Instone Real Estate Group AG

Earnings Release • Mar 17, 2022

FY 2021 Results Presentation

Disclaimer

Highlights

Portfolio Update

FY Financial Performance

Outlook

Appendix

Highlights

Highlights

Impressive operational results

Operational Highlights

 Sales: Strong demand from private and institutional investors continues unabated; continued upward pressure on prices  Strong momentum in Q4 (7 institutional deals signed), FY-2021 sales volume of c.€1.1bn ahead of expectations  Favourable demand and pricing environment continues in 2022 YTD  Acquisitions: €1.8bn of new projects approved in 2021; GDV climbs to €7.5bn (+ 23,9% yoy)  Supply: Instone well positioned to cope with ongoing supply bottlenecks and cost price inflation  Sustainability: Voluntary first time publication of fully-fledged sustainability report including "limited assurance" provided by Deloitte and covering i.a. Scope 1,2,3 emissions as well as various social and governance aspects

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Strong earnings – slightly exceeding guidance – underscore strength of business model

FY-2021 Results	 Adjusted revenues: €783.6m (FY 2020: €480.1m, +63.2%)  Adjusted gross profit margin: 28.3% (FY 2020: 30.5%)  Adjusted EBIT: €155.7m (FY 2020: €83.8m, +85.8%)  Adjusted earnings after tax (EAT): €96.9m (FY 2020: €41.1m; +135.8%)  Dividend proposal €0.62 per share (FY 2020: €0.26/share; +138.5%)
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Guidance for FY-2022 confirmed

	 Adj. revenues of €900-1,000m
	 Adj. gross profit of 25-26%
Outlook	 Adj. EAT of €90-100m
	 Sales volume of >€1,000m
	 Management is closely monitoring the full extent of developments triggered by Russian invasion of Ukraine

Retail sales ratio remains above long term mean since end of 1st lockdown

Pricing environment remains favourable

German residential prices: upward trend intact

House price inflation¹

Interests - Average 10y-fixed rate mortgage²

Q4 market reports show continued positive price dynamic – Outlook for 2022 remains positive

• Buying remains affordable and attractive compared to renting
• Instone price index captures official sales price list, inflation of condo sales during marketing phase only

Affordability

Apartment 85 sqm, metropolitan area	Owner occupier
Buying
Price/sqm	5,500 €
Purchase price (incl. transaction costs 7.5%)	502,563 €
Financing (20% equity)	402,050 €
Financing costs at 1.6% (per month)	536 €
Total monthly charges (2.0% amortisation)	1,206 €
Renting
Rent 14 €/sqm/month	1,190 €

7 | 17.03.2022 | FY-2021

Instone well positioned to cope with continued cost inflation

Construction price inflation¹

Observations

• Construction price index up 14.4% yoy based on official data
• qoq increase peaked in Q1-21 and has since eased
• economic implications of Russia's invasion of Ukraine to be monitored closely

Instone has a clearly defined strategy to mitigate construction price inflation 1. Pre-sold projects

• high level of (mostly) fixed price supplier contracts awarded concurrently or shortly after forward sale agreement
• superior supplier relationships and construction management expertise
• conservative budgeting of expected construction costs fully taking recent construction price inflation into account
• as of Dec-21 a significant share of total expected project costs of our pre-sold portfolio has been fixed based on pre-awarded supplier contracts

Condo sales projects

• high level of (mostly) fixed price supplier contracts awarded prior to construction start (i.e. when pre-sales contracts become legally binding)
• realistic budgeting of expected construction costs
• continuous sales price increase tends to fully compensate construction cost inflation
• 2. Energy-efficiency related subsidies
• previously unexpected approved subsidies create additional buffer
• 3. Favourable CPI to HPI relationship
• construction costs account for c 40% of selling price
• 1 percentage point of CPI growth is neutralised by 0.4 percentage point of HPI

Effective 2021 Instone cost price inflation substantially below Y-o-Y construction price index 2022 Strategy will remain unchanged

