Instone Real Estate Group AG

Investor Presentation • Dec 4, 2019

INVESTOR PRESENTATION

ROADSHOW HELSINKI / STOCKHOLM

4 DECEMBER 2019

Disclaimer

Table of Contents

01 | Instone Overview

• 02 | Portfolio Review
• 03 | 9M 2019 Financial Performance
• 04 | Outlook
• 05 | Appendix

2019 Key Achievements

Operational achievements	 Volume of new permits of €1,017m and increased project portfolio of €5.6bn exp. sales volume y-t-d  Since 30 June 2019: Signed 4 forwards sales with institutional buyers of aggregate €815m expected sales volume  Successfully re-organized corporate level financing; 3-year term loan (€200m), promissory note (€98.5m)  Strategic corporate acquisition of residential development platform in northern Bavaria  Positive 9M 2019 business development – Construction launched for 9 projects (~ €333m exp. sales volume); €315m of concluded sales contracts
Financial performance (9M 2019)	 Adjusted revenues increased by 36% to €302.4m (previous year: €222.5m)  Adjusted gross profit margin of 32.7% (previous year: 26.8%)  Adjusted EBIT significantly up to €56.7m (previous year: €20.6m)  Adjusted Net Income substantially improved to €46.7m (previous year: -€1.7m)
Outlook	 16/09/19: FY 2019 outlook significantly increased taking into consideration new large project in Frankfurt/Main  26/11/19 (Q3 reporting): FY 2019 outlook and medium-term guidance confirmed

Instone is a Leading Residential Developer in Germany

Proven track record

>28 years Management experience

>1 million sqm Successfully developed and marketed since1991

~1,000 units Sold on average per annum between '15-'18 First mover in building up a nationwide residential developer platform in Germany

Focus on developing modern, urban, multi-family, residential buildings

Established operating platform with ability to achieve further scale gains

Attractive project portfolio and identified acquisition opportunities underpinning strong and profitablegrowth

Prudent approach to risk management Proprietary and tailored management information system

Diligent site selection criteria leadingto attractive and consistentreturns

Nationwide platform

8 branches + HQ Present in all key German

metropolitan regions

362 Employees (as of 30/09/2019)

Strong project portfolio

~€2.3bn Expected sales volume of approved projects in 2018 and 2019 y-t-d

~€5.6bn Expected sales volume of project portfolio as of 11/2019

Persistent Supply Demand Imbalance for Residential Units in Germany

Significant Growth

• (1) Based on expected sales volume for fully developed projects as of 31 December 2014
• (2) Based on expected sales volume for fully developed projects as of 31 December 2016
• (3) Based on expected sales volume for ongoing projects when fully developed as of November 2019

Rigorous Control over the Entire Development Process

Selected Projects

Hamburg ("Amanda") ~€91m GDV; ~167 units

Frankfurt/Main ("Marie") ~€210m GDV; ~239 units

Bonn ("Schumanns Höhe") ~€68m GDV; ~186 units

Herrenberg ("Schwarzwaldstr.") ~€48m GDV; ~117 units

Leipzig ("Heeresbäckerei") ~€122m GDV; ~345 units

Munich ("Therese") ~€136m GDV; ~118 units

Berlin ("Luisenpark") ~€236m GDV; ~560 units

Regensburg ("Marina Bricks") ~€29m GDV; ~50 units

Table of Contents

01 | Instone Overview

02 | Portfolio Review

• 03 | 9M 2019 Financial Performance
• 04 | Outlook
• 05 | Appendix

Development of Project Portfolio

• In 2019 y-t-d approved new projects of total €1,017m expected sales volume

New projects (YTD 2019):

Project	Exp. sales volume	Exp. Units
Hamburg / Rothenburgsort	€182m	716
Herrenberg III / Schäferlinde	€56m	141
Leipzig / Rosa-Luxemburg-Strasse	€116m	330
Nuremberg / Seetor	€103m	199
Nuremberg / Schopenhauerstrasse	€65m	101
Nuremberg / Stephanstrasse	€65m	461
Regensburg / Marina Bricks	€29m	50
Rosenheim / Bahnhofsareal Nord	€22m	151
Erlangen / Kitzmann	€19m	32
Subtotal as of 09/19	€655m	2,181
Bamberg	€73m	227
Augsburg	€51m	102
Nuremberg	€49m	101
Mönchengladbach	€105m	303
Essen	€68m	212
Leipzig	€16m	75
Total as of 11/19	€1,017m	3,201

