LEG Immobilien AG March 2018

Transcription

1 CAPTURE CHANCES DRIVE INNOVATION LEG Immobilien AG March 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 March 2018

3 Key Investment Highlights c. 4.1% Dividend Yield 1) 2) 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 > 40,000 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 42.3% secures defensive profile Average cost of debt of Ø 1.74% with average maturity of c.8.1 years Secures high visibility for future earnings and dividend growth 1) Based on mid-point guidance 2019, share price as of 1 March 2018 ( 84.80) 2) Potential increase of payout not yet taken into account 3 I March 2018

4 Highlights FY-2017 Overall company development in Q4 Internal growth: Focus on continuous process optimisations Transaction markets: Low supply; single data points suggest a continuing yield compression Portfolio revaluation: Valuation gain of 557m (+6.3%) in H Strong operating performance on basis of high capital efficiency In-place rent, l-f-l 5.46/sqm (+3.3% total portfolio, +4.1% for free-financed units) EPRA-Vacancy, l-f-l 2.8% (-20 bps YOY) Maintenance/Capex 22.4/sqm (+23.1% YOY) Financials: Margin expansion story fully on track Net cold rent 534.7m (+4.5% YOY from 511.7m) Adjusted EBITDA 385.7m (+8.4% YOY from 355.7m) FFO I (excl. minorities) 295.3m (+10.1% YOY from 268.3m), 4.67 per share (+9.6% YOY from 4.26) EPRA-NAV (excl. goodwill) per share (+24.8% YOY) DPS 3.04 (+10.1% YOY, payout ratio 65%) 4 I March 2018

5 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. FINANCIALS: LEADING CASH FLOW PROFITABILITY STRONG BALANCE-SHEET Sound FFO and dividend growth on basis of leading operating profitability and long term secured financing VI. BUSINESS UPDATE & OUTLOOK 5 I March 2018

6 LEG at a Glance Leading residential platform across Germany s largest state Overview One of the largest German residential real estate companies with 130,085 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 Key Financial Metrics (FY-2017) Net Cold Rent 534.7m Adj. EBITDA 385.7m FFO I 295.3m GAV 9,518m EPRA-NAV per share 1) LTV 42.3% Key Data (FY-2017) Geographic Reach across NRW Number of units: 130,085 Residential sqm: 8.3m In-place rent (l-f-l): 5.46 /sqm EPRA-vacancy (l-f-l): 2.8% Rent free financed/ restricted units (l-f-l): 5.77/4.74 /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)) 6 I March 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 L-f-l Vacancy Rate % 3.5% LEG in-place rent per sqm unrestricted units 3.1% 2.9% 2.7% 2.5% 2.9% 2.8% LEG s affordable living product in urban areas well suited to market demand Product ideally tailored to rising demand from 1-2 person households and immigrants Source: LEG as of FY ) Sources: LEG, Bundesbank 2) Like-for-like 7 I March 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 41,000 47,650 39, ,085 % of GAV 46% 31% 21% 100% Gross Yield 4.7% 6.5% 7.3% 5.9% EPRA-Vacancy l-f-l 1.1% 2.9% 5.2% 2.8% 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% 3.7% 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 1,876 residential units located outside NRW 8 I March 2018

9 I. Leading Performance Strong operational performance 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 1.1% -10 bps Stable Markets with Attractive Yields (YOY) # of units 47, % In-place rent (sqm), l-f-l % EPRA-Vacancy, l-f-l 2.9% -10 bps Total Portfolio Higher-Yielding Markets (YOY) # of units 130, % In-place rent (sqm), l-f-l % EPRA-Vacancy, l-f-l 2.8% -20 bps (YOY) # of units 39, % In-place rent (sqm), l-f-l % EPRA-Vacancy, l-f-l 5.2% -30 bps 9 I March 2018

