LEG Immobilien SE

Investor Presentation • May 11, 2020

LEG Immobilien AG Q1-2020 Results

11 May 2020

1 I May 2020

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.

HIGHLIGHTS Q1-2020 & CORONAVIRUS CRISIS I.

• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• OUTLOOK IV.
• APPENDIX V.

Highlights Q1-2020 & Coronavirus Crisis Strong start despite a difficult environment Guidance 2020 confirmed

Strong Financials

• FFO I +10.7% to €94.0m
• EBITDA-Margin 74.1%
• LTV 38.0%/ @1.43%, 8.1y
• Cash €300m, credit lines of €200m

• Net cold rent +4.9%
• L-f-l rental growth +2.8%
• L-f-l vacancy 3.4% (-20bps)
• Acquisitions put on-hold/ ambition of 7,000 units unchanged

• 10-point paper to protect and safeguard customers and employees in the Corona crisis
• Dividend proposal of €3.60 confirmed – Introduction of scrip dividend – AGM postponed

Good start into 2020

• Guidance 2020 confirmed with FFO I of €370m €380m
• Minimal Corona effect YTD
• Further revaluations gains expected
• Financial profile strengthened

Highlights Q1-2020 & Coronavirus crisis Manageable implications of Coronavirus crisis

Impact on rental growth:

• Voluntary suspension of Mietspiegel rent increases: ~20bps on l-f-l rental growth
• Additional headwinds due to postponement of modernisation measures not started before mid-March

Deferral of rents

• <1% of residential units
• Minor liquidity effect only

New lettings/ Terminations

• New lettings on-going, total of ~200 units below prev. year (since mid March), increasing activity lately
• Termination of contracts ~400 units below prev. year level (since mid March)

Capex spending

• Already started projects continued as planned and ongoing – future projects depending on Corona development
• Focus on turn cost measures to realize additional value potential

Pre-cautionary measures

• External hiring on-hold
• Non-personnel cost savings identified

Acquisitions

• Markets starting to re-open
• Confirm our 7,000 units ambition

Balance sheet

Secured and unsecured financing at the peak of the crisis: €250m for 10Y @ 1.2%

A very resilient business model with a strong track record

LEG not materially affected during the GFC

• Non-cyclical business model
• LEG's attractive rent level of €5.88/sqm is key to provide affordable living to our tenants
• C. 25% of units subsidised
• German social system provides several strong layers of social security

LEG well positioned Resilience of German residential during the last economic crises

Source: Company information, Federal Statistical Office – Residential Rental Price Index

Highlights Q1-2020 & Coronavirus crisis

A lean business model, a strong balance sheet and attractive returns allow to navigate through the crisis

Additional layers of complexity

Source: Company information as reported as of FY19, incl. hybrid debt. Peers comprise ADO/Adler, Deutsche Wohnen, Grand City Properties, TAG, Vonovia.

HIGHLIGHTS Q1-2020 & CORONAVIRUS CRISIS I.

PORTFOLIO AND OPERATING PERFORMANCE II.

• FINANCIAL PERFORMANCE III.
• OUTLOOK IV.
• APPENDIX V.

Portfolio and Operating Performance – Overview Positive rent development across all submarkets

Markets	Total Portfolio		High-Growth		Stable		High-Yielding
	Q1-2020	 (YOY)	Q1-2020	 (YOY)	Q1-2020	 (YOY)	Q1-2020	 (YOY)
# of units	136,217	+1.9%	41,886	+5.8%	52,682	+3.3%	41,649	-3.3%
In-place rent (sqm), l-f-l	€5.88	+2.8%	€6.68	+3.1%	€5.56	+3.2%	€5.40	+1.8%
EPRA-Vacancy, l-f-l	3.4%	-20 bps	1.9%	-20 bps	3.4%	-10 bps	5.6%	-20 bps

Portfolio and Operating Performance – Rent Development +2.8% l-f-l rental growth

• Performance of free financed units demonstrates strong underlying fundamentals
• No material effects from Corona YTD
• Rent restricted units: +1.7% year-on-year (like-for-like) due to cost rent adjustment in January 2020
• High exposure to structural growth markets and respective commuter belts supports strong performance

Portfolio and Operating Performance – Capex & Maintenance Ongoing focus on energy efficiency

Lifting potential for growth and energy efficiency while maintaining high capital efficiency €m

• Investments increased c.45% year-over-year due to strong increase in line with value enhancing capex
• Q1 increase driven by energy efficient modernization as well as value-enhancing turn-cost spending
• ~5,400 tons of CO² savings assumed due to energetic refurbishment measures in FY 2019

• HIGHLIGHTS Q1-2020 & CORONAVIRUS CRISIS I.
• PORTFOLIO AND OPERATING PERFORMANCE II.

FINANCIAL PERFORMANCE III.

