Instone Real Estate Group AG

Quarterly Report • Nov 27, 2018

9M 2018 RESULTS PRESENTATION

NOVEMBER 27, 2018

Disclaimer

9M 2018 wrap-up

Positive business development continues

Outlook for financial year 2018 confirmed

Strong project portfolio and acquisition pipeline

Positive business development continues

In € thousands	9M 2017 (reported)	9M 2018 (reported)	IFRS 15 effect	9M 2018 (pre IFRS 15)	PPA effect	9M 2018 (pre PPA)	9M 2018 (pre IFRS 15 + PPA)
Revenues	123,835	223,524	-92,315	131,209		223,524	131,209
Operating performance	154,243	236,428	-11,109	225,319	13,910	250,338	239,229
Cost of materials	-109,497	-184,605	8,310	-176,295		-184,605	-176,295
Cost of sales	-15,524	-6,952		-6,952		-6,952	-6,952
profit1 Gross	29,221	44,871	-2,799	42,072	13,910	58,781	55,982
Gross margin	23.6%	20.1%		32.1%		26.3%	42.7%
EBIT	3,916	5,876	-2,799	3,077	13,910	19,786	16,987
EBIT margin	3.2%	2.6%		2.3%		8.9%	12.9%
EBT	-11,024	-1,591	-2,799	-4,390	13,910	12,319	9,520
EAT	-13,043	-10,482	-1,937	-12,419	9,472	-1,010	-2,947
EAT attributable to shareholders	-13,188	-10,487	-1,937	-12,424	8,265	-2,223	-4,160
EPS (€)2	-0.36	-0.28		-0.34		-0.06	-0.11

¹ Gross profit = Operating performance – cost of materials – cost of sales; ² Shares outstanding = 36,988,336

Project portfolio key figures

In € million	Q1 17	Q2 17	Q3 17	Q4 17	Q1 18	Q2 18	Q3 18
Volume of sales contracts	90.8	120.4	88.5	58.4	30.0	120.0	104.3
Volume of new permits	0.0	174.2	203.9	128.0	0.0	173.2	17.8
Handovers	17.9	25.8	82.5	75.6	30.3	36.5	70.8
Project Portfolio (as of)	na	3,039.8	3,374.8	3,410.0	3,408.5	3,589.1	3,620.3

In units	Q1 17	Q2 17	Q3 17	Q4 17	Q1 18	Q2 18	Q3 18
Volume of sales contracts	193	527	189	110	56	273	245
Volume of new permits	0	555	458	358	0	575	55
Handovers	18	44	208	190	75	92	92
Project Portfolio (as of)	na	7,675	8,042	8,390	8,355	8,863	8,924

Unless otherwise stated, the figures are quarterly values

9M 2018 wrap-up

Positive business development continues

Outlook for financial year 2018 confirmed

Strong project portfolio and acquisition pipeline

Positive FY 2018 outlook confirmed

	FY18 outlook (August 2018)	FY18 outlook (November 2018)
Revenues	€370-400m	€370-400m	
Operating performance	>€500m	>€500m	
Volume of concluded sales contracts	>€500m	~€500m
margin1 Gross profit	~24%	~24%	
Adj.2 EBIT	€48-54m	€48-54m	
Adj2 . EBT	€32-37m	€32-37m	
Tax rate	Stable at 30%	Stable at 30%	

¹ Pre PPA (expected PPA in 2018: ~€18m) and including sales commissions; ² Pre PPA

Revenue ramp-up well on track

• Main contribution from following projects in Q4 2018:

Project	Location	Revenue
Stallschreiber Strasse / Luisenpark	Berlin	~€30m
Heeresbäckerei	Leipzig	~€25m
Marienkrankenhaus	Frankfurt	~€25m
Wilhelm IX	Wiesbaden	~€10m

Ramp-up of volume of concluded sales contracts towards Q4

9M 2018 wrap-up

Positive business development continues

Outlook for financial year 2018 confirmed

Strong project portfolio and aquisition pipeline

Strong project portfolio being basis for sustainable profitable growth

• 45 projects with 8,924 units pointing to an overall expected sales volume of €3.6bn
• 92% of sales volume located in key metropolitan regions
• 27% of sales volume already sold
• 28% of sales volume already under construction