10 I. Leading Performance Portfolio highly exposed to structural growth markets Geographic Reach (60 km radius) Key Data Kleve Düren 10 I March 2018 Borken Hamm Wesel Recklinghausen Unna Gelsenkirchen Oberhausen Herne Dortmund Bochum Duisburg Essen Krefeld Viersen Mettmann Düsseldorf Wuppertal Monchengladbach Solingen Rhein-Kreis Neuss Leverkusen Heinsberg Aachen Cologne Rhein-Erft-Kreis Euskirchen Rhein-Sieg-Kreis Bonn Coesfeld Steinfurt Münster Hagen Warendorf Hochsauerlandkreis Märkischer Kreis Oberbergischer Kreis Olpe Soest Gütersloh Siegen- Wittgenstein Minden- Lübbecke Herford Bielefeld Lippe Paderborn Hoxter Approx. 93% of LEG s portfolio is located in the catchment area of swarm cities (60 km) and around 64% in the commuter belts of Düsseldorf and Cologne (60 km) NRW is a key metropolitan area in Germany and one of the largest areas in Europe (17.7m inhabitants) with Cologne and Düsseldorf being the most populous cities Many university cities are located in NRW, e.g. Aachen with the largest technical university in Europe Number of 1-2 person households constantly growing in swarm cities and outperforming Germany (2015: 75.6% in Germany) Opposite trend in age structure 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) Many large companies are located in growth markets, e.g. Bayer, Bertelsmann, Brenntag, Deutsche Post, Deutsche Telekom, Dr. Oetker, E.ON, Evonik, GEA, Henkel, innogy, Lanxess, Metro, Miele, RWE, thyssenkrupp, Uniper etc.

11 I. Leading Performance Well diversified portfolio with attractive reversionary potential High Growth Markets As of FY-2017 LEG NRW 2) No. of Residential Units 41,000 4,112,461 NORTH RHINE- WESTPHALIA Stable Markets with Attractive Yields As of FY-2017 LEG NRW 2) No. of Residential Units 47,650 2,910,961 Occupancy Rate (%) 98.3% 97.4% In-Place Rent per sqm ( ) Rent Potential 1) 15% n/a Borken Steinfurt Munster Coesfeld Warendorf Gütersloh Minden- Lübbecke Herford Bielefeld Lippe Occupancy Rate (%) 96.5% 96.3% In-Place Rent per sqm ( ) Rent Potential 1) 7% n/a The LEG portfolio offers a 10% average rent upside potential Kleve Düren Hamm Wesel Recklinghausen Unna Gelsenkirchen Oberhausen Herne Dortmund Bochum Duisburg Essen Rhein-Sieg-Kreis Soest Krefeld Hagen Viersen Mettmann Hochsauerlandkreis Dusseldorf Wuppertal Märkischer Kreis Remscheid Monchengladbach Solingen Rhein-Kreis Neuss Olpe Heinsberg Leverkusen Rheinisch-Bergischer Kreis Oberbergischer Cologne Siegen- Kreis Rhein-Erft-Kreis Wittgenstein Aachen Bonn Paderborn Hoxter Higher Yielding Markets As of FY-2017 LEG NRW 2) No. of Residential Units 39,559 1,905,824 Occupancy Rate (%) 94.0% 95.3% In-Place Rent per sqm ( ) Rent Potential 1) 5% n/a Euskirchen Source: LEG as of FY-2017, 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 March 2018

12 I. Leading Performance Attractive portfolio + operational excellence = strong rent growth L-f-l Residential Rent ( /sqm/month) Rent growth drivers +3.3% 0.2% 0.5% Cost rent adjustments Re-letting FY-2016 FY % Modernisation L-f-l Free Financed Rent ( /sqm/month) +3.3% +4.1% 1.9% Mietspiegel adjustments FY-2016 FY-2017 Strong performance of free financed units best proxy for underlying rent dynamics Rent restricted units: +1.2% 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) 12 I March 2018

13 I. Leading Performance Well-maintained portfolio tailored to demand Well-Maintained Portfolio 149.6m ( 18.2/sqm) 77.6m 72.0m FY-2016 maintenance 187.5m ( 22.4/sqm) 115.5m 72.0m FY-2017 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) 13.9/sqm 13.7/sqm 12.9/sqm 14.0/sqm 13.8/sqm 16.1/sqm 83.1m 81.9m 76.9m 85.5m 89.1m 114.2m 18.2/sqm 149.6m 22.4/sqm 187.5m in m I March maintenance capex

14 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 (17.7m inhabitants) Largest economy: Germany in Europe, NRW in Germany Germany s economic powerhouse generating approx. 21% of German GDP Bielefeld Gutersloh Essen Mulheim/Ruhr Düsseldorf Leverkusen Cologne Bonn About one third of the largest companies in Germany are based in NRW (8 of the DAX30 companies and 18 of Germany s 50 largest companies by revenue in 2014) Robust labour market Steadily decreasing rate of unemployment since 2005 (-42%) Highest population density key advantage for efficient property management 13% 12% 11% 10% 9% 8% 7% 6% 12.0% 11.4% Decreasing Unemployment in NRW 9.5% 8.5% 8.9% 8.7% 8.1% 8.1% 8.3% 7.8% 7.7% 7.4% 7.0% Source: Federal Statistical Office, Federal Employment Agency unemployment rate 14 I March 2018

