHEET Sound FFO and dividend growth on basis of leading operating profitability and long term secured financing VI. BUSINESS UPDATE & OUTLOOK 39 I October 2018

40 VI. Business Update Further capital growth on the cards Imminent acquisition of c. 3,750 residential units creates additional upside to future FFO PS Transaction is currently close to signing (closing expected for Q4-2018) Acquisition in LEG core markets allows for high synergies & scale effects with existing portfolio Properties are mainly located in the Greater Ruhr area Off-market deal due to strong network and reputation in the NRW market No need to raise fresh equity due to strength of LEG balance sheet Deal expected to be FFO per share accretive and NAV neutral Due to initial investments full earnings impact is expected to become visible in FY-2020 FFO 2019: smaller positive effect FFO 2020e: > 5m; assumption 100% debt financing Accelerated asset sales for further portfolio optimisation planned for FY-2019 Potential volume: 1,500-2,000 units Further streamlining of portfolio with expected positive impact on operating efficiency/margins Proceeds earmarked for financing of future growth (capital recycling) 40 I October 2018

41 VI. Business Update Outlook for FFO I 315m - 323m / per share L-F-L rent growth ~3.0% L-F-L vacancy slightly decreasing EBITDA margin ~73% Investments ~30/sqm Dividend 70 % of FFO I 2019 FFO I 338m - 344m / per share L-F-L rent growth ~3.5% EBITDA margin ~74% Investments ~ 30/sqm Mid-term L-F-L rent growth % (per year; until 2021) 41 I October 2018

42 VI. Business Update Outlook for : Steady expansion of leading profitability FFO I per share ( ) e *at mid point FFO I per share CAGR e*: +12.2% (excl. future acquisitions) 2019e EBITDA Margin 64.3% 66.5% 67.3% 69.5% 72.1% ~73% ~74% e 2019e 42 I October 2018

43 VI. Business Update Attractive Dividends from Robust Cash Flows NAV per share ( ), excl. goodwill Dividend per share ( ) H I October 2018

44 LEG Share Information Prime Standard, Frankfurt Stock Exchange Total no. of shares: 63,188,185 Ticker symbol: LEG ISIN: DE000LEG1110 Basic data Indices: MDAX, FTSE EPRA/NAREIT, GPR 250, Stoxx Europe 600 Weighting ( ): MDAX 3.16%; EPRA 2.84% Rating: Baa1 (stable) by Moody s Share price ( , indexed; = 100) Well-balanced shareholder structure Other free float 72.5% BlackRock 9.7% MFS 9.3% AXA S.A. 3.0% BNP Paribas Asset Management 2.8% Norges Bank 2.7% EPRA Germany LEG Source: LEG; shareholdings according to voting rights notifications 44 I October 2018

45 Financial Calendar Date Report/Event Quarterly Report Q1 as of 31 March Annual General Meeting, Düsseldorf Quarterly Report Q2 as of 30 June Goldman Sachs & Berenberg Corporate Conference, Munich Baader Investment Conference, Munich KeplerCheuvreux Roadshow, Vienna Quarterly Statement Q3 as of 30 September Exane BNP Paribas Roadshow, Paris 45 I October 2018

46 Contact Investor Relations Burkhard Sawazki Head of Investor Relations & Strategic Business Analysis Tel: +49 (0) Karin Widenmann Manager Investor Relations & Strategic Business Analysis Tel: +49 (0) Benedikt Kupka Manager Investor Relations & Strategic Business Analysis Tel: +49 (0) LEG Immobilien AG Phone: +49 (0) Hans-Boeckler-Str. 38 Fax: +49 (0) Düsseldorf, Germany 46 I October 2018

47 Appendix

48 LEG Management Board Thomas Hegel CEO Eckhard Schultz CFO Responsibilities Corporate Development Innovation Management and Digitisation IT Acquisitions Corporate Communication Law, Structure & Organisation Human Resources Executive and Supervisory Board Office Inhouse Business Management Asset and Property Management Procurement Rent, Capex / Opex, Receivables Management Quarter & Commercial Real Estate Management Integration Energy Services & Repairs Management Corporate Finance & Treasury Investor Relations Controlling & Risk Management Accounting Tax Portfolio Management With LEG In Industry Since 2006 Since 2009 Since 1988 Since I October 2018

49 The LEG portfolio is highly attractive Aachen Düsseldorf Duisburg Hamm Köln Minden Münster Osnabrück Ratingen Remscheid Siegburg Solingen 49 I October 2018

50 Portfolio Structure 30 June 2018 Construction Years Free Financed / Rent Restricted Units 1) After % 5% 11% Until 1949 Rent restricted units 27% 58% % Free financed units Building Types 2) Apartment Size 2) Low Rise High Rise 2% 32% 66% Medium sized sqm 28% > 90 sqm 5% sqm 21% <40 sqm 5% sqm 41% 1) Based on number of buildings. Buildings are measured by entrances. 2) Refers to housing only. 50 I October 2018