• OUTLOOK IV.
• APPENDIX V.

Financial Highlights Q1-2020 Margin expansion story is set to continue

Financial Performance EPRA Net Asset Value of €106.55 per share

Financial Performance – Portfolio (as of 31 March 2020) Portfolio valuation: With €1,356/sqm @5.1% gross yield still at attractive levels in absolute and relative terms

Market segment	Residential Units	GAV Residential Assets (€m)	GAV/ sqm (€)	Gross yield	In-Place Rent Multiple	Market Multiples1	GAV Commercial/ Other (€m)	Total GAV (€m)
High Growth Markets	41,886	5,300	1,899	4.2%	24.1x	20.6x	249	5,548
Stable Markets	52,682	3,997	1,194	5.5%	18.2x	16.4x	134	4,131
Higher-Yielding Markets	41,649	2,466	973	6.4%	15.7x	14.4x	81	2,547
Total Portfolio	136,217	11,763	1,356	5.1%	19.7x	17.5x	464	12,226

1 Estimated rental values as of December 31, 2019.

Financial Performance Strong financial profile – successfully tapped markets during the crisis

Maturity profile

Q1 highlights

€250m of secured and unsecured financings at 1.2% for 10 years €300m cash position RCF's of €200m

Average debt maturity (years)

Average interest costs

Loan-to-value

• HIGHLIGHTS Q1-2020 & CORONAVIRUS CRISIS I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• OUTLOOK IV.
• APPENDIX V.

Social responsibility Social responsibility is core to our principles

LEG's voluntary 10-point paper (21 March 2020) and additional measures taken, e.g.:

Support and protection for tenants

• Suspension of rent increases in line with Mietspiegel from mid-March
• No termination of rental agreements, no evictions
• Supporting of small business/commercial tenants

Social initiatives

• Special offers for system-relevant professionals
• €1m for corona aid measures through foundation ("Your home helps")
• Organisation of neighbourhood assistance
• Commitment to homeless people

Legal amendment on federal level

• Tenants cannot be evicted if they are not able to pay their rents for April-June 2020 due to the coronavirus crisis
• Deferral until June 2022 at the latest; interests (4%) can be charged

Protection of employees

• Work from home to provide safety and flexibility for employees and their families
• Protection gear for employees
• Benefits for employees during times of closed schools and nursery schools

Outlook Guidance 2020 confirmed on the basis of strong operating numbers, a resilient business model and a strong balance sheet

• FFO I €370m 380m
• EBITDA-Margin ~74%
• LTV 43% max
• Dividend 70% of FFO I

• L-f-l rental growth <2.8%¹
• L-f-l vacancy slightly decreasing¹
• Investments ~31-33€/sqm¹
• Acquisition of ~7,000 units

*

• Energy efficient modernization of c.3% of the portfolio p.a.
• Development of TCFD and SASB reporting
• New compensation structure for board members reflecting also ESG criteria in STI-plan and LTI-plan²

¹ Subject to effects of the Corona crisis

²Proposal to AGM for new payment structure beginning 2021

• HIGHLIGHTS Q1-2020 & CORONAVIRUS CRISIS I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• OUTLOOK IV.

APPENDIX V.

Q1 -2020 Key Figures

Operating results		Q1 -2020	Q1 -2019	%/bp
Net cold rent	€m	153.5	146.3	4.9
Net rental and lease income	€m	116.5	109.7	6.2
EBITDA adjusted	€m	113.7	106.8	6.5
FFO I	€m	94.0	84.9	10.7
FFO I per share	€	1.36	1.34	1.5
FFO II	€m	93.5	83.2	12.4
EBITDA -margin	%	74.1	73.0	110 bp
FFO I margin	%	61.2	58.0	320 bp
Portfolio		31.3.20	31.3.19	+/ - %/bp
Residential units	number	136,217	133,637	1.9
In -place rent (l - f -l)	€/sqm	5.88	5.72	2.8
Capex	€m	54.7	29.9	82.9
Maintenance	€m	18.6	20.4	-8.8
EPRA vacancy rate (l - f -l)	%	3.4	3.6	-20 bp
Balance sheet		31.3.20	31.12.19	+/ - %/bp
Investment properties	€m	12,269.0	12,031.1	2.0
Cash and cash equivalents	€m	300.1	451.2	-33.5
Equity	€m	6,010.1	5,933.9	1.3
Total financing liabilities	€m	5,004.7	5,053.9	-1.0
Current financing liabilities	€m	142.7	197.1	-27.6
Net debt	€m	4,674.7	4,570.9	2.3
LTV	%	38.0	37.7	+30 bp
Equity ratio	%	46.4	45.9	+50 bp
Adj. EPRA NAV, diluted	€m	7,352.9	7,273.0	1.1
Adj. EPRA NAV per share, diluted	€	106.55	105.39	1.1