15 II. Attractive NRW Market NRW: leading position in future industries Highlights Key markets showing sound household growth 1) 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 Regional focuses in Aachen, Cologne/Bonn, Münster, Ruhr area with Dortmund as a hotspot (MST Cluster is one of the largest in Europe) 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 15 I March 2018 Germany Inhabitants +1.7% Households +2.1% Inhabitants +2.3% Households +2.8% Inhabitants +1.8% Households +3.3% 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 +4.6% Gütersloh 1,270 units Inhabitants +2.4% Households +6.9% Inhabitants +2.6% Households +4.8%

16 II. Attractive NRW Market Excellent infrastructure making NRW one of the key transport hubs in Europe Airports Two major international airports - Düsseldorf International and Cologne Bonn Airport as well as four airports with European connections are located in NRW Düsseldorf International Airport is the 3 rd largest passenger airport in Germany Cologne Bonn Airport is the 6 th largest passenger airport in Germany and it is also Germany's #3 air cargo center with 786,000 tons in 2016 Road network NRW accounts for 17% of Germany s motorway network, although it represents only 10% of Germany s total area NRW lies at the intersection of important national and European routes and accounts for more than 25% of German traffic A network of approx. 2,200 kilometers of freeway, 4,500 kilometers of federal highways, 9,800 kilometers of district highways and 13,100 kilometers of state highways forms a good infrastructure Rail network The densest rail network in Germany with a length of more than 6,000 kilometers Rhein-Ruhr-Express (starts in ) is going to improve the connection between the Rhineland and Ruhr Area with trains running in a 15 minute interval The transhipment station in Cologne is Germany's biggest container terminal for combined rail/road transports Betuwe-Route connects NRW directly to the largest European sea port of Rotterdam NRW serves as an important hub in the international highspeed rail network (e.g. Thalys to Brussels and Paris) Waterways 720 kilometers of waterways via the Rhine or the European canal system provide links to the North Sea, the Baltic, the Atlantic, the Mediterranean and the Black Sea Excellent access to the most important European ports such as Amsterdam, Emden, Hamburg, Rotterdam Europe's largest inland port is in Duisburg 16 I March 2018

17 II. Attractive NRW Market Supply and demand drivers in favour of LEG s product NRW Household Growth ) People Households (m) >2 People Households (m) Residential Ownership Split in Germany (%) 2) Owner Occupied 43% Private 8% Private/Small 37% Professionals 20% 7.0 Cooperatives 5% Public 6% Drivers of Supply and Demand Low home ownership of approx. 43% in NRW 3) (45% in Germany 4) ) provides for consistent demand Structural long-term demand growth: 10.3% growth of 1-2-people households expected in NRW ( ). Process driven by decrease of average household size (2.04 in 2014 vs in 2008) Current strong net immigration not yet reflected in long term demographic forecasts High demand for affordable living product. Approx. 50% of households with income of less than 2,000 per month LEG has the right product that addresses needs of majority of households: average net rent of only approx. 350 per apartment per month and 40 years of experience in addressing the needs of immigrant tenants Majority of tenants are 1-2 people households (more than 70%) Church <1% LEG approx.: <1% of total market / 2% of professionals Source: Federal Statistical Office, BBSR, IDN Immodaten, DTZ, NRW, IT.NRW 1) it.nrw; Number of households in millions based on micro census as of ) GdW 07/2016, census ) Federal Statistical Office 2016, census ) IVD real estate association 17 I March 2018

18 II. Attractive NRW Market Stabilising net immigration with decreasing share of refugees ~1.0 m 1) (approx. +80% yoy) NRW Net Immigration to Germany ~25% 0.5 m 2) 0.25 m 3) 2.5 m 2) H Sources: 1) Interview with director of Federal Agency of Migration and Refugees (Aug 2016) 2) Deutsche Bundesbank 3) BAMF Federal Agency of Migration and Refugees, migration monitoring report 4) Federal Statistical Office, press release 2 Nov 2017 Key Facts In 2016, net immigration to Germany amounted to about 0.5 million 2) 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 2.5 million additional immigrants (net) for End of 2016, 1.6 million people seeking protection (incl. asylum seekers) were registered in Germany the majority living in NRW (27%) 4) Stabilising net immigration expected for the years to come with decreasing share of refugees 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 18 I March 2018

