Instone Real Estate Group AG

Investor Presentation • Nov 26, 2020

Q3 2020 Results Presentation

Highlights

Portfolio Update

Q3 Financial Performance

Outlook

Appendix

Highlights

Highlights

Continued strong demand despite resurgence of pandemic; institutional deals in Q4 expected

	 Sales ratio fully recovered to pre-COVID levels; at this point no meaningful impact from renewed lockdown
Operational	 Three to four institutional deals signed or close to signing in Q4
Highlights	 Acquisitions: five new projects approved since June, incl. valuehome (aggregate GDV of c.€600m*)
	 Construction starts since beginning of Q3 (four projects; sales volume €225m)

Q3 2020 results in line; High gross margin persists

	 Adjusted revenues: €291.3m (9M 2019: €302.4m, -3.7%)
9M 2020	 Adjusted gross profit margin: 32.3% (9M 2019: 32.7%)
Results	 Adjusted EBIT: €50.0m (9M 2019: €56.7m; -11.8%)
	 Adjusted earnings after tax (EAT): €24.9m (9M 2019: €43.4m; -42.6%)

Financial targets for 2020 & 2021 reiterated

	 2020 forecast: Adjusted revenues and adjusted EAT target of €470m-€500m and €30m-€35m
Outlook	 2021 forecast: Adjusted revenues of €900m-€1.0bn; adjusted EAT of at least €90m
	 Target payout-ratio: 30% of net profit (starting for FY 2020)

Corona Virus – Operating Update

No impact from resurgence of crisis so far

	Key topics		Instone position
1	Sales		• Institutional: constructive ongoing discussions in line with expectations • Retail: volumes at pre-COVID levels, selling prices in-line with budget
2	Construction		• Construction progress according to plan on all our sites; no major impact from limited number of infections so far • Easing cost pressure due to less severe capacity constraints in construction industry
3	Approvals		• Still a differentiated picture depending on the individual situation in the municipalities (e.g. level of digitisation etc.) but no major delays so far
4	Employees		• Headquarter and branch offices: Increased share of Work from Home since October; stricter social distancing measures implemented • Construction sites: Tight monitoring of social distancing rules and hygienic measures; purchase of air cleaning systems

Retail sales activities fully recovered to pre-COVID levels

• Continued normalised retail sales ratio; no visible impact to date from "lockdown light" (November 2nd)
• Emerging trend of multi-unit private buy-to-let investments from high net worth investors
• Strong backlog of reservations and notarization appointments

German residential prices: stable upward trend continues - winner of the crisis

Recent data points/surveys show residential prices continue to move up

IMX (immoscout):	Prices for new built condos up +1.4% in Q3 (qoq); +4.8% (yoy)
Hypoport, EPX*:	Condo prices +3.8% in Q3 (qoq); +9.0% YTD in Germany
vdp:	Condo prices: +2.1% (qoq); +4.8% YTD

Financing markets remain supportive for residential demand

Bundesbank:	Mortgage loans for private households in September flat yoy (€21.8bn)
Interhyp:	Interest costs for mortgage loans near all-time low (~0.75% for 10 yrs.)

Portfolio Update

Projects with GDV of c. €600m approved since end of June

In €m 2020 new project approvals Exp. sales 5,846 -278 296 -16 90 5,938 -94 194 6,037 New approvals Changed 09/2020 sales volume 12/2019 Completed Deduction projects New approvals Completed 11/2020 projects

Project portfolio development, ytd (GDV)

	volume (€m)	Exp. units
Heusenstamm (near Frankfurt)	149	341
Halle	38	151
Subtotal as of 06/20	187	492
Hannover, Buentekamp III	50	72
Nuremberg, Boxdorf	59	125
Rhine/Main	194	480
Berlin*	222	531
Rhine/Main*	72	177

9 | 26.11.2020 | Q3-2020 *Including relevant share of at-equity consolidated JV's, which are not included in portfolio development bridge