Project Portfolio (as of 30/09/2019)

5.0% 1.8% 3.3%

1

under construction

26,7%

pre construction 5.1%

• Building right for 92% of portfolio completed or in process

"Others" include Wiesbaden, Mannheim, Hannover, Potsdam

Development of New Urban Neigbourhood in Frankfurt/Main (~€ 600m GDV)

• Project "Westville" (Kleyer Quarter) in Frankfurt/Main
• Instone is developing one of the biggest new urban neighbourhoods in Germany
• Approx. 93k sqm floor area and 51k sqm living space for >3,000 people

• 1,200 residential units, thereof around 400 publicly subsidized, 3 daycare centres

• Existing masterplan. Expect contruction start in 2020 and completion in 2024.
• Expected sales volume of ~€600m (GDV) and gross margin of ~18%; Attractive IRR
• Forward sale of the entire project to Universal-Investment / Bayerische Versorgungskammer (BVK) – continuing successful cooperation of Instone and BVK (3rd project within one year)
• Expect both property purchase agreement and forward sale of the project to become effective in the current financial year since only technical aspects of contractual consumation have to be implemented

Acquisition of S&P Stadtbau (Transaction Highlights and Rationale)

Well established platform in new region with 30+ years track record in residential development

2

1

C. €300m secured pipeline; €250m identified short-term acquisition pipeline

3

4

Attractive ROCE

Mid-term margin optimization

Acquisition of highly skilled resources and well established platform in attractive region of Northern Bavaria, previously not covered by Instone

Near-term revenue potential with around 85% of revenues from secured pipeline expected until 2022

Consideration is equivalent to 8% post tax unlevered Return on Capital for Instone plus platform value

Instone "single awarding" of works will drive mid-term margin increase (avg. margin of existing projects at 20.5%)

Table of Contents

• 01 | Instone Overview
• 02 | Portfolio Review

03 | 9M 2019 Financial Performance

• 04 | Outlook
• 05 | Appendix

9M 2019 Results of Operations

Results of Operations (€m, adj.*)
	9M 2019	9M 2018	Delta
Revenues	302.4	222.5	35.9%
Project cost	-203.5	-162.7	25.1%
Gross profit	98.9	59.7	65.7%
Margin	32.7%	26.8%
Platform cost	-42.2	-39.1	7.9%
EBIT	56.7	20.6	275%
Margin	18,8%	9.3%
Financial Result	-7.3	-6.7	9.0%
EBT	49.4	13.8	357%
Margin	16.3%	6.2
Taxes	-2.7	-15.5	-82.6%
Tax rate	5.5%	112%
Net income	46.7	-1.7	>100%

• Gross profit margin of 32.7% reflects exceptionally high share of revenue contribution from high margin projects in first nine month 2019

€m	9M 2019	9M 2018
EBIT	46.3	8.3
ppa	6.4	12.3
Non-recurring items	4.0	-
Adj. EBIT	56.7	20.6

• 18.8% EBIT margin driven by strong gross margin and economies of scale
• Tax rate at 5.5% due to recognition of tax loss carryforwards (following approval of a domination and profit transfer agreement with a subsidiary)

*adjusted for ppa and non-recurring items

Revenue Recognition (illustrative) Volume of Sales Contracts (illustrative)

| 17 (Revenue recognition under Instone Group's adjusted results of operations, which is the basis of the Company's forecast, will continue to reflect share deals and asset deals in the same way, i.e. equivalent to the requirements stipulated in IFRS 15 irrespective of an expected IFRS IC decision to exclude share deals from revenue recognition over time in accordance with IFRS 15)