19 II. Attractive Market NRW population development - many cities just entering upswing phase Cities Entering Upswing Mode Index = End of declining population CAGR % Bielefeld % 0.4% 0.5% 0.6% Mönchengladbach Krefeld Dortmund Essen I March 2018

20 II. Attractive 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 20 I March 2018

21 III. Market Leading Platform with External Growth Potential Strong acquisition track record since IPO Creating tangible value Closing Change Units In-place rent / sqm Occupancy In-place rent / sqm Occupancy In-place rent / sqm Occupancy Total Portfolio 1) 39, % % 0.48 (+9.8%) ~ +50 bp Vitus portfolio 9, % % 0.61 (+12.8%) ~ +10 bp Charlie portfolio 2) 11, % % 0.40 (+8.3%) ~ -130 bp Portfolio 1) Split by Markets Higher-yielding markets 38% Others 1% 13% High-growth markets 48% Stable markets Attractive initial yields + operational improvements + low risk = Creation of tangible value Portfolio 1) : average in-place rents +9.8% (average 32.4 months, CAGR of 3.5%); vacancies down (-50 bps) Vitus portfolio: rent/sqm +12.8% (38.5 months, CAGR of 3.8%); vacancies -10 bps Charlie portfolio: rent/sqm +8.3% (21.3 months, CAGR of 4.6%) Lifting attractive value potential also in Stable and Higher Yielding markets 1) Acquisitions since year end 2012; excl. acquisitions in ) Charlie portfolio excl. disposal of ~2,000 units in Sep I March 2018

22 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 admin. 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 March 2018

23 III. Market Leading Platform with External Growth Potential Overview acquisitions FY-2017 Selective external growth contributes positively to FFO PS growth in tough markets Deal # Units acquired Geographic focus Market Annual net cold rent 1 1,145 Dortmund, Essen, Wuppertal and others In place rent/sqm Vacancy rate Closing Stable ~EUR 3.5m EUR % Oct Düsseldorf High Growth ~EUR 2.1m EUR % Oct ,792 Düsseldorf, Neuss High Growth ~EUR 9.6m EUR % July Düsseldorf, Neuss High Growth ~EUR 1.7m EUR % Jan 2018 c.3, I March 2018

24 Development In execution IV. Innovative Value-Added Services Leveraging LEG s strong customer base Partner Partner Partner Cooperation TV, internet and telephone Launch January 2014 Joint venture (51%) Electricity, heating, metering Launch March 2015 Joint venture (51%) Small repair work Launch January 2017 Elderly care Care services Emergency call system Others to follow Launch in H I March 2018

25 IV. Innovative Value-Added Services Highly compelling financials FFO Contribution Services Launch Multimedia: Jan 2014 Energy Service: Mar 2015 Craftsmen services: Jan m Growth drivers Increasing penetration rate Portfolio growth (acquisitions) New services Third party business Price adjustments 4.6m 6.8m 9m Principles Additional cash flow streams at low risk (operational and financial) Stay focused: selective extension of value chain complementary to letting business Value add for tenants and shareholder 0.0m I March 2018

26 V. Financials: High Profitability Financial highlights FY-2017 Net Cold Rent ( m) Adj. Net Rental and Lease Income ( m) Adj. EBITDA ( m) +4.5% +7.3% +8.4% FY-2016 FY-2017 FY-2016 FY-2017 FY-2016 FY-2017 FFO I ( m) Capex-Adj. FFO I / AFFO ( m) Margin (%) FY-2016 FY-2017 Comment Adj. NRI Scale effects + efficiency gains FY % FY FY % FY-2017 Adj. EBITDA FFO I AFFO See above + lower admin. costs ratio + higher others See above + lower interests See above + higher growth capex 26 I March 2018

27 V. Financials: High Profitability Income statement FY-2017 million FY-2017 FY-2016 Net rental and lease income Net income from the disposal of investment property Net income from the valuation of investment property 1, Higher rental income (+ 23.0m/+4.5%) Adj. NRI-margin rose from 74.5% to 76.5% YOY (scale effects, insourcing of craftsmen services, process optimisations) Net income from the disposal of real estate inventory Net income from other services Administrative and other expenses Other income Operating earnings 1, Net finance costs Earnings before income taxes 1, Income tax expenses Consolidated net profit FY-2017 portfolio valuation (+13.0% l-f-l YOY) Acquisition related one-time costs of 34.4m in FY-2016 Recurring admin. costs slightly increased to 33.3m (- 1.2m YOY) mainly due to an extraordinary item in 2016 One-time refinancing costs ( 50.4m) Net income from fair value measurement of derivatives ( m; thereof 138.8m from convertibles) Slightly lower cash interests ( 80.9m; - 2.3m YOY) despite rising debt volume Cash taxes (- 8.2m) 27 I March 2018