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

• 53 projects / 13,374 units
• 88% in metropolitan regions
• ~80 sqm / unit

• ~€5,450 ASP / sqm

• €2.4bn GDV pre-construction or under construction

• €1.4bn GDV under construction
• €2.1bn of portfolio already sold (89% of pre-construction and under construction)
• €1.2bn of currently under construction portfolio is sold (85%)

Q3 Financial Performance

Adjusted Results of Operations

9M sales affected by COVID-19 effects – Recovery well underway

€m	Q3 2020	Q3 2019	Change	9M 2020	9M 2019	Change
Revenues	111.7	128.2	-12.9%	291.3	302.4	-3.7%
Project cost	-75.4	-87.8	-14.1%	-197.2	-203.5	-3.1%
Gross profit	36.3	40.4	-10.1%	94.1	98.9	-4.9%
Gross Margin	32.5%	31.5%		32.3%	32.7%
Platform cost	-14.9	-16.0	-6.9%	-44.8	-42.2	6.2%
Share of results of joint ventures	0.4	0.4		0.7	0.0
EBIT	21.8	24.8	-12.1%	50.0	56.7	-11.8%
EBIT Margin	19.5%	19.3%		17.2%	18.8%
Financial and other result	-6.0	-5.1		-15.5	-10.6
EBT	15.7	19.6	-19.9%	34.4	46.1	-25.4%
EBT Margin	14.1%	15.3%		11.8%	15.2%
Taxes	-4.7	-1.3		-9.6	-2.7
Tax rate	29.9%	6.6%		27.9%	5.9%
EAT	11.2	18.3	-38.8%	24.9	43.4	-42.6%
EAT Margin	10.0%	14.3%		8.5%	14.4%

• Q2+Q3 revenues affected by reduced sales speed and postponed marketing launches
• Sustained very high gross margins underscores resilient pricing environment as well as quality of product pipeline
• Moderately rising 9M platform costs reflect investments into future growth (incl. valuehome)
• Increased interest expenses due to 2019 land acquisitions and related increase in debt
• Normalisation of tax rate: Low FY 2019 taxes due to one-time effect

High visibility for FY 2020 sales and revenues targets

Revenue recognition – expected development in Q4 2020

• Q4 expected sales and revenues in line with targets
• Retail demand remains strong
• Expect institutional sales related to three to four projects to be completed in Q4

Strong balance sheet a competitive edge in current markets

€m	30/09/2020	31/12/2019
Corporate debt	215.3	180.8
Project debt	332.8	414.7
Financial debt	548.1	595.5
Cash and cash equivalents and term deposits	-241.5	-117.1
Net financial debt	306.6	478.4
Inventories and Contract asset	951.2	951.1
LTC**	32.2%	50.3%
Adjusted EBIT (LTM)***	122.9	129.6
Adjusted EBITDA (LTM)***	127.0	133.7
Net financial debt / adjusted EBITDA	2.4	3.6

14 | 26.11.2020 | Q3-2020

• 9M LTC of 32.2% implies low financial gearing
• Reminder: inventories are recorded at historical costs
• Significant hidden reserves provide additional downside cushion
• Low 9M net debt/adjusted EBITDA of just 2.4x despite temporary decline in profitability
• €1.6bn-€1.7bn mid term revenues target fully funded with the recent capital raise
• INS's financial strength a competitive edge for acquisitions in current environment

**Loan-to-Cost: Net financial debt/ (Inventories + Contract assets)

***LTM: Last twelve months. Adj. EBIT/EBITDA for FY 2019 has been restated to align the adj. EBIT/EBITDA calculation to the changed definition used from January 1, 2020 onwards.