Increased project portfolio driven by new approvals

• New approvals include:
• Neckartalterassen, Rottenburg (expected sales volume: ~€105m)
• Semmelweisstrasse, Leipzig (expected sales volume: ~€66m)

• Completed projects:

• Freiburg and Leipzig

• Increased expected sales volume:

• Marienkrankenhaus, Frankfurt (+€13m)
• Adjustments in different projects (+€37m)

More than € 1.3bn GDV in 2018 purchased or agreed exclusivity

Approved and secured (y-t-d): Approved (y-t-d): In the approval process:

Project	Exp. sales volume (€)	Residential units
Beethovenpark, Augsburg	135m	396
Sportplatz, Hannover	116m	281
Neckartalterassen, Rottenburg	105m	364
Semmelweissstrasse, Leipzig	66m	210
Total	422m	1,251

Project	Exp. sales volume (€)	Residential units
Metropolitan region Hamburg	102m	286
Metropolitan region Rhine Ruhr	81m	258
Potsdam	47m	114
Frankfurt	39m	69
Leipzig	18m	55
Total	287m	782

Project	Exp. sales volume (€)	Residential units
Augsburg	~220m	~600
Metropolitan region Hamburg	~195m	~470
Metropolitan region Rhine Ruhr	~75m	~430
Metropolitan region Frankfurt	~80m	~230
Berlin	~80m	~260
Metropolitan region Stuttgart	~50m	~130
Total	~700m	~2,040

• Well on track to exceed our annual acquisition target of €900 1,000m sales volume
• Average gross margin above medium-term target of 25%
• Projects regionally well balanced

13

Medium-term revenue guidance confirmed

APPENDIX

Project portfolio (projects >€30m sales volume, representing total: >€3.5bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Hamburg
NMA	Hamburg	145 Mio €
Essener Straße	Hamburg	Mio 89 €
Schulterblatt	Hamburg	Mio 83 €			Construction section	launched for 3 / whole project
Berlin		Increased from	€232m		now	under construction
Quartier Stallschreiber Straße Luisenpark /	Berlin	233 Mio €
Wendenschloss	Berlin	Mio 119 €
NRW		Increased from	€64m
Sebastianstraße / Schumanns Höhe	Bonn	67 Mio €
Halle 17 - Clouth Areal	Cologne	31 Mio €
Niederkasseler Lohweg	Dusseldorf	Mio 72 €
Dusseldorf Unterbach / Wohnen im Hochfeld	Dusseldorf	149 Mio €
west.side	Bonn	179 Mio €	Increased from	€178m

| 16

Indicating changes vs previous quarter

a) Status as per 30.09.2018 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 (projects >€30m sales volume, representing total: >€3.5bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Rhine Main
Wiesbaden-Delkenheim, Lange Seegewann	Wiesbaden	89 Mio. €
Schönfeld Areal	Frankfurt am Main	422 Mio. €
Marienkrankenhaus	Frankfurt am Main	210 Mio. €
Wohnen an der Lange Straße	Frankfurt am Main	43 Mio. €
Rebstock	Frankfurt am Main	49 Mio. €
Friedberger Landstraße	Frankfurt am Main	305 Mio. €
Elisabethenareal	Frankfurt am Main	60 Mio. €
Wohnen am Kurpark / Wilhelms IX	Wiesbaden	97 Mio. €
Steinbacher Hohl	Frankfurt am Main	41 Mio. €
				Increased from	€95m

vs previous quarter

a) Status as per 30.09.2018 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 (projects >€30m sales volume, representing total: >€3.5bn)

