Instone Real Estate Group AG

Investor Presentation • Aug 26, 2021

Q2 2021 Results Presentation

Disclaimer

Highlights

• Portfolio Update
• Q2 Financial Performance
• Outlook

Appendix

Highlights

Highlights

Strong business performance reflects sound underlying fundamentals

Operational Highlights	 Sales: Strong retail sales slightly ahead of plan; Several institutional deals close to signing  Positive HPI trend persists
	 Acquisitions: 6 new projects with (GDV > €600m) approved YTD; pipeline with GDV of ~€1.0bn under exclusivity
	 Construction: Actively managing supply bottlenecks for certain materials, experiencing selected albeit minor delays, rising material costs more than offset by positive HPI momentum
	 FY 2021 construction costs are largely fixed (incl. material costs)

Sustained high gross margins – positive price trend and support from sales mix

	 Adjusted revenues: €260.5m (H1 2020: €179.6m, +45.0%)
H1-2021	 Adjusted gross profit margin: 29.4% (H1 2020: 32.2%)
Results	 Adjusted EBIT margin: 15.8% (H1 2020: 15.7%)
	 Adjusted earnings after tax (EAT): €23.4m (H1 2020: €13.7m; +70.8%)

Well on track for FY 2021 targets – guidance reiterated

	 Adj. revenues of €820-900m;
	 Adj. gross profit margin of 26-27%;
Outlook	 Adj. EAT of €90-95m;
	 Target payout-ratio: 30%

Retail sales ratio stays significantly above long term mean

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

Positive HPI growth momentum persists; upside pressure on prices during sales processes of several projects

Strong backlog of reservations and notarization appointments

German residential prices: dynamic upward trend continues

Recent data points/surveys show only slight growth deceleration

VDP:	Condo prices in top 7 cities +3.3% in Q2 (qoq); +9.7% (yoy)
Hypoport/EPX:	Condo prices up +3.8% in Q2 (qoq); +14.3% (yoy)
IMX (immoscout):	Prices for newly built condos up +4.0% in Q2 (qoq); +10.3% (yoy)

Financing markets continue providing strong support for residential demand

Bundesbank:	Mortgage loans for private households still on record high in Q2 2021 at €72.5bn; +4.0% yoy
Interhyp:	Average 10year fixed rate mortgage <1%, slightly decreasing due to lower bond rates

Rising material costs – Momentum decelerating

+~3% Labour +~8-10% Material Construction costs development 2021e In %

30 35 40 45 50 55 60 65 PMI>50: expansion PMI<50: contraction Germany Construction PMI

• Material costs continue to rise but at a decelerating pace (prices for lumber even dropped sharply recently)
• Actively managing supply bottlenecks for certain materials, experiencing selected albeit minor delays in construction progress for certain projects
• Only moderate increase in labour costs reflecting decreasing demand for commercial projects and improved negotiation power (decreasing margins of contractors)
  • German construction PMI still in contraction mode (see chart) due to sluggish commercial demand

INS comparatively well positioned in a market with rising scarcity

• High share of single awarding offers higher flexibility in the steering of the construction process (unlike most other competitors)
• Procurement strategy of early order placements is paying-off
• Strong network of suppliers (relationships & leading market position)
• Approx. 85% of 2021 construction costs contractually fixed.
• Margin sensitivity: each pp of material cost increases above 3.5% p.a. translates into approx. 20bp of gross margin decline (assuming no HPI growth)

Portfolio Update

Promising deal pipeline paves way for future growth

Project portfolio development, ytd (GDV)

	volume (€m)	Exp. units
YTD 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	50
TOTAL	618	1,248

Significant share of pre-sold units supports future cash flow and earnings visibility

• 52 projects / 14,338 units
• 90% in metropolitan regions
• ~80 average sqm / unit
• ~€5,272 ASP / sqm

Project portfolio as of 30/06/2021 by region (GDV) Project portfolio as of 30/06/2021 by development (GDV)