Political environment supportive of expanding residential construction

Key elements of coalition agreement

Relevance for Instone

• Construction of 400k resi units p.a., of which 100k are publicly subsidized	Positive: Although support schemes are unclear, there is commitment to support new developments. INS benefits from role as forerunner in the segment of affordable housing
• Strengthening of climate protection in new construction (KfW40 standard), focus on GHG (expiry of KfW55- programme) -	Neutral to negative: General commitment to support high energy standard for new builds (future focus on KfW40 equivalent properties) – Short term uncertainty due to limited budget for new projects in 2022 (€1bn) and still no clarity for support schemes in 2023 and beyond
• Accelerated energetic refurbishment of existing housing stock (energy standard EH 70 for larger refurbishments; new heating systems share of 65% from renewable energies)	Neutral: Return on investments for landlords of existing housing stock is unclear
• Extension of existing rental regulation (rent price break), introduction of qualified rent tables	Neutral: In the existing legal framework new builds are exempt from the rent restrictions
• Promotion of the state owned housing company (BlmA) for more new construction	Neutral to positive: INS has a highly competitive product (nyoo)
• Increase of regular depreciation for residential investments from 2% to 3%	Positive Supportive for post tax returns (IRRs)
• Subsidies for the foundation of housing companies with low return target (with rents below market levels)	Neutral to positive: INS with competitive edge (nyoo product) for the affordable segment
• Potential introduction of reduced real estate transfer tax for first time buyers	Positive: Help to buy-scheme could create additional demand from retail clients
• Abolishment of tax benefits associated with share deals	Neutral: No noticeable impact as Instone sales are almost entirely asset deals

9 | 17.03.2022 | FY-2021

Portfolio Update

Significant GDV increase paves way for future growth

Project portfolio development (GDV)

	volume (€m)	Exp. units
2021
Metropolitan area Stuttgart	70	160
Metropolitan area Nuremberg	111	180
Metropolitan area Rhine-Main	55	100
Metropolitan area Nuremberg	68	160
Metropolitan area Rhine-Main	283	600
Metropolitan area Rhine-Main	31	40
Metropolitan area NRW	715	1,500
Metropolitan area Hamburg	84	120
Metropolitan area Rhine-Main	97	220
Metropolitan area NRW	73	180
SUBTOTAL	1,587	3,260
At-equity investment Stuttgart region	200	/
TOTAL	1,787	/

Pre-sold units support future cash flow and earnings visibility

Project portfolio as of 31/12/2021 by development (GDV)

The scaling of the business continues to gain momentum

Units under construction – ramping up the business

Construction starts

13 | 17.03.2022 | FY-2021

FY 2021 Financial Performance

Adjusted Results of Operations

Leading profitability maintained

€m	Q4 2021	Q4 2020	Change	FY 2021	FY 2020	Change
Revenues	378.0	188.8	100.2%	783.6	480.1	63.2%
Project cost	-277.5	-136.3	103.6%	-562.1	-333.5	68.5%
Gross profit	100.5	52.5	91.4%	221.5	146.6	51.1%
Gross Margin	26.6%	27.8%		28.3%	30.5%
Platform cost	-22.2	-20.7	7.2%	-80.5	-65.5	22.9%
Share of results of joint ventures	12.0	2.0		14.6	2.7
EBIT	90.4	33.8	167.5%	155.7	83.8	85.8%
EBIT Margin	23.9%	17.9%		19.9%	17.5%
Financial and other results	-9.1	-8.9		-19.2	-22.0
EBT	81.3	25.0	225.2%	136.5	59.4	129.8%
EBT Margin	21.5%	13.2%		17.4%	12.4%
Taxes	-24.7	-8.7		-39.6	-18.3
Tax rate	-30.4%	-34.8%		29.0%	30.8%
EAT	56.6	16.2	249.4%	96.9	41.1	135.8%
EAT Margin	15.0%	8.6%		12.4%	8.6%
EAT post minorities	55.9	16.2	244.2%	98.7	41.1	140.1%
EPS1	1.19	0.39	204.4%	2.10	0.99	112.4%