Operating Cash Flow Leverage

In € million	9M 2019	9M 2018
EBITDA	59.7	21.0
Other non-cash items	-2.8	-2.8
Taxes paid	-10.2	-10.9
Change in working capital	-78.61	-35.1
thereof new land plot acquisition payments	-93.7	-28.5
Operating cash flow	-32.0	-27.82
Operating cash flow excl. investments	61.7	0.7

¹without changes of business acquisition of S&P Stadtbau

² without reimbursements of IPO costs from former shareholder

In € million	9M 2019	FY 2018
Corporate debt	171.7	66.1
Project related debt	279.8	199.5
Financial debt	451.5	265.5
- Cash and cash equivalents	162.8	88.0
Net financial debt	288.7	177.5
EBITDA (adjusted) (LTM)	88.9	50.2
Net debt/adjusted EBITDA	3.2x	3.5x
Gross corporate debt / adjusted EBITDA less project interest expenses	2.2x	1.6x

Financing Structure Provides Basis for Growth

• Corporate level refinancing largely completed
• €200m term loan signed in Q2
• Successful completion of new €98.5m promissory note
• Tax optimisation implemented
• Negotiation re syndicated RCF well advanced

Future growth fully funded

Table of Contents

• 01 | Instone Overview
• 02 | Portfolio Review
• 03 | 9M 2019 Financial Performance

04 | Outlook

05 | Appendix

Confirmed FY 2019 Outlook and Midterm Revenue Guidance

• Increased FY 2019 outlook considering project "Westville"( Frankfurt/Main)
• Adj. gross margin of ~24% assumed to be lower than previous outlook due to forward sale of new large project in Frankfurt/Main. Not considering this project adj. gross margin of ~28% would have been confirmed.

Revenue (adj.) Guidance FY 2019 - 2022

• Midterm revenue guidance fully covered by existing projects

21 | (Revenue recognition under Instone Group's adjusted results of operations, which is the basis of the Company's forecast, will continue to reflect share deals and asset deals in the same way, i.e. equivalent to the requirements stipulated in IFRS 15 irrespective of an expected IFRS IC decision to exclude share deals from revenue recognition over time in accordance with IFRS 15)

Table of Contents

• 01 | Instone Overview
• 02 | Portfolio Review
• 03 | 9M 2019 Financial Performance
• 04 | Outlook

05 | Appendix

Project Cost

Platform Cost

Q3 2019	€k
Cost of materials	-286,251
Changes in inventories	+87,344
Indirect sales cost	-1,778
Capitalized interest on changes in inventories	-2,804
Total project cost	-203,490

Q3 2019	€k
Personnel expenses	-25,412
Other operating income	+2,388
Other operating expenses	-24,918
Indirect sales cost	+1,778
Non-Recurring Costs1	+3,976
Total platform cost	-42,188

1 including transaction costs from business acquisition and acquisition costs resulting from effects in previous years

Income statement (reported) Commentary

In €m	9M 2019	9M 20181
Total revenue	296.4	210.2
Changes in inventories	86.8	24.5
	383.2	234.7
Other operating income	2.4	1.3
Cost of materials	-286.1	-185.2
Staff costs	-25.4	-22.6
Other operating expenses	-22.0	-18.7
Depreciation and amortization	-3.0	-0.4
Earnings from operative activities	49.1	9.1
Income from associated affiliates	0.0	-2.2
Other net income from investments	0.0	2.1
Finance income	1.4	1.0
Finance costs	-11.8	-8.4
Changes of securities classified as financial assets	0.2	-0.1
EBT (reported)	39.0	1.6
Income taxes	-0.6	-11.6
Net income (reported)	38.5	-10.0

• For the nine months to 30 September 2019, the Instone Group significantly increased its year on year revenues to €296.4 million (previous year: €210.2 million). New sales contracts concluded in the nine-months to September 2019 as well as construction progress related to projects in revenue recognition led to a year on year increase in revenues of €86.2 million versus the previous year period. 1
• Cost of materials increased to €286.1 million (previous year: €185.2 million) reflecting land price payments in relation to new as well as previously secured projects and increased construction activities. 2
• Staff costs in the first nine month of 2019 amounted to €25.4 million (previous year: €22,6 million) reflecting the increase in FTEs to 293.0 (previous year: 258.6). 3
• The increase of financing costs compared to the same period of last year, is related to the increase in gross debt. 4
• Income taxes for the first nine months of the current year are about €-0.6 million (previous year: €-11.6 million). The favorable development and corresponding IFRS tax rate reflects the first time recognition of tax loss carry-forwards in fiscal year 2019. 5