Expect positive operating cash flow for FY 2020 including new land investments

Cash Flow (€m)	9M 2020	9M 2019
EBITDA adj.	53.0	59.7
Other non-cash items	-5.5	-14.0
Taxes paid	-13.3	-10.2
Change in working capital	-7.8	-67.5
Operating cash flow	26.4	-32.0
Land plot acquisition payments (incl. RETT*)	72.2	100.8
Operating cash flow excl. investments	98.6	68.8

• 9M operating cash flow remains positive prior to new land investment
• Existing projects are fully self-funding
• Expect significant positive operating cash flow (including new land investments) for FY 2020
• Substantial milestone payments from presold institutional projects in Q4
• Full recovery of retail sales

Liquidity (€m)	Total	t/o drawn	t/o available
Corporate debt
Promissory notes	206.0	206.0	0.0
Revolving Credit Facilites	119.0	10.0	109.0
Total	325.0	216.0	109.0
Cash and cash equivalents and term deposits			241.5
Total corporate funds available			350.5
Project debt
Project finance**	458.7	334.6	124.1

• Strong liquidity position further improved through equity raise
• Acquisitions expected to continue at elevated levels

Intrinsic pipeline value suggests fundamental upside

Additional upside from deployment of funds from capital increase

NAV (€m) as of 30/09/2020	ACTUAL
Expected selling prices of project pipeline (GDV)	5,938
Payments received	-750
Expected project costs	-3,389
Net debt	-307
Net Asset Value	1,492
Number of shares (m)	47.0
Net Asset Value per share (€)	31.75

• 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

Outlook

Guidance confirmed, strong structural growth ahead

€m	Outlook 2020	Outlook 2021
Revenues (adjusted)	470-500	900-1,000
Gross profit margin (adjusted)	>28%	n/a
EAT (adjusted)	30-35	>90
Volume of concluded Sales contracts	>450	n/a

Planned payout ratio of 30% of adjusted EAT

18 | 26.11.2020 | Q3-2020

FY 2020 a transitional year due to severe temporary effects from the COVID-19 pandemic

* % figures as of 30 September 2020; referring to midpoint of guidance

Appendix

Income statement (reported)

• Cost of materials including land price payments and corresponding ancillary costs of around €60.8m for previously secured projects.
• lncrease in staff costs reflects the increase in FTEs to 333.7 (9M-2019: 307.7).

The increase of finance costs is related to the increase in gross debt due to investments in new land acquisition.

In 9M-2019 tax rate was positively influenced by a special effect associated with the first-time recognition of loss carry forwards.

Condensed balance sheet

€m	30/09/2020	31/12/2019
Non-current assets	18.9	20.4
Inventories	805.4	732.1
Contract assets	145.8	219.0
Other receivables	143.5	34.7
Cash and cash equivalents	141.5	117.1
Current assets	1,236.2	1,102.9
Total assets	1,255.1	1,123.4
Total equity	508.4	310.2
Financial liabilities	297.7	451.6
Other provisions and liabilities	26.2	26.6
Deferred tax liabilities	14.3	12.0
Non-current liabilities	338.2	490.2
Financial liabilities	250.4	143.9
Trade payables	79.0	87.6
Other provisions and liabilities	79.1	91.5
Current liabilities	408.5	323.0
Total equity and liabilities	1,255.1	1,123.4

As at 30 September 2020, inventories increased to €805.4m (Q4 2019: €732.1m) due to construction progress as well as land acquisitions of €60.8m.

• Equity increased due to the capital increase by issuing 10 million new shares with net proceeds of round €175m.
• Non-current financial liabilities fell to €297.7m as of Q3 2020 (Q4 2019: €451.6m). Current financial liabilities increased to €250.4m (Q4 2019: €143.9m). In Q3 corporate financing €75.0m was repaid with the proceeds from a new promissory note loan of €100m at better terms.
• Trade payables decreased to €79.0m (Q4 2019: €87.6m) and essentially comprise the services provided by contractors.