• Strong topline growth despite ongoing negative COVID19 related effects
• Industry leading gross margin
• Rising platform costs in line with guidance
• Exceptional EBIT margin supported by €14.6m income from associates

EPS more than doubled, despite increased number of shares outstanding

Institutional sales increased to 71% in 2021

Volume of sales contracts by customer segment In €m Q1 Q2 Q3 Q4 FY 2021 119 89 171 762 1,140 809 331

• Institutional sales account for 71% of aggregate 2021 sales (2020: 39%)
• Substantial portion of overall sales contracts agreed in seasonally strong Q4

Adjusted revenues by customer segment

• Institutional revenues account for 62% 2021 revenues (2020: 42%)
• Almost 50% of aggregate revenues recognised in seasonally strong Q4

Strong balance sheet leaves significant headroom for growth

€m	31/12/2021	31/12/2020
Corporate debt	199.1	207.2
Project debt	191.4	274.5
Financial debt	390.5	481.7
Cash and cash equivalents and term deposits	-151.0	-232.0
Net financial debt	239.5	249.7
Inventories and contract asset / liabilities	1,190.1	946.4
LTC*	20.1%	26.4%
Adjusted EBIT (LTM)**	155.7	83.8
Adjusted EBITDA (LTM)**	160.3	87.9
Net financial debt / adjusted EBITDA	1.5	2.8

• 20.1% LTC implies very low financial gearing
• Reminder: inventories are recorded at historical costs
• Significant hidden reserves provide additional downside cushion
• Decline in net debt/adjusted EBITDA to a low level of 1.5x mainly due to rising operating profit
• INS's financial strength remains a competitive edge for acquisitions in a highly fragmented market

Positive cash flow despite growth investments

Cash Flow (€m)	Q4 2021	Q4 2020	FY 2021	FY 2020
EBITDA adj.	91.6	34.9	160.3	87.9
Other non-cash items	-25.1	1.6	-36.6	-3.8
Taxes paid	-0.3	1.9	-8.3	-11.4
Change in working capital	-134.3	55.0	-71.5	47.2
Operating cash flow	-68.1	93.5	43.9	119.9
Land plot acquisition payments (incl. RETT*)	139.3	32.9	212.4	105.1
Operating cash flow excl. investments	71.3	126.4	256.3	225.0

Positive operating CF based on retail prepayments and institutional milestone payments

• despite build-up of inventories for future growth
• Negative operating cash flow in 2022 expected due to planned investment in land plots for future growth

Liquidity (€m)	Total	t/o drawn	t/o available
Corporate debt
Promissory notes	197.5	197.5	0.0
Revolving Credit Facilities	119.0	0.0	119.0
Total	316.5	197.5	119.0
Cash and cash equivalents and term deposits			151.0
Total corporate funds available			270.0
Project debt
Project finance**	295.6	190.9	104.7

Ample financial headroom for future growth

Intrinsic pipeline value indicates fundamental upside

Additional upside from planned future growth investments

Prospective NAV (€m)	31/12/2021	31/12/2020
Expected selling prices of project pipeline (GDV)	7,500	6,054
Payments received	-1,191	-942
Expected project costs	-4,293	-3,368
Net debt	-240	-250
Expected proceeds from "at-equity" projects	132	71
Prospective Net Asset Value	1,909	1,566
Number of shares (m)	47.0	47.0
Prospective Net Asset Value per share (€)	40.62	33.32

• Payments received reflect project related income received to date from pre-sale of pipeline and rental income
• Expected project costs include future expected payouts required to complete INS project pipeline
• Proceeds from "at-equity" projects reflect profit from subsidiaries accounted for "at-equity"

Outlook

Strong structural growth ahead: outlook confirmed

€m	Outlook 2021	2021 results	Outlook 2022
Revenues (adjusted)	780-800	783.6	900-1,000
Gross profit margin (adjusted)	c.28%	28.3	25-26%
EAT (adjusted)	93-96	96.9	90-100
Volume of concluded Sales contracts	>1,000	1,140.1	>1,000