Appendix – Q1-2020 EPRA-Net Asset Value

€63.6m net profit €12.5m pensions

€m	31.3.2020	31.12.2019
Equity (excl. minority interests)	5,986.0	5,909.9
Effect of exercising options, convertibles and other rights	26.1	26.1
NAV	6,012.1	5,936.0
Fair value measurement of derivative financial instruments	87.2	84.0
Deferred taxes1	1,337.0	1,336.4
EPRA-NAV	7,436.3	7,356.4
Number of shares fully-diluted incl. convertible (m)	69.010	69.010
EPRA-NAV per share in €	107.76	106.60
Goodwill resulting from synergies	83.4	83.4
Adjusted EPRA-NAV (excl. goodwill)	7,352.9	7,273.0
Adjusted EPRA-NAV per share in €	106.55	105.39

• Gross yield of 5.1% (thereof free financed portfolio: 5.3%) and value per sqm (€1,356) still reflect decent gap to recent portfolio transactions
• Value of services business not included in NAV
  • Scenario: additional value approx. €5.30-€8.00 per share (discount rate of 4.0%-6.0%)

1 And goodwill resulting from deferred taxes on EPRA-adjustments.

Appendix – Q1-2020 FFO Calculation

€m	Q1-2020	Q1-2019
Net cold rent	153.5	146.3	 +€7.2m YOY/+4.9%
Profit from operating expenses	-0.8	-1.7
Maintenance (externally-procured services)	-12.9	-13.8
Staff costs	-17.7	-16.1	 Growth in staff costs mainly due to additional FTE's
Allowances on rent receivables	-2.3	-2.4	(operations and for crafts
Other	-0.8	-0.6	services) and increased tariff
Non-recurring project costs (rental and lease)	0.7	0.7	 Adj. NRI increased by
Recurring net rental and lease income	119.7	112.4	+€7.3m YOY (+6.5%); rising
Recurring net income from other services	2.4	2.0	cost inflation more than offset by efficiency gains
Staff costs	-5.6	-5.6
Non-staff operating costs	-3.6	-2.9
Non-recurring project costs (admin.)	0.8	0.8	 Higher IT, legal and
Recurring administrative expenses	-8.4	-7.7	consulting costs
Other income and expenses	0.0	0.1
Adjusted EBITDA	113.7	106.8	 EBITDA increased by
Cash interest expenses and income	-19.0	-19.2	+€6.9m YOY (+6.5%)
Cash income taxes from rental and lease	-0.8	-2.0
FFO I (including non-controlling interests)	93.9	85.6	 Stable interest costs
Non-controlling interests	0.1	-0.7	(average costs in Q1-2020: 1.46% vs. 1.62% in Q1-2019)
FFO I (excluding non-controlling interests)	94.0	84.9	despite higher debt volume
FFO II (including disposal of investment property)	93.5	83.2
Capex-adjusted FFO I (AFFO)	39.3	55.0

Appendix – Q1-2020 FFO Bridge Q1-2020 Increase of +€9.1m (+10.7%)

+€22.8m (+7.2%)

Appendix – Q1-2020 Strong balance sheet

€m	31.3.2020	31.12.2019
Investment property	12,269.0	12,031.1
Other non-current assets	269.5	322.7
Non-current assets	12,538.5	12,353.8
Receivables and other assets	106.3	89.6
Cash and cash equivalents	300.1	451.2
Current assets	406.4	540.8
Assets held for sale	15.9	25.2
Total Assets	12,960.8	12,919.8
Equity	6,010.1	5,933.9
Non-current financing liabilities	4,862.0	4,856.8
Other non-current liabilities	1,656.6	1,654.2
Non-current liabilities	6,518.6	6,511.0
Current financing liabilities	142.7	197.1
Other current liabilities	289.4	277.8
Current liabilities	432.1	474.9
Total Equity and Liabilities	12,960.8	12,919.8

Acquisitions €184.9m Capex €54.7m

• Cash flow from operating activities €80.2m
• Investing activities -€178.2m
• Financing activities -€53.1m
• Net repayment of loans -€108.4m
• Borrowing of bank loans €58.5m

Appendix – Q1-2020 Strong credit profile in more volatile financing environment

€m	31.3.2020	31.12.2019
Financial liabilities	5,004.7	5,053.9
Excluding lease liabilities (IFRS 16)	29.9	31.8
Cash & cash equivalents	300.1	451.2
Net Debt	4,674.7	4,570.9
Investment properties	12,269.0	12,031.1
Properties held for sale	15.9	25.2
Prepayments for investment properties	13.0	53.5
Property values	12,297.9	12,109.8
Loan to Value (LTV) in %	38.0	37.7

Strong balance sheet with LTV of 38.0% significantly below maximum target (43%) leaves headroom for growth investments