Well balanced financing structure at attractive terms

Maturity profile as of 30/09/2020

Secured/unsecured* as of 30/09/2020

Weighted average corporate debt maturity	3.1 years
Weighted average corporate interest costs	3.12%
Share of total debt with floating interest	82.1%

*Based on total available credit lines (drawn and undrawn)

Project Portfolio Key Figures

€m	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Volume of sales contracts	94.9	54.1*	69.4	1,088.2	183.1	69.0	62.8
Project Portfolio (as of)	5,937.5	5,701.3	5,744.4	5,845.7	5,384.1	5,091.7	4,790.2
thereof already sold (as of)	2,108.6	2,017.1	2,189.0	2,174.0	1,261.1	1,128.7	1,061.1
Units	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Volume of sales contracts	128	347*	109	2,063	380	120	170
Project Portfolio (as of)	13,374	13,075	12,952	13,715	12,233	11,628	11,041
thereof already sold (as of)	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.

9M 2020 – Concluded Sales Contracts (Top Projects)

Project	City	Units	€m
St. Marienkrankenhaus	Frankfurt a. M.	28	32.5
Schulterblatt "Amanda"	Hamburg	41	29.1
Westville*	Frankfurt a. M.	303	24.3
Schumanns Höhe	Bonn	50	19.3
"Carlina Park", Schopenhauerstraße	Nuremberg	39	19.2
Schwarzwaldstraße	Herrenberg	37	16.7
Lange Seegewann, Delkenheim	Wiesbaden	2	15.9
"Neckar.Au Viertel"	Rottenburg	40	14.6
"Wohnen im Hochfeld", Unterbach	Dusseldorf	18	12.5
Quartier Stallschreiber Straße - Luisenpark	Berlin	12	10.6
Others		14	23.6
Total		584	218.4

*€24.3m (303 units) from updated business plan

9M 2020 – Revenue Contribution (Top Projects)

Project	City	Adj. revenues (€m)
St. Marienkrankenhaus	Frankfurt a. M.	43.9
Schumanns Höhe	Bonn	30.5
west.side	Bonn	28.2
Quartier Stallschreiber Straße - Luisenpark	Berlin	22.8
Schulterblatt "Amanda"	Hamburg	18.7
Westville	Frankfurt a. M.	14.8
City-Prag - Wohnen im Theaterviertel	Stuttgart	13.7
Schwarzwaldstraße	Herrenberg	12.8
Franklin	Mannheim	12.3
S'LEDERER	Schorndorf	9.6
Others		84.1
Total		291.3

9M 2020 Construction Launches

Project	City	Start in	Exp. Sales Volume (€m)	Units
Schulterblatt "Amanda"	Hamburg	Q2	~ 93	~ 165
Schorndorf, S'LEDERER	Schorndorf	Q2	~ 87	~ 230
"Niederkasseler Lohweg"	Dusseldorf	Q3	~ 80	~ 220
"Neckar.AU Viertel" (section 1)	Rottenburg	Q3	~ 24	~ 65
"Carlina Park"	Nuremberg	Q3	~ 67	~ 100
"west.side" (section 3)	Bonn	Q3	~ 54	~ 140
Total			~ 405	~ 920

Sales Offer as of Q3 2020 (Top Projects, condominium sales)

Project	City	Sales volume (€m)	Units	Already sold in %
St. Marienkrankenhaus	Frankfurt a. M.	51.9	41	73%
"Carlina Park", Schopenhauerstr. 10	Nuremberg	47.9	63	29%
Schulterblatt "Amanda"	Hamburg	38.1	47	57%
Scholle 1, D-Unterbach	Dusseldorf	24.4	43	33%
Marina Bricks	Regensburg	11.9	14	60%
Schwarzwaldstraße	Herrenberg	9.7	17	80%
"Neckar.Au Viertel"	Rottenburg	9.5	26	61%
Quartier Stallschreiber Straße - Luisenpark	Berlin	7.8	7	94%
Schumanns Höhe BF 3	Bonn	0.9	1	98%
Total		202.0	259