Dividend policy: 30% payout ratio based on adjusted EAT

Secured via projects with masterplan in place*: Secured via existing projects *: Secured via pre-sales*: 100% 100% 58%

21 | 17.03.2022 | FY-2021 * % figures as of 31 December 2021; referring to midpoint of guidance

ESG Update

2021 ESG achievements and disclosures

	Scope 1, 2 and 3 GHG1 emissions according to TCFD3 • guidelines
	SBTI2 • compliant net zero targets (Net zero climate neutrality by 2045)
Environment	• Qualitative climate-scenario analysis
	• Declared membership of German Sustainable Building Council (DGNB), pre-certification of pilot project nyoo in platinum (requirement for series certification)
	• Completed first stakeholder survey, initiated platform for continuous dialogue
	• Started construction of first two affordable housing projects under Instone innovative "nyoo" brand
Social	• Confirmed Instone's position as an attractive employer
	• Re-iterated affirmative diversity policy
	• Confirmed Instone's responsibility for work standards at our contractors
	• Established first independent ESG rating by Sustainalytics; ranked top 2% among global developers
	• Strengthened ESG governance structure
Governance	• Established 3 people strong dedicated ESG team
	• Established sustainability targets in management compensation scheme
	• Launched ESG website

1) GHG=Greenhouse gas emissions / Scope 1-3: classification of emissions (direct and indirect) according to GHG Protocol

2) SBTI=Science-Based Targets Initiative / New approach for setting emissions reduction targets with focus on the amount of emissions that have to be reduced in order to meet the goals of the Paris Agreement, limiting global warming to 1.5°C

23 | 17.03.2022 | FY-2021

3) Task Force on Climate Related Financial Disclosures

GHG emissions of the INS portfolio significantly below German average

GHG emissions Instone portfolio¹

• High-quality insulation and modern heating technology lead to significantly reduced GHG emissions for Instone projects compared to average of existing resi buildings in Germany
• Instone targets share of buildings with primary energy demand of less than 90% compared to NZEB² (NZEB -10%) by 2030 of 100%

Project portfolio per energy efficiency standard (as of 31/12/2021)3

1) Diagram refers to the entire Instone portfolio based on the planned energy efficiency during usage (operational carbon only

2) As defined as of December 31, 2021

24 | 17.03.2022 | FY-2021

3) Based on share of surface area / Portfolio: All buildings planned, under construction and completed in 2021

Major ESG-KPIs – achievements and targets

	Major KPIs	2020	2021	Targets
	Expected GHG emissions of portfolio in use	11 kg CO2e/m²	9.5 kg CO2e/m²	-50% (2030 vs. 2020)
	Share of projects with renewable energy supply	~14%	~22%	At least 40% (2030)
	Share of projects with energy requirements at least NZEB -10%	~79.6%	~82.5%	100% of project portfolio in 2030
	GHG emissions / scope 1 and 2 abs.	3,387 t CO2e	3,456 t CO2e	-42% (2030 vs. 2020)
	GHG emissions / scope 1 and 2 Intensity	0.024 t CO2e/sqm	0.010 t CO2e/sqm	-42% (2030 vs. 2020)
E	GHG emissions / scope 3 abs.	110,058 t CO2e	147.849 t CO2e	Net zero climate neutrality (2045)
	GHG emissions / scope 3 Intensity	0.766 t CO2e/sqm	0.416 t CO2e/sqm	Net zero climate neutrality (2045)
	Charging stations for EVs	~330	~734	From 2025, 100% of projects in construction to provide charging stations
	Brownfield developments (land plot size)	833.746sqm	690,204sqm	Acquisition focus on brownfield projects
	Collection of environmental KPIs (e.g. environmental diversity, waste, water and recycling)	/	ongoing	100% dates delivered by 2025
	Shares of affordable housing: social / subsidized / privately financed (incl. nyoo)	15% / 2% / 83%	17% / 1.5% / 81.5%	at least 50% share of revenues with affordable housing (social / subsidized / nyoo) by 2030
S	Share of female employees in management positions (below C-level)	25% (1st)* / 22% (2nd)	25% (1st)* / 23% (2nd)	at least stable
	Employee satisfaction and loyalty	75%	70% / 76%	75% / 80%
	Code of Conduct for employees and contractors (UN Charter)	100%	100%	100%
	Employee compliance and data protection training	96%	99%	100%
	Compliance cases (suspected)	2	0	0
G	Independent Supervisory Board	100%	100%	100%
	of ESG targets into management compensation scheme (1st Integration management level)	Implemented	Implemented	Continuous evaluation and adoption