¹ Previous year's figure adjusted

Condensed balance sheet Commentary

In €m	30/09/2019	FY 2018
Non-current assets	21.3	2.8
Inventories	547.8	404.4
Contract assets	156.6	158.5
Other receivables	26.6	33.0
Cash and cash equivalents	162.8	88.0
Current assets	893.8	683.8
Total assets	915.2	686.6
Total equity	285.8	246.7
Financial liabilities	321.7	177.7
Other provisions and liabilities	17.3	8.5
Deferred tax liabilities	34.9	32.2
Non-current liabilities	373.9	218.4
Financial liabilities	129.8	87.8
Trade payables	73.6	78.3
Other provisions and liabilities	52.1	55.1
Current liabilities	255.5	482.7
Total equity and liabilities	915.2	686.6

7

9

8

• 6 As at 30 September 2019, inventories increased to €547.8 million (31 December 2018: €404.4 million) construction progress as well as land acquisitions. Approximately €70.1 of inventories are related to the first time consolidation of the activities acquired from S&P Stadtbau.
• Gross contract assets decreased slightly to €459.9 million (31 December 2018: €466.9 million), reflecting deliveries of completed projects. Advance payments received from customers amounted to €310.0 million (31 December 2018: €318.1 million). Capitalised direct sales costs fell to €6.8 million (31 December 2018: €9.7 million). The balance of these items resulted in a moderate reduction in (net) contract assets to €156.7 million (31 December 2018: €158.5 million).
• Short and Long-term financial liabilities increased to €451.5 million as at 30 September 2019 (31 December 2018: €265.6 million) reflecting new land acquisitions and financing of construction progress in our ongoing projects.
• Trade payables decreased to €73.6 million (31 December 2018: €78.3 million).

Condensed cash flow statement Commentary

	In €m	9M 2019	9M 20181
	Consolidated earnings	38.5	-10.0
	Other non-cash income and expenses	7.2	33.5
	Decrease / increase of inventories, contract assets, trade receivables and other assets	-60.3	197.5
	Increase / decrease of contract liabilities, trade payables and other liabilities	-7.2	-208.4
	Income taxes paid	-10.2	-10.9
10	Cash flow from operating activities	-32.0	1.7
11	Cash flow from investing activities	-33.7	2.1
	Free cash flow	-65.7	3.8
	Increase of issued capital incl. contributions to capital reserves	0.0	150.5
	Increase from other neutral changes in equity	0.0	-9.1
	Repayment of shareholder loans / Payout to non-controlling interests	0.0	-28.3
	Cash proceeds from borrowings	392.7	49.4
	Cash repayments of borrowings	-246.4	-82.7
	Interest paid	-5.9	-4.3
12	Cash flow from financing activities	140.5	75.7
	Cash change	74.8	79.5
	Cash and cash equivalents at the beginning of the period	88.0	73.6
	Cash and cash equivalents at the end of the period	162.8	153.2

11

• Operating cash flow for the nine months to 30 September 2019 amounted to €- 32.0 million (previous year: €1.7 million). The number includes approximately €93.7 million in relation to land acquisition payments including for our "City Prague", Stuttgart, "Rote Kaserne", Potsdam, "Garden City", Dortmund, "Wiesbaden-Delkenheim", "Friedberger Landstraße" and "Idsteiner Straße", both Frankurt a.M. , "Kösliner Weg", Hamburg, "Rothensburgsort", Hamburg, "Schäferlinde", Herrenberg projects. 10
  • Investing cash flow is mainly influenced by outflows of €31.8 million for our acquisition of S&P Stadtbau
• Cash flow from financing activities for the first nine months of 2019 amounted to €140.5 million (previous year: €75.7 million). The figure reflects new financings of €392.7 million and repayments for terminated loans of €246.4 million. 12