Project Portfolio as of Q3 2020

(projects > €30m sales volume, representing total: ~ €5.9bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Hamburg
Schulterblatt "Amanda"	Hamburg	€ 95 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	€ 236 Mio
Wendenschlossstr	Berlin	135 Mio €
Rote Kaserne West	Potsdam	€ 59 Mio
NRW
Sebastiansraße / Schumanns Höhe	Bonn	70 Mio €
Niederkasseler Lohweg	Düsseldorf	N/A
Unterbach / Wohnen am Hochfeld	Düsseldorf	€ 172 Mio
Literaturquartier	Essen	68 Mio €
REME	Mönchengladbach	€ 105 Mio
west.side	Bonn	187 Mio €
Gartenstadtquartier	Dortmund	€ 103 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 Q3 2020

(projects > €30m sales volume, representing total: ~ €5.9bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Rhine-Main
Wiesbaden-Delkenheim Lange Seegewann ,	Wiesbaden	100 Mio €
Siemens-Areal	Frankfurt	554 Mio €
St Marienkrankenhaus	Frankfurt am Main	211 Mio €
Friedberger Landstraße	Frankfurt am Main	324 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	147 Mio €
Heusenstamm	Heusenstamm	153 Mio €
Leipzig
Semmelweisstraße	Leipzig	110 Mio €
Parkresidenz	Leipzig	€ 250 Mio
Rosa-Luxemburg-Straße	Leipzig	111 Mio €
Heide Süd	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 Q3 2020

(projects > €30m sales volume, representing total: ~ €5.9bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Baden-Wurttemberg
City-Prag - Wohnen im Theaterviertel	Stuttgart	126 Mio. €
Franklin	Mannheim	69 Mio. €
Schwarzwaldstraße	Herrenberg	49 Mio. €
S`LEDERER	Schorndorf	N/A
Neckartalterrassen	Rottenburg	149 Mio. €
Schäferlinde	Herrenberg	56 Mio. €
Bavaria South
Ottobrunner Straße	München	84 Mio. €
Beethovenpark	Augsburg	58 Mio. €
Römerhügel	Augsburg	51 Mio. €
Bavaria North
Schopenhauerstraße	Nürnberg	67 Mio. €
Stephanstraße	Nürnberg	66 Mio. €
Seetor	Nürnberg	112 Mio. €
Eslarner Straße	Nürnberg	50 Mio. €
Lagarde	Bamberg	80 Mio. €
Boxdorf	Nürnberg	59 Mio. €
Marina Bricks	Regensburg	30 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.

Instone Share

Basic data		Shareholder structure (October 2020)
• ISIN:	DE000A2NBX80
• Ticker symbol:	INS
• No of shares:	46,988,336
• Index:	SDAX
• Market cap* :	€1,003.2m
• Average daily trading volume:	€1.4m
• Free float:	100%
• Indices:	SDAX
• Market segment:	Prime Standard, Frankfurt	Others: 58.64%

* Based on closing price on 20/11/2020 at €21.35

Financial Calendar

2020

November	26	Quarterly Statement for the first nine months of 2020
November	27	Virtual Roadshow, Switzerland and Scandinavia (Mainfirst)
November	30	Virtual Roadshow, UK (Deutsche Bank)
December	01	Virtual Roadshow, US (Jefferies)
December	02	Virtual Roadshow, Benelux (Kempen & Co)
December	03	Virtual Roadshow, Germany (MM Warburg)
December	09	HSBC Virtual Real Estate Seminar

2021

January	07	ODDO BHF Forum
January	18	UniCredit Kepler Cheuvreux German Corporate Conference
February	24	Publication of preliminary figures for the financial year 2020
March	18	Annual Report 2020
March	25	BofA EMEA Real Estate CEO Virtual Conference
March	30	Jefferies Pan-European Mid-Cap Virtual Conference
May	20	Quarterly Statement for the first quarter of 2021
June	09	Annual General Meeting
August	26	Group Interim Report for the first half of 2021
November	18	Quarterly Statement for the first nine months of 2021

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