• €2.6bn GDV in "pre-construction" or "under construction" state of which 92% (€2.4bn) already sold
• €1.8bn GDV in "under construction" state of which 92% (€1.6bn) sold

Q2 Financial Performance

Adjusted Results of Operations

High profitability maintained

€m	Q2 2021	Q2 2020	Change	H1 2021	H1 2020	Change
Revenues	132.4	79.9	65.7%	260.5	179.6	45.0%
Project cost	-96.2	-51.8	85.7%	-183.8	-121.8	50.9%
Gross profit	36.2	28.1	28.8%	76.7	57.8	32.7%
Gross Margin	27.3%	35.2%		29.4%	32.2%
Platform cost	-21.8	-18.0	21.1%	-38.1	-29.9	27.4%
Share of results of joint ventures	0.0	0.0		2.5	0.3
EBIT	14.4	10.2	41.2%	41.1	28.2	45.7%
EBIT Margin	10.9%	12.8%		15.8%	15.7%
Financial and other result	-3.4	-4.0		-7.5	-9.5
EBT	10.9	6.2	75.8%	33.5	18.7	79.1%
EBT Margin	8.2%	7.8%		12.9%	10.4%
Taxes	-3.3	-1.1		-10.1	-4.9
Tax rate	30.3%	17.7%		30.1%	26.2%
EAT	7.6	5.0	46.0%	23.4	13.7	70.8%
EAT Margin	5.7%	6.3%		9.0%	7.6%
EPS1	0.21	0.13	63.8%	0.55	0.35	57.5%

• Strong H1 topline growth (sale of JV project not included) shows INS on track; first half with traditionally weaker seasonality – higher revenues in coming quarters expected
• Attractive gross margin underscores sound pricing environment
• Rising platform costs primarily due to investments into future growth (incl. valuehome)
• Interest expenses decreased due to lower project related debt

Strong EPS growth

High visibility for FY 2021 sales and revenues targets

Concluded sales contracts – expected development in H2 2021

H1 sales & revenues in line with expectations

• Sales and revenues expected to accelerate in H2
• Institutional investors expected to be the largest customer group in FY 2021
• Sales ratio for B2C business is also expected to stay above the long-term mean

14 | 26.08.2021 | Q2-2021

Strong balance sheet leaves significant headroom for growth

€m	30/06/2021	31/12/2020
Corporate debt	227.0	207.2
Project debt	173.9	274.5
Financial debt	400.9	481.7
Cash and cash equivalents and term deposits	-272.1	-232.0
Net financial debt	128.8	249.7
Inventories and contract asset	1,026.7	971.9
LTC*	12.5%	25.7%
Adjusted EBIT (LTM)**	96.7	83.8
Adjusted EBITDA (LTM)**	101.0	87.9
Net financial debt / adjusted EBITDA	1.3	2.8

• 12.5% LTC implies very low financial gearing
  • Reminder: inventories are recorded at historical costs
  • Significant hidden reserves provide additional downside cushion
• 1.3x net debt/adjusted EBITDA
• Rising leverage in remainder of 2021 and in 2022 expected planned expansion of the project portfolio
• €1.6-1.7bn mid term revenue target fully equity funded
• INS's financial strength remains a competitive edge for acquisitions in current environment

Strong operating cash flow from visible milestone payments

Cash Flow (€m)	Q2 2021	Q2 2020	H1 2021	H1 2020
EBITDA adj.	15.4	11.2	43.3	30.2
Other non-cash items	-4.4	3.7	-6.9	0.6
Taxes paid	1.1	-3.1	-7.4	-7.1
Change in working capital	-17.2	-34.7	117.2	-61.5
Operating cash flow	-5.1	-22.9	146.2	-37.8
Land plot acquisition payments (incl. RETT*)	37.1	2.0	45.8	50.3
Operating cash flow excl. investments	32.0	-20.9	192.0	12.5

