LEG Immobilien SE

Investor Presentation • Mar 9, 2020

LEG Immobilien AG 2019 Results

9 March 2020

1 I March 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 2019 & YTD 2020 I.

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

Highlights 2019 & first achievements 2020 Growing along our defensive profile Guidance 2020 confirmed

• FFO I +7.1%
• EBITDA-Margin 72.8%
• LTV 37.7%/ @1.43%, 8.1y
• GAV €1,353/ sqm, 5.1% gross yield
• €3.60 DPS, +11% pay-out

• Net cold rent +4.6%
• L-f-l rental growth +2.9%
• L-f-l vacancy 3.0%
• FFO Services €23m
• Acquisition of 5,700 units

• CO2 emission –5,400t from our 2019 modernisation efforts
• New foundation "Your home helps", €16m funding
• Susanne Schröter-Crossan as new CFO from 1 July

Good start into 2020

• 1,500 units signed, 1,200 units in advanced negotiations
• Guidance 2020 confirmed with FFO I of €370m €380m
• Operating performance according to plan

Highlights 2019 – Further growing our platform Delivering attractive pay-outs

• Improved portfolio quality through disposal of 3,400 units, 2,700 via a single portfolio deal
• Acquisition of c. 7,200 units
  • 5,700 units already disclosed (o/w 2,200 units transferred at 1/1/20)
  • 1,500 units in NRW and Rhineland-Palatinate signed in January
• 1,200 units in advanced negotiations/ outside NRW

• FFO I growth driven by: 1) 2.9% l-f-l rental growth 2) Vacancy reduction 3) 2018 acquisition
• FFO I per share €5.27, +4.6%
• Acquisitions of 7,200 units to add c. €7m to FFO I in 2020
• Refinancing actions from Q4 19 to add c. €7m in 2020

• DPS19 €3.60 (vs. €3.53 in 2018)
• Dividend paid €248m, +11%
• Pay-out from FFO I of 73%

Highlights 2019 – Selective growth Remaining focussed on NRW/Germany and affordable living

HIGHLIGHTS 2019 & YTD 2020 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
	2019	 (YOY)	2019	 (YOY)	2019	 (YOY)	2019	 (YOY)
# of units	134,031	0.0%	40,843	+3.0%	52,034	+1.9%	41,154	-4.9%
In-place rent (sqm), l-f-l	€5.82	+2.9%	€6.63	+3.3%	€5.50	+3.1%	€5.37	+2.1%
EPRA-Vacancy, l-f-l	3.0%	-10 bps	1.6%	-30 bps	2.8%	-10 bps	5.2%	+30 bps

Portfolio and Operating Performance – Rent Development Sound underlying rent dynamics

L-f-l residential rent

L-f-l free financed rent

• Performance of free financed units demonstrates strong underlying fundamentals
• Rent restricted units: +0.5% year-on-year (like-for-like)
• High exposure to structural growth markets and respective commuter belts supports strong performance

Rent growth drivers %

• Well diversified mix of growth drivers
• Growth supported by modernisation program with focus on energy efficiency

Portfolio and Operating Performance – Capex & Maintenance Lifting potential for growth and energy efficiency

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

• Investments increased c.17% year-over-year in line with increased value enhancing capex
• Capex program ongoing with major investments in Dortmund, Monheim, Münster, Mönchengladbach
• ~5,400 tons of CO² savings assumed due to energetic refurbishment measures in FY 2019
• Capex ratio of 70.0%
• Outlook of ~31-33 €/sqm for FY 2020

€m

Portfolio and Operating Performance – Innovation & Value-Added Services Leveraging LEG's strong customer base with additional services

Cooperation Multimedia: TV, internet and telephone Launch January 2014 Further roll-out of our media service offering in 2019 contributed >€1m to the FFO growth Cooperation Electricity, heating, gas, metering Launch March 2015 Acquisition of outstanding 49% share in 2019 Successful cooperation with energy supplier to market electricity and gas Joint venture (51%) Small repair work, craftsmen services Launch January 2017 Increased our FTE's by 31 (+10%) in order to better and faster serve our tenants Strong FFO contribution – Services €m NAV per share from services of € 5.3 – 8.0¹ Not reflected in Group NAV 0 5 7 9 ^{15 16} 23 2013 2014 2015 2016 2017 2018 2019 Partner Partner Partner

1 Based on 4% - 6% discount rate

• HIGHLIGHTS 2019 & YTD 2020 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.

FINANCIAL PERFORMANCE III.

• OUTLOOK IV.
• APPENDIX V.