25 | 17.03.2022 | FY-2021

KPI definitions and further explanations can be found in our Annual Report 2021, p. 60

Appendix

Well balanced financing structure at attractive terms

167 Corporate debt Project debt Maturity profile as of 31/12/2021 In €m In %

Weighted average corporate debt maturity	2.4 years
Weighted average corporate interest costs	3.33%
Share of corporate debt with floating interest	24.1%

Secured/unsecured as of 31/12/2021

27 | 17.03.2022 | FY-2021 All calculations based on drawn values

Project Portfolio Key Figures

€m	Q4 2021	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020
Volume of sales contracts	761.7	170.7	89.1	118.6**	246.0	94.9	54.1*	69.4
Project Portfolio	7,500.0	7,154.9	6,268.1	6,054.2	6,053.6	5,937.5	5,701.3	5,744.4
thereof already sold	3,038.9	2,308.7	2,444.0	2,360.5	2,328.8	2,108.6	2,017.1	2,189.0
thereof already realized revenues	1,621.0	1,276.2	1,436.1	1,307.8	1,265.5	n.a.	n.a.	n.a.
Units	Q4 2021	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020
Volume of sales contracts	1,906	468	169	372**	708	128	347*	109
Project Portfolio	16,418	15,913	14,338	13,678	13,561	13,374	13,075	12,952
thereof already sold (Unless otherwise stated, the figures are quarterly values)	7,215	5,401	5,679	5,510	5,381	4,770	4,648	4,799

*Of which €24.3m (303 units) from updated business plan of already sold project Westville.

**Of which €6.3m (186 units) from updated business plan of already sold project part in "Schönhof-Viertel", Frankfurt.

28 | 17.03.2022 | FY-2021

Project Portfolio as of 31/12/2021

(projects > €30m sales volume, representing total: ~ €7.5bn)

Project	Location	Sales volume (expected, in milion EUR)	Land plot acquired	Building right obtained	Sales started	Construction started
Hamburg
Schulterblatt "Amanda"	Hamburg	96
Kösliner Weg	Norderstedt-Garstedt	93
Sportplatz Bult	Hannover	120
Rothenburgsort	Hamburg	215
Büntekamp	Hannover	146
Saeseler Chaussee	Hamburg	84
Berlin
Wendenschlossstr.	Berlin	N/A
Rote Kaserne West	Potsdam	64
NRW
Niederkasseler Lohweg	Düsseldorf	N/A
Unterbach / Wohnen am Hochfeld	Düsseldorf	186
Literaturquartier	Essen	N/A
REME	Mönchengladbach	118
west.side	Bonn	202
Gartenstadtquartier	Dortmund	103
Bickendorf	NRW	715
Projekt NRW - I	NRW	73

Semi-filled circle means that the milestone has already been achieved for sections of the project (land plot acquisition, start of sales or construction). Concerning the building rights the semi-filled circle means that the zoning process has been initiated. No circle for "land plot acquired" means that the land has not yet been purchased but secured by contract.