Strong operating CF based on retail prepayments and institutional milestone payments

FY 2021 operating cash flow expected to turn negative due to planned investment into land plots for future growth

Liquidity (€m)	Total	t/o drawn	t/o available
Corporate debt
Promissory notes	206.0	206.0	0.0
Revolving Credit Facilities	119.0	0.0	119.0
Total	325.0	206.0	119.0
Cash and cash equivalents and term deposits			272.1
Total corporate funds available			391.1
Project debt
Project finance**	308.0	174.5	133.5

Ample financial headroom for future growth

Intrinsic pipeline value suggests fundamental upside

Additional upside from planned future growth investments

Prospective NAV (€m)	30/06/2021	31/12/2020
Expected selling prices of project pipeline (GDV)	6,268	6,054
Payments received	-1,222	-942
Expected project costs	-3,444	-3,368
Net debt	-129	-250
Expected proceeds from "at-equity" projects	83	71
Prospective Net Asset Value	1,556	1,566
Number of shares (m)	47.0	47.0
Prospective Net Asset Value per share (€)	33.12	33.32

• Payments received reflect project related income received to date from pre-sale of pipeline, rental income and ordinary course sale of land plots
• 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

2021 guidance reiterated, strong structural growth ahead

€m	Outlook 2021
Revenues (adjusted)	820-900
Gross profit margin (adjusted)	26-27%
EAT (adjusted)	90-95
Volume of concluded Sales contracts	>900

Dividend policy: 30% payout ratio based on adjusted EAT

Thereof from existing 88% 100% 820-900 >1,000 1,600-1,700 2021 2022 ... Mid-term In €m Revenues (adjusted) outlook

Thereof from projects with building right*: projects*: Revenues secured through pre-sales*:

63%

Appendix

Income statement (reported)

• The increase in revenues is based on the successful marketing and the scheduled construction progress of the current project developments.
• Stable purchases of land and increased construction activities led to an increase in cost of materials to €198.6m (previous year: €162.2m).
• lncrease in staff costs reflects the increase in FTEs to 365.4 (H1-2020: 323.1).

The financial result decreased to €-8.8m (H1-2020: €-12.0m). The lower interest expenses is mainly attributable to the successful refinancing at better conditions and the lower utilization of project financing.

Condensed balance sheet

• The increase in inventories is attributable to land acquisitions and higher capitalised construction costs. As of H1-2021, acquisition of land plots (incl. incidental costs) of €599.4m (Q4-2020: €583.7m) are included in inventories.
• Cash and cash equivalents and time deposits totaling €272.1m (Q4-2020: €232.0m) increased due to the positive operating cash flow. The volume of project financings has been reduced over the same period (negative financing CF).
• Non-current financial liabilities decreased to €286.4m. Current financial liabilities fell to €114.5m.

Other liabilities €252.0m mainly comprise advance payments received on work in progress.

Well balanced financing structure at attractive terms

Maturity profile as of 31/03/2021

Secured/unsecured as of 31/03/2021

Weighted average corporate debt maturity	2.8 years
Weighted average corporate interest costs	3.32%
Share of corporate debt with floating interest	27.2%

Project Portfolio Key Figures

€m	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Volume of sales contracts	89.1	118.6**	246.0	94.9	54.1*	69.4	1,088.2	183.1	69.0	62.8
Project Portfolio	6,268.1	6,054.2	6,053.6	5,937.5	5,701.3	5,744.4	5,845.7	5,384.1	5,091.7	4,790.2
thereof already sold	2,444.0	2,360.5	2,328.8	2,108.6	2,017.1	2,189.0	2,174.0	1,261.1	1,128.7	1,061.1
Units	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Volume of sales contracts	169	372**	708	128	347*	109	2,063	380	120	170
Project Portfolio	14,338	13,678	13,561	13,374	13,075	12,952	13,715	12,233	11,628	11,041
thereof already sold	5,679	5,510	5,381	4,770	4,648	4,799	4,814	2,944	2,684	2,564

(Unless otherwise stated, the figures are quarterly values)

*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.