Project	Location	Sales volume (expected)	Land plot acquired	Building right obtained	Sales started	Construction started
Baden-Wurttemberg
City-Prag - Wohnen im Theaterviertel	Stuttgart	115 Mio €
Wohnen am Safranberg	Ulm	Mio 49 €
Franklin	Mannheim	Mio 69 €	Increased from	€68m
Schwarzwaldstraße	Herrenberg	34 Mio €
S`Lederer	Schorndorf	70 Mio €
Neckartalterrassen	Rottenburg	Mio 105 €
Bavaria
Therese	Munich	Mio 136 €
Ottobrunner Strasse	Munich	Mio 83 €
Leipzig		Increased	from €66m
Heeresbäckerei	Leipzig	Mio 122 €
Semmelweisstrasse	Leipzig	68 Mio €
Parkresidenz	Leipzig	196 Mio €

18 |

Indicating changes vs previous quarter

a) Status as per 30.09.2018 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.

Income statement Commentary

1	Operating performance	154.2	236.4
	Changes in inventories	30.4	12.9
	Total revenue	123.8	223.5
	In €m	Q3 2017	Q3 2018

	Other operating income	4.2	1.3
2	Cost of materials	-109.5	-184.6
3	Staff costs	-19.2	-22.6
	Other operating expenses	-26.5	-24.2
	Income from associated affiliates	0.5	-2.2
	Other net income from investments	0.6	2.1
	EBITDA (reported)	4.2	6.3
	Depreciation and amortization	-0.3	-0.4
	EBIT (reported)	3.9	5.9
	Finance income	0.8	1.0
	Finance costs	-15.7	-8.4
	Write-down of long-term securities	0.0	-0.1
4	Finance result	-14.9	-7.5
	EBT (reported)	-11.0	-1.6

Income taxes	-2.0	-8.9
Net income (reported)	-13.0	-10.5

1

4

• Operating performance consists of booked revenues from realized projects as well as change in inventories due to projects currently ramping up. Due to the first-time adoption of IFRS 15 in 2018 the operating performance includes also revenues from recognitions over time. The increase of operating performance in Q2 2018 compared to the same period of the previous year is mainly the effect of the first-time adoption of IFRS 15.
• The cost of materials in Q2 2018 were significant higher compared to Q2 2017 by aprox. €75 million resulting from the higher work in progress for the projects under construction. In addition, the loss relief of three projects is included in the cost of materials in the amount of approx. €8 million in the second quarter of 2018. 2
• Personnel expenses increased by €3.3 million to €22.6 million in the period under review com-pared to the same period of the previous year. This increase was mainly due to the increased headcount in the second half of 2017 and in the current period under review. 3
• The net financial income in the period under review improved to €-7.5 million (same period last year: €-14.9 million). A crucial factor for this was the conversion of €48.0 million shareholder loans into equity on 28 December 2017 and the repayment of the €57.8 million residual amount of shareholder loans in the period under review.

Balance sheet (1/2) Commentary

In €m

	FY 2017	Q3 2018
Intangible assets	0.0	0.1
Tangible assets	1.6	1.8
Investments accounted for using the equity method	0.4	0.4
Other financial assets	0.3	0.3
Financial receivables	0.7	0.7
Other receivables	1.0	0.0
Non-current assets	4.0	3.4

5	Inventories	659.4	385.5
	Financial receivables	32.4	0.0
6	Trade receivables	4.2	102.8
	Other receivables and other assets	15.5	16.0
	Income tax assets	0.0	3.8
	Cash and cash equivalents	73.6	153.2
	Current assets	785.1	661.4
	Total assets	789.1	664.7

Source: Audited historical financials, Company information.

5 The decrease in inventories is essentially the result of the first-time adoption of IFRS 15 for the reporting period from 1 January 2018 to 30 September 2018. Taking this new standard into account, the previously as inventories reported projects with already concluded purchase agreements with customers are now reported as receivables.

6 The first-time adoption of IFRS 15 leads to an increase in trade receivables due to the project previously reported as inventories with already concluded customer contracts. However, the increase in receivables is lower than the reduction in inventories, as prepayments received are netted off against trade receivables.