Financial Highlights 2019 Margin expansion story is set to continue

Financial Performance EPRA Net Asset Value Increase of +€11.99 per share

Financial Performance – Portfolio Valuation 2019 Valuation uplift driven by letting performance and yield compression

Breakdown revaluation gains €m

• Yield compression (especially in Orange and Green markets) and broad-based strong letting performance drive portfolio values
• Visible catch-up effects with respect to multiple B-cities and commuter towns
• Adjustment of discount rate from 5.2% in 2018 to 4.8% (cap rate from 6.1% to 6.05%)

1 Change in Gross Asset Value, l-f-l.

Financial Performance – Portfolio (as of 31 December 2019) Portfolio valuation: With €1,353/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	40,843	5,170	1,913	4.1%	24.2x	20.6x	246	5,416
Stable Markets	52,034	3,939	1,187	5.5%	18.3x	16.4x	134	4,074
Higher-Yielding Markets	41,154	2,425	968	6.4%	15.7x	14.4x	78	2,502
Total Portfolio	134,031	11,535	1,353	5.1%	19.8x	17.5x	458	11,992

1 Estimated rental values as of December 31, 2019.

Financial Performance Further improved financing structure: Lower for longer

Maturity profile

Average debt maturity (years)

Average interest costs

Loan-to-value

Net debt/ Adj. EBITDA

• HIGHLIGHTS 2019 & YTD 2020 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• OUTLOOK IV.
• APPENDIX V.

Outlook Guidance 2020 confirmed

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

• L-f-l rental growth c.2.8% (incl. 20bps from refinancing)
• L-f-l vacancy slightly decreasing
• Investments ~31-33€/sqm
• Acquisition of ~7,000 units

• Energy efficient modernization of c.3% of the portfolio p.a.
• New foundation "Your home helps" fully staffed with 8 FTE's
• New compensation structure for board members reflecting also ESG criteria in STI-plan and LTI-plan*

• HIGHLIGHTS 2019 & YTD 2020 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• OUTLOOK IV.

APPENDIX V.

Appendix – Generating Attractive Shareholder Returns NAV and dividend development

Strong volume growth at decreasing overhead cost…

…leads to a significant drop of the administrative costs ratio

€m	2019	2018
Equity (excl. minority interests)	5,909.9	4,757.6
Effect of exercising options, convertibles and other rights	26.1	553.9
NAV	5,936.0	5,311.5
Fair value measurement of derivative financial instruments	84.0	222.2
Deferred taxes1	1,336.4	1,132.7
EPRA-NAV	7,356.4	6,666.4
Number of shares fully-diluted incl. convertible (m)	69.010	68.824
EPRA-NAV per share in €	106.60	96.86
Goodwill resulting from synergies	83.4	52.7
Adjusted EPRA-NAV (excl. goodwill)	7,273.0	6,613.7
Adjusted EPRA-NAV per share in €	105.39	96.10
Effects from a simulated executed conversion	n/a	-185.7
Pro-forma NAV (excl. goodwill) post-conversion	7,273.0	6,428.0
Pro-forma-NAV post conversion per share in €	105.39	93.40

• Gross yield of 5.1% (thereof free financed portfolio: 5.3%) and value per sqm (€1,353) 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.

		€923.4m Portfolio revaluation
---	--	-------------------------------

• -€223.1m Dividends
• €596.8m Equity increase
• -€144.8m Others

Comment on Pro-forma-NAV post conversion

• This figure incorporates a simulated, executed conversion of the 2014/2021 convertible
• In 2019 there is no difference between adj. EPRA-NAV and Pro-Forma-NAV due to the conversion of the convertible in 2019

Appendix – 2019 FFO Calculation

€m	2019	2018
Net cold rent	586.1	560.2	 +€25.9m/+4.6%
Profit from operating expenses	-2.8	-4.5
Maintenance (externally-procured services)	-61.0	-51.8
Staff costs	-68.2	-60.3	 Growth in staff costs mainly due to additional FTE's (operations and for crafts
Allowances on rent receivables	-7.9	-8.4
Other	-1.3	-10.4	services)
Non-recurring project costs (rental and lease)	8.3	5.8	 Adj. NRI increased by
Recurring net rental and lease income	453.2	430.6	+€22.6m YOY (+5.3%); rising cost inflation more than offset by efficiency gains
Recurring net income from other services	6.0	7.8
Staff costs	-30.1	-24.8
Non-staff operating costs	-32.6	-18.4	 Recurring admin. costs ratio
Non-recurring project costs (admin.)	29.5	9.2	further reduced to 5.7%
Recurring administrative expenses	-33.2	-34.0	(previous year: 6.1%)
Other income and expenses	0.5	0.8
Adjusted EBITDA	426.5	405.2	 EBITDA increased by
Cash interest expenses and income	-78.7	-77.2	+€21.3m YOY (+5.3%)
Cash income taxes from rental and lease	-2.8	-5.8
FFO I (including non-controlling interests)	345.0	322.2	 Almost stable interest costs
Non-controlling interests	-3.7	-3.6	(average costs in FY-2019: 1.43% vs. 1.58% in FY-2018) despite higher debt volume
FFO I (excluding non-controlling interests)	341.3	318.6
FFO II (including disposal of investment property)	327.9	318.8
Capex-adjusted FFO I (AFFO)	134.6	139.7