28 V. Financials: High Profitability FFO calculation FY-2017 million FY-2017 FY-2016 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.) Extraordinary and prior-period expenses 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) (+ 23.0m/+4.5%) Disproportional growth in staff costs mainly due to new crafts business (offset by lower procured services); adjusted for this effect increase of +2.0% m (+7.3% YOY) NRI-margin increased from 74.5% to 76.5% YOY Acquisition related one-time costs in FY-2016 Slight increase due to release of a provision in 2016 (number of FTE s decreased) m (+8.4% YOY) EBITDA margin 72.1% vs. 69.5% in FY-16 Lower average interest costs (FY-17 avg. cost c.1.82% vs. c.2.08% in FY-16) 28 I March 2018

29 V. Financials: High Profitability Leading profitability despite short term distortion from restricted units Adj. EBITDA margin FY-2017 FY-2016 m margin % m margin % As reported Gap restricted vs. unrestricted rents 1) ) /sqm: 4.74 vs in 2017, 4.67 vs in 2016 EBITDA as reported distorted by restricted units (compensation for lower rents included in interest result below the EBITDA line) Scenario analysis: closing gap between restricted vs. unrestricted rents; Adjusted EBITDA margin approx. 150 bps higher 29 I March 2018

30 V. Financials: Strong Balance Sheet Balance sheet 31 December 2017 million Investment property 9, ,954.9 Prepayment for investment property Other non-current assets Non-current assets 9, ,164.5 Receivables and other assets Cash and cash equivalents Current assets Assets held for sale Total Assets 10, ,435.9 Equity 4, ,436.7 Non-current financing liabilities 3, ,222.3 Other non-current liabilities 1, Non-current liabilities 4, ,092.6 Current financing liabilities Other current liabilities Current liabilities Total Equity and Liabilities 10, ,435.9 Revaluation gains 1,036.8m Additions 396.8m Capex 115.5m Reclassification m Cash flow from operating activities 269.6m Dividend m Bond issue + 495m Convertible bond + 395m Repayment of subsidised loans m and other bank loans m Commercial paper + 100m 30 I March 2018

31 V. Financials: Strong Balance Sheet LTV 31 December 2017 million Financial liabilities 4, ,774.3 Cash & cash equivalents Net Debt 4, ,607.6 Investment properties 9, ,954.9 Low gearing below current target LTV (approx. 45%) leaves headroom for growth investments Yield compression is likely to trigger a further LTV decline in FY-2018 Properties held for sale Prepayments for investment properties Prepayments for acquisitions Property values 9, ,039.2 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 -290bps) 31 I March 2018

32 V. Financials: High Profitability LT financing secures future earnings growth % Weighted avg. interest (excl. subsidised loans), as of % 1.3% 2.0% 934m 950m Variable interest 8.5% -0.16% 101m 1) 1.8% 2.8% 6m 77m 518m 3.5% 216m 2.2% 383m 1.8% 1.7% 417m 424m 1.6% 117m 0m 265m Swaps 13.9% * Fixed interest 77.6% 2) 3) 4) ff 1) Commercial paper 2) 300 m convertible bond with investor put option ) Corporate bond ( 500 m) 4) 400 m convertible bond *Including commercial paper Key Facts Average debt maturity 8.3 years (8.1 years*) Interest costs Ø 1.78% (1.74%*) Hedging ratio 93.6% (91.5%*) Rating Baa1 (Moody s) Maturities 1-2 years 0.2% (2.4%*) 3-5 years 18.8% (18.4%*) 6-8 years 52.6% (51.4%*) 9 years 28.4% (27.7%*) 32 I March 2018

33 V. Financials: Strong Balance Sheet EPRA-Net asset value 31 December 2017 million Equity (excl. minority interests) 4, ,414.5 Effect of exercising options, convertibles and other rights NAV 4, , m net profit m dividend 17.1m other comprehensive income (derivatives) Fair value measurement of derivative financial instruments Deferred taxes 1) EPRA-NAV 5, ,641.0 Number of shares fully-diluted incl. convertible (m) 2) EPRA-NAV per share in Goodwill resulting from synergies Adjusted EPRA-NAV (excl. goodwill) 5, ,597.2 Adjusted EPRA-NAV per share in Attractive rental yield of 5.9% leaves upside for capital growth (thereof free financed portfolio: 6.1%) 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% 33 I March 2018