Project Portfolio as of 31/12/2021

(projects > €30m sales volume, representing total: ~ €7.5bn)

Project	Location	Sales volume (expected, in milion EUR)	Land plot acquired	Building right obtained	Sales started	Construction started
Rhine-Main
Wiesbaden-Delkenheim, Lange Seegewann	Wiesbaden	106
Siemens-Areal	Frankfurt	602
St. Marienkrankenhaus	Frankfurt am Main	217
Friedberger Landstraße	Frankfurt am Main	306
Elisabethenareal Frankfurt	Frankfurt am Main	87
Steinbacher Hohl	Frankfurt am Main	53
Gallus	Frankfurt am Main	41
Westville	Frankfurt am Main	N/A
Aukamm	Wiesbaden	186
Heusenstamm	Heusenstamm	156
Kesselstädter Str.	Maintal	207
Polaris	Hofheim	61
Rheinblick Wiesbaden	Wiesbaden	284
Eichenheege	Maintal	97
Leipzig
Semmelweisstrasse	Leipzig	109
Parkresidenz	Leipzig	258
Rosa-Luxemburg-Straße	Leipzig	109
Heide Süd	Halle (Saale)	38

Semi-filled circle means that the milestone has already been achieved for sections of the project (land plot acquisition, start of sales or construction). Concerning the building rights the semi-filled circle means that the zoning process has been initiated. No circle for "land plot acquired" means that the land has not yet been purchased but secured by contract.

Project Portfolio as of 31/12/2021

(projects > €30m sales volume, representing total: ~ €7.5bn)

Project	Location	Sales volume (expected, in milion EUR)	Land plot acquired	Building right obtained	Sales started	Construction started
Baden-Wurttemberg
City-Prag - Wohnen im Theaterviertel	Stuttgart	128
Schwarzwaldstraße	Herrenberg	50
S`LEDERER	Schorndorf	N/A
Neckartalterrassen	Rottenburg	163
Schäferlinde	Herrenberg	61
Schwarzwaldstraße BA II	Herrenberg	70
Bavaria South
Ottobrunner Straße	München	100
Beethovenpark	Augsburg	N/A
Bavaria North
Schopenhauerstraße	Nürnberg	68
Stephanstraße	Nürnberg	N/A
Seetor	Nürnberg	112
Eslarner Straße	Nürnberg	50
Lagarde	Bamberg	81
Boxdorf	Nürnberg	59
Marina Bricks	Regensburg	30
Thumenberger Weg	Nürnberg	111
Worzeldorf	Nürnberg	68

Semi-filled circle means that the milestone has already been achieved for sections of the project (land plot acquisition, start of sales or construction). Concerning the building rights the semi-filled circle means that the zoning process has been initiated. No circle for "land plot acquired" means that the land has not yet been purchased but secured by contract.

• ISIN: DE000A2NBX80 • Ticker symbol: INS

• No of shares: 46,988,336
• Index: SDAX
• Market cap*: €822m
• Average daily trading volume: €1.3m

Instone Share

• Free float: 100%
• Market segment: Prime Standard,

Frankfurt

Financial Calendar

2022

March	17	Annual Report 2021
March	21	Roadshow Germany (Warburg)
March	22	Roadshow UK (Deutsche Bank)
March	23	Roadshow France (Kepler Cheuvreux)
May	12	Quarterly Statement for the first quarter of 2022
May	19	German SMID Cap Forum, Stifel Europe, Frankfurt/Main
June	09	Annual General Meeting
June	16	Morgan Stanley Europe & EEMEA Property Conference, London
August	11	Group Interim Report for the first half of 2022
September	19	11th German Corporate Conference, Berenberg/Goldman Sachs, Munich
November	10	Quarterly Statement for the first nine months of 2022

Investor Relations Contacts

Burkhard Sawazki

Head of Business Development & Communication

T +49 201 45355-137 M +49 173 2606034 burkhard.sawazki@instone.de

Simone Cujai

Senior Investor Relations Manager

T +49 201 45355-428 M +49 162 8035792 simone.cujai@instone.de

Tania Hanson

Roadshows & Investor Events

T +49 201 45355-311 M +49 152 53033602 tania.hanson@instone.de

Instone Real Estate Group SE Grugaplatz 2-4, 45131 Essen E-Mail: investorrelations@instone.de Internet: www.instone.de/en