H1 2021 – Concluded Sales Contracts

Project	City	Units	€m
"Wohnen im Hochfeld" Unterbach	Düsseldorf	65	41.3
St. Marienkrankenhaus	Frankfurt/Main	22	31.8
"Neckar.Au Viertel"	Rottenburg	89	30.6
Seetor "City Campus"	Nuremberg	35	19.5
"Carlina Park", Schopenhauerstraße	Nuremberg	22	15.7
Rote Kaserne West – "Fontane Gärten"	Potsdam	25	15.4
Schulterblatt "Amanda"	Hamburg	17	14.5
"Lokhöfe", Bahnhofsareal Nord	Rosenheim	67	11.2
"Schönhof-Viertel"*	Frankfurt/Main	186	6.3
Kitzmann, Südliche Stadtmauerstr.	Erlangen	1	5.3
Others		12	16.1
Total		541	207.7

H1 2021 – Revenue Contribution

Project	City	Adj. revenues (€m)
St. Marienkrankenhaus	Frankfurt/Main	43.0
"Wohnen im Hochfeld" Unterbach	Düsseldorf	24.0
west.side	Bonn	21.7
Westville	Frankfurt/Main	20.1
Schulterblatt "Amanda"	Hamburg	16.7
"Carlina Park", Schopenhauerstraße	Nuremberg	15.3
City-Prag – Wohnen im Theaterviertel	Stuttgart	14.4
Schwarzwaldstraße	Herrenberg	12.4
S'LEDERER	Schorndorf	11.4
Stephanstraße	Nuremberg	11.1
Others		70.3
Total		260.5

H1 2021 Construction Launches

Project	City	Start in	Exp. Sales Volume (€m)	Units
"Fontane Gärten" – 1. BA	Potsdam	Q1	~ 31	~ 55
Westville – 1. BA (WA-5)	Frankfurt	Q1	~ 153	~ 330
Total			~ 184	~ 385

Sales Offer as of 30/06/2021 (Top Projects, condominium sales)

Project	City	Sales volume (€m)	Units	Already sold in %
Seetor "City Campus" – Wohnen	Nuremberg	55.6	113	31%
"Fontane Gärten BA 2"	Potsdam	23.7	44	23%
"Carlina Park", Schopenhauerstraße	Nuremberg	19.9	14	71%
"Wohnen im Hochfeld" Scholle 2	Düsseldorf	16.5	33	60%
"Fontane Gärten BA 1"	Potsdam	14.6	24	53%
"Lokhöfe", Bahnhofsareal Nord	Rosenheim	14.1	76	44%
Seetor "City Campus" – Geschossbau	Nuremberg	12.9	17	52%
Marina Bricks	Regensburg	7.5	9	75%
Schwarzwaldstraße	Herrenberg	1.9	1	96%
"Neckar.Au Viertel"	Rottenburg	1.2	3	95%
Total		167.9	334

Project Portfolio as of 30/06/2021

(projects > €30m sales volume, representing total: ~ €6.3bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Hamburg		€
Schulterblatt "Amanda"	Hamburg	96 Mio
Kösliner Weg	Norderstedt-Garstedt	85 Mio €
Sportplatz Bult	Hannover	120 Mio €
Rothenburgsort	Hamburg	198 Mio €
Büntekamp	Hannover	143 Mio €
Berlin
Quartier Stallschreiber Straße / Luisenpark	Berlin	235 Mio €
Wendenschlossstr	Berlin	49 Mio €
Rote Kaserne West	Potsdam	62 Mio €
NRW
Sebastiansraße / Schumanns Höhe	Bonn	70 € Mio
Niederkasseler Lohweg	Düsseldorf	N/A
Unterbach / Wohnen am Hochfeld	Düsseldorf	184 € Mio
Literaturquartier	Essen	77 Mio €
REME	Mönchengladbach	105 Mio €
west.side	Bonn	188 Mio €
Gartenstadtquartier	Dortmund	103 Mio €