Appendix – FFO FFO Bridge 2019 Increase of +€22.7m (+7.1%)

+€22.8m (+7.2%)

Appendix – 2019 – Balance Sheet Strong balance sheet

€m	2019	2018
Investment property	12,031.1	10,709.0	 Revaluation €923.4 m
Other non-current assets	322.7	175.9	 Acquisitions €360.7m  Capex €201.5m
Non-current assets	12,353.8	10,884.9
Receivables and other assets	89.6	55.4	 Cash flow from operating activities €318.2m
Cash and cash equivalents	451.2	233.6	 Investing activities -€489.1m
Current assets	540.8	289.0	 Financing activities
Assets held for sale	25.2	20.3	€388.5m  Issue of corporate bonds
Total Assets	12,919.8	11,194.2	€800m  Net repayment of loans
Equity	5,933.9	4,783.9	-€153m  Dividend -€223.1m
Non-current financing liabilities	4,856.8	4,113.3
Other non-current liabilities	1,654.2	1,382.3
Non-current liabilities	6,511.0	5,495.6
Current financing liabilities	197.1	484.8
Other current liabilities	277.8	429.9
Current liabilities	474.9	914.7
Total Equity and Liabilities	12,919.8	11,194.2

Appendix – 2019 – LTV Strong credit profile in more volatile financing environment

Loan to Value (LTV) in %	37.7	40.7
Property values	12,109.8	10,729.3
Business combinations	-	-
Prepayments for investment properties	53.5	-
Properties held for sale	25.2	20.3
Investment properties	12,031.1	10,709.0
Net Debt	4,570.9	4,364.5
Cash & cash equivalents	451.2	233.6
Excluding lease liabilities (IFRS 16)	31.8	-
Financial liabilities	5,053.9	4,598.1
€m	2019	2018

Strong balance sheet with LTV of 37.7% significantly below maximum target (43%) leaves headroom for growth investments

Appendix – 2019 Income Statement

€m	2019	2018	 Higher rental income
Net rental and lease income	435.0	418.6	(+€25.9m YOY/+4.6%)  Higher personnel expenses (€7.9m) and one-time costs (+€2.5m)
Net income from the disposal of investment property	-1.3	-0.9
Net income from the valuation of investment property	923.4	800.9
Net income from the disposal of real estate inventory	-0.8	-1.6	 Portfolio revaluation resulted in 8.3% appraisal gain (FY
Net income from other services	3.3	5.3	2019)
Administrative and other expenses	-66.1	-44.8	 Admin costs including €16m for new foundation ("Your home helps")
Other income	0.5	0.8	 Recurring admin. costs slightly down (€33.2m/-€0.8m YOY), despite wage inflation
Operating earnings	1,294.0	1,178.3	 Net income from fair value
Net finance costs	-242.7	-81.9	measurement of derivatives -€96.1m; thereof -€94.8m from convertibles
Earnings before income taxes	1,051.3	1,096.4	(FY-2018: +€25.4)  Cash interests nearly stable
Income tax expenses	-230.2	-249.3	(€78.7m; +€1.5m YOY) despite rising debt volume
Consolidated net profit	821.1	847.1	 Cash taxes FFO I -€2.8m, cash taxes from disposals -€12.3m

Appendix – 2019 Cash Effective Interest Expense

€m	2019	2018	 Refinancing effect from early
Reported interest expense	-153.1	-109.3	conversion of convertible bond (€17.7m)
Interest expense related to loan amortisation	34.9	14.0	 Prepayment penalties of
Prepayment penalties / breakage costs	27.6	-3.5	€27.6m due to early refinancing
Interest costs related to valuation of assets/liabilities	6.2	0.0	 Release of swaps and fixed
Leasing related interest expense	2.2	0.8	interest loans (refinancing)
Interest expenses related to changes in pension provisions	2.5	2.4
Other interest expenses	0.5	0.5
Cash effective interest expense (gross)	-79.2	-78.1
Cash effective interest income	0.5	0.8	 Interest coverage improved
Cash effective interest expense (net)	-78.7	-77.2	further (5.4x up from 5.3x YOY)