¹ Previous year's figure adjusted

Project Portfolio Key Figures

In € million	Q3 19	Q2 19	Q1 19	Q4 18	Q3 18	Q2 18	Q1 18
Volume of sales contracts	183.1	69.0	62.8	206.2	104.2	120.0	30.0
Project Portfolio (as of)	5,384.1	5,091.7	4,790.2	4,763.2	3,620.3	3,589.1	3,408.5
thereof already sold (as of)	1,261.1	1,128.7	1,061.1	998.2	971.9	867.8	779.9

In units	Q3 19	Q2 19	Q1 19	Q4 18	Q3 18	Q2 18	Q1 18
Volume of sales contracts	380	120	170	459	245	273	56
Project Portfolio (as of)	12,233	11,628	11,041	11,041	8,924	8,863	8,355
thereof already sold (as of)	2,944	2,684	2,564	2,395	2,283	2,038	1,849

(Unless otherwise stated, the figures are quarterly values)

9M 2019 – Revenue Contribution (Top Projects)

Project	City	Adj. Revenues (€m)
Quartier Stallschreiber Strasse / Luisenpark	Berlin	68.2
Wohnen am Kurpark / Wilhelm IX	Wiesbaden	40.3
Marienkrankenhaus	Frankfurt/Main	34.5
Heeresbäckerei	Leipzig	30.5
City Prag – Wohnen im Theaterviertel	Stuttgart	24.6
Franklin	Mannheim	18.4
Niederkasseler Lohweg	Dusseldorf	18.4
Sebastianstrasse / Schumanns Höhe	Bonn	15.1
Rebstock	Frankfurt/Main	14.9
west.side	Bonn	12.4
Others		25.1
Total		302.4

9M 2019 – Volume of Concluded Sales Contracts (Top Projects)

Project	City	Volume (€m)	Units
Niederkasseler Lohweg	Dusseldorf	NA1	221
Quartier Stallschreiber Strasse / Luisenpark	Berlin	55.1	100
Marienkrankenhaus	Frankfurt/Main	40.5	42
Sebastianstrasse / Schumanns Höhe	Bonn	26.6	61
Wohnen am Kurpark / Wilhelms IX	Wiesbaden	23.4	34
Schulterblatt	Hamburg	15.3	67
Theaterfabrik	Leipzig	14.7	50
Schwarzwaldstrasse	Herrenberg	14.7	36
Kantstrasse 55-57 (property)	Leipzig	11.5	4
Marina Bricks	Regensburg	10.0	20
Others		103.12	35
Total		314.9	670

¹ The parties to the contract have agreed not to disclose the purchase price. ²Figure includes volume from project "Niederkasseler Lohweg".

9M 2019 – Construction Launches

Project	City	Exp. Sales Volume (€m)	Units
City-Prag – Wohnen im Theaterviertel	Stuttgart	~110	~250
Sebastianstrasse / Schumanns Höhe	Bonn	~68	~185
Schwarzwaldstrasse	Herrenberg	~48	~115
West.side	Bonn	~35	~115
Marina Bricks	Regensburg	~29	~50
Theaterfabrik	Leipzig	~20	~75
Marie (social housing part)	Frankfurt/Main	~11	~55
Friedrich-Ebert-Strasse	Leipzig	~10	~15
Fregestrasse	Leipzig	~2	~5
Total		~333	~865

Sales Offer as of 30/09/19 (Top Projects)

Project	City	Sales volume (€m)	Units
Marienkrankenhaus	Frankfurt	109.9	92
Beethovenpark	Augsburg	101.4	309
Schulterblatt "Amanda"	Hamburg	77.2	100
Quartier Stallschreiber Strasse / Luisenpark	Berlin	33.6	40
Schwarzwaldstrasse	Herrenberg	33.5	78
Others		~94.4	137
Total		~450.0	756