51 Portfolio Sound property fundamentals basis for value growth As of Market High- Growth Markets Residential Units GAV Residential Assets ( m) % of Total Residential GAV GAV/ sqm ( ) In-Place Rent Multiple Market Multiples, Estimated Rental Values GAV Commercial/ Other Assets ( m) Total GAV 41,341 4,439 47% 1, x 19.3x 216 4,655 Stable Markets 47,565 2,945 31% x 14.4x 101 3,046 Higher- Yielding Markets 39,468 2,004 21% x 13.3x 59 2,062 Subtotal NRW 128,374 9,387 98% 1, x 16.1x 376 9,763 Portfolio outside NRW 1, % 1, x 16.6x Total Portfolio 130,224 9, % 1, x 16.1x 378 9,921 Other Assets Total 9, I October 2018

52 Portfolio Overview Above inflationary rent growth and high occupancy EPRA-vacancy of 2.8% (l-f-l) as of FY-2017 Significant rent upside 1) potential with current in-place rents of 5.50/sqm/month (as of FY-2017), approx. 10% below market rent levels In-place rent for unrestricted units has increased by approx. 4.1% (l-f-l) yoy, outperforming inflation Market (FY-2017) Residential Units % of total rent Rent /sqm Market rent 3) /sqm % to market 1) EPRA-Vacancy Rent CAGR last 5 yrs (lfl)* Occup. CAGR last 5 yrs* High-Growth Markets Stable Markets Higher-Yielding Markets 41,000 46% % 1.7% 2.8% 4.7% 47,650 31% % 3.5% 2.4% 8.7% 39,559 21% % 6.0% 2.6% -1.1% Total 2) 130, % % 3.5% 2.7% 3.5% Market (FY-2017) High-Growth Markets Stable Markets Higher- Yielding Markets Source: LEG, CBRE * As of FY-2017 and FY-2012 Note: Rent change free financed/subsidised is same store. 1) rent upside is defined as the difference between LEG in-place rent and market rent, the latter of which is an indicator of an average rent value that could theoretically be achieved, not implying that an adjustment of the in-place rent to the market rent is feasible, as stringent legal and contractual restrictions regarding rent increases exist. 2) Total includes an additional 1,895 residential units located outside NRW 3) Cf. Footnote 1 for a definition of market rent 52 I October 2018 % Subsidised units Rent/sqm EPRA-Vac. (%) Rent CAGR last 5 yrs (lfl)* Occ. change last 5 yrs* % free financed units Rent/sqm EPRA-Vac. (%) Rent CAGR last 5 yrs (lfl)* Occup. CAGR last 5 yrs* 31% % 1.0% 12.3% 69% % 3.8% 1.1% 29% % 1.0% 14.5% 71% % 3.3% 6.4% 21% % 0.9% 6.1% 79% % 4.0% -3.3% Total 2) 27% % 1.0% 11.0% 73% % 3.6% 0.5%

53 Portfolio Overview Well-balanced portfolio with significant growth potential Units Gross Asset Value Rental Income 1% 2% 2% By Market 30% 32% 21% 47% 26% 37% 37% 31% 35% High Growth Markets Stable Markets with Attractive Yields Higher Yielding Markets Non-NRW Markets Restricted Subsidised 26% Subsidised 27% Subsidised 24% vs. Unrestricted Freefinanced 74% Freefinanced 73% Freefinanced 76% 53 I October 2018

54 Leading Performance Capex Watch the value traps Measure Life cycle Investment / apartment (in ) IRR at 7% yield on costs Required yield on costs (6% IRR) Rent increase in % Floor covering 15 years 1, % 10.3% 2.6% Bathroom 30 years 5, % 7.3% 8.5% Kitchen 10 years 3,000 negative 13.6% 9.5% Conclusion for LEG: Bottom-up investment approach with strict IRR targets Capital discipline is key not overpaying for growth LEG aims at capital efficiency 54 I October 2018

55 Rent revisionary potential Refinancing of subsidised loans lifting value Rent Potential Subsidised Units In the following 10 years more than 25,000 units will come off rent restriction Units show significant upside to market rents Subject to general legal and other restrictions, the economic upside can theoretically be realised the year after restrictions expire 10 years 35.7% 5 years 23.6% Number of Units Coming Off Restriction and Rent Upside # Units 17,760 2,730 c. 8,100 1,737 1, ff Spread to Market Rent (in /sqm/month) ff 5 years 2) 6 10 years 2) 10 years 2) In-place rent years 40.7% Market rent 1) Upside potential 3) 33% 35% 21% Upside potential p.a. 3) 8.8m 15.1m 13.3m Source: LEG as of H ) Employed by CBRE as indicator of an average rent value that could theoretically be achieved, not implying that an adjustment of the in-place rent to the market rent is feasible, as stringent legal and contractual restrictions regarding rent increases exist. 2) 5 years = ; 6-10 years = ; 10 years = 2029ff. 3) Rent upside is defined as the difference between LEG in-place rent as of H and market rent (defined in footnote 1) as of FY I October 2018