34 VI. Business Update Best-in-class management platform Leading letting performance Strong bread-and-butter growth excluding capex (FY-2017: approx. 2.5%) Strong integration track record Rent-CAGR 3.5% in average c.32 months, lower vacancies Acquired portfolios with high exposure to Green and Purple markets Leading operating profitability EBITDA margin target of 74% for 2019 Estimated short term drag from rent restricted units c.150 bps (i.e. adjusted target margin >75%) Process innovations/digitisation remain key margin driver Launch of new tenant related services also contributing positively to margin targets New product: Pilot phase for leasing concept of kitchen equipment (in cooperation with strategic partners) Further capital growth on the cards Portfolio well positioned in the cycle with high exposure to B-locations in the catchment areas ofa-cities 93% of properties located in structural growth markets or in their respective commuter belts Recently observed transcation prices some 10% above year-end valuation but low liquidity in the market (delta up to c.25%) 34 I March 2018

35 VI. Business Update Capex programme Lifting internal growth potential Total invest ( /sqm) L-f-l rent growth 22.4 ~ 29 ~ ~ 30 ~ % ~3.0% 50bp ~3.5% ~ % ~ % 90bp 50-90bp 50-90bp Regular rent growth Contribution from enhanced capex Strict investment criteria maintained IRR hurdle of 6% Sole focus on Yield on Costs can trigger substantial misallocation of capital (NAV dilution) Construction work for enhanced capex programme started in Q Improving market conditions allow for larger investment volumes Instrument to capture reversionary potential in one step (especially in locations where rental laws prohibit higher one-time rent increases) 35 I March 2018

36 VI. Business Update Portfolio valuation H Broadbased valuation uplifts gaining traction Breakdown Revaluation Gains Value drivers Rent & vacancy development 171 m Discount rate 383 m Repayment of subsidized loans 101 m Others (e.g. cost adjustments) -13 m 642 m Allocation capital growth Revaluation gains 557 m thereof repayment of subsidized loans 101 m Capex 85 m Valuation Uplift by Markets Valuation uplift H2-17 Gross yield High-growth markets 7.1% (15.5% in FY-17, l-f-l) 4.7% Stable markets 6.5% (12.5% in FY-17, l-f-l) 6.5% Higher-yielding markets 4.5% (8.8% in FY-17, l-f-l) 7.3% Total portfolio 6.3% (13.0% in FY-17, l-f-l) 5.9% Increasingly positive momentum in the B-cities Reported IFRS values show still significant gap to recently observed market transactions/ asking prices 36 I March 2018

37 VI. Business Update 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 terracies, 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% 37 I March 2018

38 VI. Outlook for FFO I 315m - 323m / per share EBITDA margin ~73% L-F-L rent growth 3.0% L-F-L vacancy slightly decreasing Investments ~ 29/sqm Dividend 65% of FFO I 2019 FFO I 338m - 344m / per share EBITDA margin ~74% L-F-L rent growth ~3.5% Investments ~ 29-30/sqm Mid-term L-F-L rent growth % 38 I March 2018

39 VI. 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 39 I March 2018

40 VI. Attractive Dividends from Robust Cash Flows Diversified and Growing Income Base Rent Acquisitions Downward Pressure on Costs due to Efficiency Opportunities Appropriate Leverage Structure Optimises Risk/Return to Equity Cost Base Interest Cost FFO I 65% 35% Total Return Driving Dividend Payment and Growth Dividend Dividend 2016: Based on FFO guidance 4.1% 1) Organic growth target (mid-term) approx. 6% + growth from acquisitions Capital Growth Acquisitions Capex Debt Amortisation 1) Based on mid-point guidance 2019, share price as of 1 March 2018 ( 84.80) 40 I March 2018