Appendix – Q1-2020 Income Statement

€m	Q1-2020	Q1-2019	 Higher rental income +€7.2m
Net rental and lease income	116.5	109.7	YOY/+4.9%  Higher personnel expenses
Net income from the disposal of investment property	-0.3	-0.3	(€1.6m)
Net income from the valuation of investment property	-0.7	-0.2
Net income from the disposal of real estate inventory	-1.4	-0.7
Net income from other services	1.7	1.4
Administrative and other expenses	-10.3	-9.5	 Recurring admin. costs +€0.7m due to a mix of higher IT, legal and
Other income	0.0	0.1	consulting costs
Operating earnings	105.5	100.5	 Net income from fair value measurement of derivatives
Net finance costs	-20.0	-139.0	-€0.3m (Q1-2019: -€116.0m)  Lower cash interests (€22.6m; -€3.0m YOY) despite rising
Earnings before income taxes	85.5	-38.5	debt volume
Income tax expenses	-19.0	-18.5	 Cash taxes FFO I -€0.8m, cash taxes from disposals
Consolidated net profit	66.5	-57.0	-€0.3m

Appendix – Q1-2020 Cash Effective Interest Expense

€m	Q1-2020	Q1-2019
Reported interest expense	-22.6	-25.6
Interest expense related to loan amortisation	3.3	5.6	 Refinancing effect from early conversion of convertible bond
Interest costs related to valuation of assets/liabilities	0.0	0.2
Interest expenses related to changes in pension provisions	0.3	0.6
Other interest expenses	-0.1	0.0
Cash effective interest expense (gross)	-19.0	-19.2
Cash effective interest income	0.0	0.0	 Interest coverage improved
Cash effective interest expense (net)	-19.0	-19.2	further (6.0x up from 5.6x YOY)

Appendix – Rent revisionary potential Refinancing of subsidised loans lifting value

Rent Potential Subsidised Units

• Until 2028, c. 24,000 units will come off rent restriction
• Units show significant upside to market rents
• The economic upside can theoretically be realised the year after restrictions expire, subject to general legal and other restrictions⁴

Over 70% of units to come off restriction until 2028

Number of Units Coming Off Restriction and Rent Upside

Spread to Market Rent

Source: LEG as of FY-2019

1 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 = 2020-2024; 6-10 years = 2025-2029; ≥10 years = 2029ff.

3 Rent upside is defined as the difference between LEG in-place rent and market rent (defined in footnote 1).

4 For example rent increase cap of 15% or 20% for three years.

Appendix LEG Additional Creditor Information

Unsecured financing covenants Financing mix

Covenant	Threshold	31.03.2020
Consolidated Adjusted EBITDA / Net Cash Interest	>1.8x	5.5x
Unencumbered Assets / Unsecured Financial Indebtedness	>125%	196%
Net Financial Indebtedness / Total Assets	<60%	36%
Secured Financial Indebtedness / Total Assets	<45%	22%

	Ratings (Moody's)
--	-------------------

Type	Rating	Outlook
Long Term Rating	Baa1	Stable
Short Term Rating	P-2	Stable

LTV	38.0%	40.1%
Net debt / EBITDA	10.8x	10.5x
	31.3.2020	31.3.2019

Appendix LEG Share Information

• Prime Standard, Frankfurt Stock Exchange
• Total no. of shares: 69,009,836
• Ticker symbol: LEG
• ISIN: DE000LEG1110
• Indices: MDAX, FTSE EPRA/NAREIT, GPR 250, Stoxx Europe 600, DAX ESG
• Weighting (31.3.2020): MDAX 3.40%; EPRA 3.49%
• Rating: Baa1 (stable) by Moody's

Share price (5.5.2020, indexed; 31.1.2013 = 100)

Basic data Well-balanced shareholder structure¹

Appendix Financial Calendar 2020

March 2020	Report/Event
th 9	Annual Report 2019
May 2020
11th	Quarterly Statement Q1 as of 31 March 2020
	Annual General Meeting – postponed. New date to be announced
August 2020
7 th	Quarterly Report Q2 as of 30 June 2020
November 2020
12th	Quarterly Statement Q3 as of 30 September 2020

Contact Investor Relations

Frank Kopfinger, CFA Head of Investor Relations & Strategy Tel: +49 (0) 211 4568-550 E-Mail: frank.kopfinger@leg.ag

Karin Widenmann

Senior Manager Investor Relations Tel: +49 (0) 211 4568-458 E-Mail: karin.widenmann@leg.ag

LEG Immobilien AG ǀ Hans-Boeckler-Str. 38 ǀ 40476 Düsseldorf, Germany Phone: +49 (0) 211 4568-400 ǀ Fax: +49 (0) 211 4568-22 204 ǀ E-Mail: ir@leg.ag ǀ Internet: www.leg.ag