Project Portfolio as of 30/09/19 (projects >€30m sales volume, representing total: ~€5.1bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Hamburg
Schulterblatt "Amanda"	Hamburg	Mio 94 €
Kösliner Weg	Norderstedt-Garstedt	102 Mio €
Sportplatz Bult	Hannover	120 Mio €
Rothenburgsort	Hamburg	Mio 182 €
Berlin
Quartier Stallschreiber Straße / Luisenpark	Berlin	236 Mio €
Wendenschlossstr	Berlin	Mio 55 €
Rote Kaserne West	Potsdam	Mio 49 €
NRW
Sebastianstraße / Schumanns Höhe	Bonn	69 Mio €
Niederkasseler Lohweg	Dusseldorf	NA
Dusseldorf Unterbach / Wohnen am Hochfeld	Dusseldorf	Mio 157 €
west.side	Bonn	Mio 186 €
Gartenstadtquartier	Dortmund	100 Mio €

32 |

a) Status as of 30.09.2019 b) 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 30/09/19 (projects >€30m sales volume, representing total: ~€5.1bn)

Location	Sales volume (expected)	Land plot acquired	Building right	Sales	Construction started
Wiesbaden	Mio 92 €
Frankfurt am Main	546 Mio €
Frankfurt am Main	210 Mio €
Frankfurt am Main	Mio 50 €
Frankfurt am Main	Mio 324 €
Frankfurt am Main	58 Mio €
Wiesbaden	103 Mio €
Frankfurt am Main	Mio 42 €
Frankfurt am Main	Mio 41 €
Frankfurt am Main	592 Mio €
Leipzig	122 Mio €
Leipzig	Mio 73 €
Leipzig	250 Mio €
Leipzig	114 Mio €
				obtained	started

33 |

a) Status as of 30.09.2019 b) 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 30/09/19 (projects >€30m sales volume, representing total: ~€5.1bn)

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	Mio 69 €
Schwarzwaldstraße	Herrenberg	48 Mio €
S`LEDERER	Schorndorf	87 Mio €
Neckartalterrassen	Rottenburg	Mio 140 €
Schäferlinde	Herrenberg	56 Mio €
Bavaria South
Therese	Munich	136 Mio. €
Ottobrunner Straße 90/92	Munich	83 Mio. €
Beethovenpark	Augsburg	147 Mio. €
Bavaria North
Schopenhauerstraße	Nuremberg	65 Mio. €
Stephanstraße	Nuremberg	65 Mio. €
Seetor	Nuremberg	103 Mio. €

34 |

a) Status as of 30.09.2019 b) 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.

Summary Transaction Terms and Financing (Acquisition of S&P Stadtbau)

Total consideration of €74m for all outstanding equity and financial debt and including all transaction costs

• €4m consideration for the platform
• €67.5m consideration for acquired projects; equivalent to 8% post tax unlevered return on capital for Instone
• €2.5m transaction cost

Agreed earn-out for additional pre-identified 4 projects

• Consideration will be equivalent to 8% unlevered return on capital for Instone
• Earn-out limited to projects actually delivered within 7 months post closing (closing expected for end of August)

Cooperation agreement with Sontowski & Partner Group targeting joint development of mixed use quarters where Instone will cover the residential development part

Transaction will not require external financing

• c €40m of project level debt expected to remain in place; terms in line with other Instone project level financing agreements
• c €34m of total to be paid from cash at hand based on recent corporate level debt financings
• Transaction results in pro-forma post acquisition leverage as of Q2 2019 of 3.5x Net Debt to LTM adjusted EBITDA