Appendix – Financial Performance – Portfolio Valuation 2019 Broadbased valuation uplifts continue across market segments

Valuation uplift by markets (l-f-l), including commercial and other assets

	Valuation uplift FY-19	Valuation uplift H2-19	Gross yield FY-19
High-Growth Markets	9.4% (7.5% in FY-18, l-f-l)	3.5%	4.1% (4.5% in FY-18)
Münster (6,103 units)	8.5%	2.8%	3.7% (4.0%)
Düsseldorf (5,209 units)	9.7%	2.8%	4.0% (4.3%)
Monheim (3,350 units)	16.4%	11.0%	4.4% (5.1%)
Stable markets	9.1% (10.7% in FY-18, l-f-l)	3.5%	5.5% (6.0% in FY-18)
Dortmund (13,318units)	11.3%	3.4%	4.7% (5.3%)
Essen (3,373 units)	7.3%	3.1%	5.4% (5.9%)
Mönchengladbach (6,436 units)	9.5%	5.1%	5.9% (6.2%)
Higher-yielding markets	6.1% (6.9% in FY-18, l-f-l)	2.4%	6.4% (6.9% in FY-18)
Duisburg (6,117 units)	4.9%	1.3%	6.1% (6.5%)
Hamm (1,626 units)	4.9%	0.1%	6.1% (6.6%)
Recklinghausen district	9.2%	4.7%	6.7% (6.9%)
Total portfolio	8.3% (8.2% in FY-18, l-f-l)	3.4%	5.1% (5.5% in FY-18)

Appendix – 2019 EPRA Net Initial Yield

€m	2019	2018
Investment properties	12,031.9	10,702.2
Assets held for sale	25.2	20.3
Market value of residential property portfolio (net)	12,057.1	10,722.5
Estimated incidental costs	1,184.7	1,056.9
Market value of residential property portfolio (gross)	13,241.7	11,779.4
Annualised cash flow from rental income (gross)	574.5	564.9
Non recoverable operating costs	-69.5	-61.8
Annualised cash flow from rental income (net)	509.3	508.0
EPRA Net Initial Yield in %	3.8	4.3

Appendix – 2019 acquisitions Accelerating external growth

Acquisitions signed in 2019	Residential units 5,700	Purchase price approx. €500m	Rent multiple 21.7x Units 1,160 1,094 912 269	Price / sqm €1,433	FFO p.a. c. €13m (FY 2020) Market segment  stable  high growth  high growth  stable
	Top 5 locations Bremen Aachen region1 Greater Oldenburg Dortmund Duisburg			Federal state Bremen NRW Lower Saxony NRW
						193	NRW	 higher yielding
Development						Residential units	Purchase price	Rent multiple
Projects2 2019		2103	approx. €38m	26.5x	€2,576	c. €0.9m
	Residential units	Locations
Transfer/ Acquisitions in 2020	1,500 1,100	in advanced	negotiations, outside NRW	NRW (Hamm, Lünen), Rhineland-Palatinate (Kaiserslautern)	4

1 Baesweiler, Alsdorf, Übach-Palenberg. 2 Dortmund, Bielefeld, Lüdenscheid. 3 Including 99 subsidised units. 4 Purchase price not disclosed

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 as of FY-2019 and market rent (defined in footnote 1) as of FY-2019.

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	31.12.2019
Consolidated Adjusted EBITDA / Net Cash Interest	>1.8x	5.4x
Unencumbered Assets / Unsecured Financial Indebtedness	>125%	180%
Net Financial Indebtedness / Total Assets	<60%	36%
Secured Financial Indebtedness / Total Assets	<45%	22%

Swaps 11.5% Fixed interest 80.8% Variable interest 7.7%

Ratings (Moody's)

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

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 (31.1.2019): MDAX 2.94%; EPRA 2.81%
• Rating: Baa1 (stable) by Moody's

Share price (2.3.2020, indexed; 31.1.2013 = 100)

Basic data Well-balanced shareholder structure¹

Appendix Financial Calendar 2020

March 2020	Report/Event
9 th	Annual Report 2019
May 2020
11th	Quarterly Statement Q1 as of 31 March 2020
20th	Annual General Meeting, Düsseldorf
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 frank.kopfinger@leg.ag

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

40476 Düsseldorf, Germany E-Mail: ir@leg.ag

LEG ImmobilienAG Phone: +49 (0) 211 4568-400 Hans-Boeckler-Str. 38 Fax: +49 (0) 211 4568-22 204