41 VI. Attractive Dividends from Robust Cash Flows NAV per share ( ), excl. goodwill Dividend per share ( ) I March 2018

42 LEG Share Information Basic data Well-balanced shareholder structure Prime Standard, Frankfurt Stock Exchange Total no. of shares: 63,188,185 Ticker symbol: LEG ISIN: DE000LEG1110 Indices: MDAX, FTSE EPRA/NAREIT, GPR 250, Stoxx Europe 600 Weighting ( ): MDAX 2.93%; EPRA 2.70% Rating: Baa1 (stable) by Moody s Share price ( , indexed; = 100) BlackRock 10.7% MFS 9.3% AXA S.A. 3.0% BNP Paribas Asset Management 3.0% Other free float 74.0% EPRA Germany LEG Source: LEG; shareholdings according to latest voting rights notifications 42 I March 2018

43 Capital Market Financing Corporate Bond Convertible Bond Issue Size EUR 500m 2014/ /2025 Issue Size EUR 300m EUR 400m Term / Maturity Date 7 years / 23 January 2024 Term / Maturity Date 7.2 years / 1 July years / 1 September 2025 Coupon % p.a. Coupon % p.a % p.a. Issue % Initial Conversion EUR EUR Price Price Initial Re-offer Yield % Adjusted Conversion Price EUR (as of 18 May 2017) -- Financial Covenants ISIN WKN Incurrence-based: Net financial debt / total assets 60% Secured financial debt / total assets 45% 1) Unencumbered assets / unsecured financial debt 125% 1) Maintenance-based: Adj. EBITDA / net cash interest 1.8x XS A2E4W8 Investor Put 1 July Issuer Call From 22 July 2019, if the LEG share price exceeds 130 % of the then applicable conversion price From 22 September 2022, if the LEG share price exceeds 130 % of the then applicable conversion price ISIN DE000LEG1CB5 DE000A2GSDH2 WKN LEG1CB A2GSDH 1) After 31 July I March 2018

44 Financial Calendar Date Report/Event Annual Report Roadshow Boston & New York, Deutsche Bank Commerzbank German Real Estate Conference, London Bank ofamerica Merrill Lynch European Real Estate Conference, London HSBC European Real Estate Conference, Frankfurt Quarterly Report Q1 as of 31 March I March 2018

45 Contact Investor Relations Burkhard Sawazki Head of Investor Relations & Strategic Business Analysis Tel: +49 (0) Karin Widenmann Manager Investor Relations Tel: +49 (0) LEG Immobilien AG Phone: +49 (0) Hans-Boeckler-Str. 38 Fax: +49 (0) Düsseldorf, Germany 45 I March 2018

46 Appendix

47 LEG Management Board Thomas Hegel CEO Eckhard Schultz CFO Holger Hentschel COO Responsibilities Corporate Development New Business / Acquisitions Corporate Communication Legal, Internal Audit & Compliance Human Resources IT Executive and Supervisory Board Office Central Services Finance & Treasury Corporate Finance Investor Relations Controlling & Risk Management Accounting & Tax Portfolio Management Asset and Property Management Rent Management Procurement Capex / Opex Management Integration Energy Services & Repairs Management With LEG In Industry Since 2006 Since 2009 Since 1987 Since 1988 Since 1993 Since I March 2018

48 Portfolio Structure 31 December 2017 Construction Years Free Financed / Rent Restricted Units 1) After % 6% 11% Until 1949 Rent restricted units 27% 58% % Free financed units Building Types 2) Apartment Size 2) Low Rise High Rise 2% 32% 65% 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. 48 I March 2018

49 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 Multiples, Estimated Rental Values GAV Commercial/ Other Assets ( m) Total GAV 41,000 4,174 46% 1, x 18.4x 214 4,388 Stable Markets 47,650 2,838 31% x 14.3x 108 2,946 Higher- Yielding Markets 39,559 1,923 21% x 13.1x 61 1,985 Subtotal NRW 128,209 8,935 98% 1, x 15.6x 384 9,319 Portfolio outside NRW 1, % 1, x 15.5x Total Portfolio 130,085 9, % 1, x 15.5x 385 9,466 Other Assets Total 9, I March 2018