|

36

Rent regulation: Proposals of Federal Government & Berlin Senat

Federal Government	Berlin Senat (proposal for Berlin only)
Mietpreisbremse	Mietendeckel "Rent cap"
• The "Mietpreisbremse" shall be extended by 5 years until 2025 • The period under review for the determination of the "Mietspiegel" (basis for "Mietpreisbremse") shall be extended from currently 4 to 6 years • In case of re-letting the new rent may still exceed the "Mietspiegel" by max. 10% • Overpaid rent can be reclaimed by the tenant retroactively for a period of 2.5 years after conclusion of the rental contract • New built apartments remain exempt from the "Mietpreisbremse" (incl. apartments being used and leased for the first time after 1 Oct 2014)  Federal Government targeting rapid parliamentary implementation of the new regulations (by YE 2019)	• Properties built after Jan 1, 2014 and subsidised/rent-controlled properties are excempt from rent cap, excemption includes any re-lettings • Rents for multi-family properties will be frozen at levels as of 18/06/19 for a period of 5 years • Rent caps will be calculated on the basis of the 2013 "Mietspiegel" plus 13.5% reflecting the increase of household income since then • Different rent caps apply subject to year of construction and quality. The rent ceiling range will be €6.45-9.80/sqm/month. • Frozen in-place rents will be subject to an annual inflation-based increase of 1.3% from 2022 onwards • Sitting tenants can apply for rent reduction if current rents are exceeding relevant rent ceilings by more than 20%. Rent reduction to the level of 20% above rent ceiling will only be implemented 9 months after the new law has been in place. • New letting rent cannot exceed the relevant rent cap • Rent increases after modernisation works (related to climate protection or barrier-free access) will be allowed up to an amount of €1.00/sqm without prior approval. Approval will be required for modernisation where rent increases will exceed €1.00/sqm (Berlin might provide subsidies for higher investments) • Berlin CDU/CSU Group announces lawsuit against Mietendeckel due to	Proposed time table: Date Event 18 Jun Senate approved key elements of proposed law 31 Aug Draft law available 18 Oct Senate approved final version of law 31 Oct - Berlin parliament 12 Dec debates draft 20 Dec Parliament approves law Jan 20 Law comes in effect

Assessment of Instone Customer Sensitivity

	Owner occupiers	Institutional buyers	Buy to let investors
e c n a v e el R	▪ Will continue to be the largest single source of sales for Instone ▪ Affordability remains strong and with compelling ownership vs rent economics	▪ Municipal and state owned property companies key buyers of rent restricted units ▪ Pension funds and insurance companies active buyers of Instone projects to cover regular payment obligations	▪ Historically focused on Instones listed property projects considering significant tax benefits ▪ In addition, strong and consistent interest to buy small to medium sized new build appartments
fits e n o n nst e b I y r e o K f	▪ Attractive customer group and still on average prepared to pay a premium over institutional buyers ▪ Huge pent-up demand and lack of comparable products in rental market ▪ Attractive financing environment	▪ Pricing increasingly competitive ▪ In selective instances exceeding owner occupier sales prices for the right product and location ▪ Significant pressure to invest in yielding assets expected to accelerate in light of depressed rates environment	▪ Additional source of demand with broader regional flexibility compared to owner occupiers ▪ Less focused on immediate yield ▪ Looking for save haven investment alternatives with mid- to long term capital appreciation potential ▪ Typical investment of €200,000 – 300,000 ▪ Significant share of repeat customers
n o o y t ati vit ut g nsiti e r nt e S e r	▪ Expected to be essentially insensitive to rent regulation ▪ More likely to increase demand to buy as rent regulation will reduce available product	▪ Berlin currently uninvestable for most institutions ▪ Expected to further increase focus on new built versus standing properties outside of Berlin ▪ Appetite to invest (outside Berlin) remains unabated	▪ Financing cost vs initial rental yield more relevant than rental regulation

Favourable Regulatory Framework in Germany – Construction costs covered by customers' regular payments

38 | (1) MaBV - Real estate agent and commercial construction industry ordinance ("Makler- und Bauträgerverordnung").

(2) Unless significant delays occur and are not solved within a set reasonable deadline.

Typical Project Cash Flow Profile

Source: Voting right notifications according to Article 40, Section 1 of the WpHG [the German Securities Trading Act]

Instone Shareholders: Financial Calendar 2020:

19 March	Publication of annual report 2019
28 May	Publication of quarterly group statement as of 31/03/2020
9 June	Annual General Meeting, Essen
27 August	Publication of group interim report as of 30/06/2020
26 Nov	Publication of quarterly group statement as of 30/09/2020

Investor Relations Contact:

Thomas Eisenlohr (Head of Investor Relations) Instone Real Estate Group AG Grugaplatz 2-4, 45131 Essen T +49 201 45355-365 | F +49 201 45355-904 thomas.eisenlohr@instone.de investorrelations@instone.de www.instone.de