Instone Real Estate Group AG

M&A Activity • Aug 15, 2019

ACQUISITION OF S&P STADTBAU

AUGUST 15, 2019

Disclaimer

Transaction Highlights and Rationale

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

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

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Attractive ROCE

Mid-term margin optimization

Acquisition of highly skilled resources and well established platform in attractive region 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

Identified mid term improvements to achieve gross margin expansion for new projects

Well Established Company

• 22 highly skilled employees covering the full value chain from land acquisition, planning and technical management of construction and sales process as well as after sales management
• 4 additional land acquisitions identified in Northern Bavaria with accumulated expected sales of €250m until 2023; assumed average gross margin of c. 20%
• Current margin expectation of existing and identified projects based on use of general contractors; mid term margin upside by implementing Instone's preferred single awarding approach

Attractive Market

2018	Purchasing power p.c. (€)	Purchasing power index (%)
Erlangen	27.875	121.2	S & P
Regensburg	25.853	110.9	m a rk
Nuremberg	24.310	104.2	et s
Munich	31.308	134.2	C u
Duesseldorf	27.744	119.0	rr e n t
Frankfurt	26.684	114.4	In st o
Stuttgart	26.466	113.5	n e
Bonn	26.152	112.1	m a rk
Hamburg	25.725	110.3	et s
Augsburg	22.417	96.1
Berlin	21.746	93.2

• Metropolitan region Nuremberg (c. 1.3m residents) is ranked #1 in economic growth in Germany
• Further population growth of c. 8% excepted until 2030 with estimated 34.000 additional residential units needed over the next years
• Several large companies are head-quartered in the region (Siemens, adidas, Puma, Schaeffler, Diehl, Leoni) as well as several Bavarian and German authorities (BAMF). The university Nuremberg-Erlangen (40.000 students) is among the largest in Germany

Source: von Poll Market Report for residential Properties in Germany

Summary Transaction Economics

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

• €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-limited to projects actually delivered within 7 months post closing (closing expected for end of August)

Future cooperation agreement with Sontowski & Partner Group for developing mixed use quarters where Instone will cover the residential development part

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