29 | 26.08.2021 | Q2-2021

Project Portfolio as of 30/06/2021

(projects > €30m sales volume, representing total: ~ €6.3bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Rhine-Main
Seegewann Wiesbaden-Delkenheim, Lange	Wiesbaden	106 Mio €
Siemens-Areal	Frankfurt am Main	591 Mio €
St . Marienkrankenhaus	Frankfurt am Main	217 Mio €
Landstraße Friedberger	Frankfurt am Main	306 Mio €
Elisabethenareal Frankfurt	Frankfurt am Main	30 Mio €
Steinbacher Hohl	Frankfurt am Main	53 Mio €
Gallus	Frankfurt am Main	41 Mio €
Westville	Frankfurt am Main	N/A
Aukamm	Wiesbaden	136 Mio €
Heusenstamm	Heusenstamm	155 Mio €
Maintal	Maintal	194 Mio €
Polaris	Hofheim	55 Mio €
Leipzig
Semmelweisstraße	Leipzig	109 Mio €
Parkresidenz	Leipzig	252 Mio €
Rosa-Luxemburg-Straße	Leipzig	109 Mio €
Süd Heide	Halle	38 Mio €

Semi-filled circle means that the milestone has yet been achieved for sections of the project (land plot acquisition, start of sales or construction). Concerning the building right 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 30/06/2021

(projects > €30m sales volume, representing total: ~ €6.3bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Baden-Wurttemberg
		127 Mio. €
City-Prag - Wohnen im Theaterviertel	Stuttgart	50 Mio. €
Schwarzwaldstraße	Herrenberg
S`LEDERER	Schorndorf	N/A
Neckartalterrassen	Rottenburg	163 Mio. €
Schäferlinde	Herrenberg	56 Mio. €
Schwarzwaldstraße BA II	Herrenberg	70 Mio. €
Bavaria South
Ottobrunner Straße	München	93 Mio. €
Beethovenpark	Augsburg	135 Mio. €
Bavaria North
Schopenhauerstraße	Nürnberg	68 Mio. €
Stephanstraße	Nürnberg	N/A
Seetor	Nürnberg	112 Mio. €
Eslarner Straße	Nürnberg	50 Mio. €
Lagarde	Bamberg	80 Mio. €
Boxdorf	Nürnberg	59 Mio. €
Marina Bricks	Regensburg	30 Mio. €
Thumenberger Weg	Nürnberg	111 Mio. €

Semi-filled circle means that the milestone has yet been achieved for sections of the project (land plot acquisition, start of sales or construction). Concerning the building right 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.

• Market cap*: €1,268.8m • Average daily trading volume: €1.9m • Free float: 100% • Market segment: Prime Standard, Frankfurt

• ISIN: DE000A2NBX80

• No of shares: 46,988,336

• Ticker symbol: INS

• Index: SDAX

32 | 26.08.2021 | Q2-2021 * Based on closing price on 17/08/2021 at €27.60

Basic data Shareholder structure (August 2021)

Instone Share

2021

August	26	Group Interim Report for the first half of 2021
August	30	Virtual Roadshow, Germany & Switzerland (MM Warburg)
September	01	Virtual Roadshow, UK (Credit Suisse)
September	02	Commerzbank Corporate Conference
September	06	Virtual Roadshow, France (Stifel)
September	13	Virtual Roadshow, US &Canada (Credit Suisse)
September	20	Berenberg and Goldman Sachs 10th German Corporate Conference, virtual
September	22	EPRA ReThink Conference, Brussels
November	18	Quarterly Statement for the first nine months of 2021
November	24	EPRA Corporate Access Day, London

Investor Relations Contact

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

Instone Real Estate Group AG

Grugaplatz 2-4, 45131 Essen E-Mail: investorrelations@instone.de Internet: www.instone.de/en