50 Rhein-Erft-Kreis Bonn Düsseldorf Rhein-Sieg-Kreis Gütersloh, district Cologne Münster Rhein-Kreis Neuss Coesfeld, district Rheinisch-Bergischer Kreis Kleve, district Paderborn, district Steinfurt, district Heinsberg, district Aachen, city region Borken, district Euskirchen, district Bielefeld Mettmann, district Leverkusen Soest, district Mülheim (Ruhr) Dortmund Wesel, district Warendorf, district Olpe, district Oberbergischer Kreis Essen Düren, district Viersen, district Solingen Unna, district Siegen-Wittgenstein, district Mönchengladbach Hamm Wuppertal Krefeld Ennepe-Ruhr-Kreis Minden-Lübbecke, district Herford, district Oberhausen Hochsauerlandkreis Lippe, district Bottrop Bochum Recklinghausen, district Märkischer Kreis Höxter, district Herne Remscheid Hagen Duisburg Gelsenkirchen High Quality Portfolio Classification of micro markets High Growth Markets Stable Markets with Attractive Yields Higher Yielding Markets Population Growth % (0.4)% (0.4)% Household Forecast (%) 1) 6.2% (0.6)% (6.1)% Purchasing Power Index 2015 Employment Growth (%) Market Vacancy 2015 (unweighted) % 5.5% 3.8% 2.6% 3.7% 4.7% Sources: inwis, BBSR, Empirica, CBRE 1) Excludes immigration Population Households Buying power Contributors to social insurance Rent Vacancy 50 I March 2018

51 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) Rent CAGR last /sqm % to market 1) EPRA-Vacancy 5 yrs (lfl)* Occup. CAGR last 5 yrs* High Growth Markets 41,000 46% % 1.7% 2.8% 4.7% Stable Markets With Attractive Yields Higher Yielding Markets 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) % 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* High Growth Markets Stable Markets With Attractive Yields 31% % 1.0% 12.3% 69% % 3.8% 1.1% 29% % 1.0% 14.5% 71% % 3.3% 6.4% 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 51 I March % % 0.9% 6.1% 79% % 4.0% -3.3% Total 2) 27% % 1.0% 11.0% 73% % 3.6% 0.5%

52 Portfolio Overview Well-balanced portfolio with significant growth potential Units Gross Asset Value Rental Income 1% 2% 2% By Market 30% 32% 21% 46% 26% 37% 37% 31% 35% High Growth Markets Stable Markets with Attractive Yields Higher Yielding Markets Non-NRW Markets Restricted Subsidised 27% Subsidised 28% Subsidised 25% vs. Unrestricted Freefinanced 73% Freefinanced 72% Freefinanced 75% 52 I March 2018

53 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 displine is key not overpaying for growth 53 I March 2018

54 Rent revisionary potential Refinancing of subsidised loans lifting value Rent Potential Subsidised Units In the following 10 years around 9,000 units will come off rent restriction Units show significant upside to market rents Number of Units Coming Off Restriction and Rent Upside # Units 25,950 2,730 1,737 1, ff Subject to general legal and other restrictions, the economic upside can theoretically be realised the year after restrictions expire 10 years 74.3% 5 years 18.0% 6-10 years 7.7% Spread to Market Rent /sqm /month ff 5 years 2) 6 10 years 2) 10 years 2) In-place rent Market rent 1) Upside potential 3) 36% 29% 27% Upside potential p.a. 3) 9.1m 2.7m 27.5m Source: LEG as of FY ) 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 = 2028ff. 3) Rent upside is defined as the difference between LEG in-place rent as of FY-2017 and market rent (defined in footnote 1) as of FY I March 2018

55 Rent Regulation (I) Free financed units Existing contracts rent increase by max. 20% (15% cap in 59 NRW cities) within 3 years; limit: local reference rent 1) after modernization: annual rent can be increased by 11% of modernization costs (modernization charge) New contracts markets without rental cap: no regulation in tense markets 2) the rental cap (Mietpreisbremse) applies: max. 10% on local reference rent 1) Low impact of rental cap on LEG: 23% of free financed units or 17% of total portfolio concerned NRW government intends to abolish 15% cap NRW government intends to abolish the rental cap Future changes according to new coalition agreement of Federal Government Mietspiegel: extension of validity period from 2 to 3 years (qualified Mietspiegel only); review of reference period (currently 4 years) Modernization: reduction of modernization charge from 11% to 8% (only applicable in cities with 15% cap for rent increases; review after 5 years); rent increase max. 3 per sqm over a period of six years Reletting: mandatory disclosure of previous tenant s rent Mietpreisbremse: assessment of its suitability and effectiveness by the end of ) Based on rent table (Mietspiegel) or 3 comparable units or expert s report 2) 22 cities in NRW: Aachen, Bielefeld, Bocholt, Bonn, Brühl, Düsseldorf, Erkrath, Frechen, Hürth, Kleve, Cologne, Langenfeld, Leverkusen, Meerbusch, Monheim, Münster, Neuss, Paderborn, Ratingen, Sankt Augustin, Siegburg, Troisdorf 55 I March 2018