7

9

8

Balance sheet (2/2) Commentary

In €m	FY 2017	Q3 2018
Share capital	0.0	37.0
Capital reserve	85.4	198.9
Retained earnings / loss carryforwards	-34.3	-2.9
Other equity components	-0.3	-0.3
Equity attributable to shareholders	50.7	232.7
Non-controlling interests	1.5	1.5
Total equity	52.2	234.2
Provisions for pensions and similar obligations	4.2	4.7
Other provisions	1.3	1.2
Financial liabilities	241.0	198.3
Other liabilities	0.0	0.0
Deferred tax liabilities	7.7	31.6
Non-current liabilities	254.2	235.9
Other provisions	49.2	19.6
Financial liabilities	134.7	86.1
Trade payables	275.7	70.6
Other liabilities	9.4	7.7
Income tax liabilities	13.8	10.5

Total equity and liabilities 789.1 664.7

Current liabilities 482.7 194.6

9

• Non-current and current financial liabilities increased to €284.4 million in the period under review (31 December 2017: €375.7 million). As planned, we paid €57.8 million in liabilities owed to the former majority shareholder of Instone Real Estate Group AG. This was done in connection with the change of legal form to a company limited by shares under Dutch law and the subsequent listing on the Frankfurt Stock Exchange.. 7
• Other current provisions decreased as planned by €29.5 million in the period under review, from €49.1 million (as at 31 December 2017) to €19.6 million. The reason for this was essentially their use for special payments in connection with a long-term incentive plan. These payments were both neutral in terms of profit and liquidity for the Group, as the former sole shareholder exempted the Group from these costs. 8
• Trade payables fell during the period under review to €70.4 million (31 December 2017: €275.7 million). The first-time adoption of IFRS 15 as at 1 January 2018 offset the upfront payments received for signed sales contracts with clients against the recognised assets for these sales contracts. As of 31 December 2017, we had shown advances received totalling €230.4 million. .

21 | Source: Audited historical financials, Company information.

In €m	FY 2017	Q3 2018
Consolidated earnings	-31.0	-10.4
Depreciation and amortization	0.4	0.4
Increase / decrease of provisions	12.5	-29.1
Increase / decrease of deferred taxes	-15.7	24.0
Decrease / increase of equity carrying amounts	1.0	0.0
Decrease/increase other financial assets	0.3	0.0
Other non-cash income and expenses	31.2	65.2
Profit / loss on disposals of property, plant and equipment	0.0	0.0
Decrease / increase of inventories, trade receivables and other assets	-112.3	206.5
Increase / decrease of trade payables and other liabilities	83.4	-208.4
Cash flow from operating activities	-30.2	48.1
Income taxes paid	-4.2	-10.9
Net cash flow from operating activities	-34.5	37.2
Proceeds from disposals of property, plant and equipment	0.0	0.0
Purchase of property, plant and equipment	-0.5	-0.6
Proceeds from disposals of non-current financial assets	0.0	0.2
Payments for acquisitions of shares in consolidated companies	-22.8	-0.1
Receipts from the disposal of subsidiaries	0.1	0.0
Interest paid	0.0	-4.3
Interest received	0.6	2.7
Cash flow from investing activities	-22.7	-2.1
Increase of issued capital incl contributions to capital reserves	0.0	141.6
Increase from other neutral changes in equity	0.0	-1.9
Payout to non-controlling interests	-0.7	0.0
Cash proceeds from borrowings	121.9	49.4
Cash repayments of borrowings	-88.3	-144.6
Interest paid	-14.8	0.0
Cash flow from financing activities	18.2	44.5

Cash flow Commentary

• The net cash flow from operating activities of Instone Real Estate of €37 million in the period under review (2017: €-34.5 million) has a positive impact on the financial position of Instone Group. The high decrease in inventories and trade receivables as well as the decrease in trade payables is mainly a cash-neutral process due to the first-time application of IFRS 15 as of 01.01.2018. 10
• In the period under review, the Instone Group made no significant investments or deinvestments. The investing cash flow is therefore almost zero. 11
• In the cash flow from financing activities in the first half of 2018, three transactions are essential: 12
• the issue of the new shares resulted in a net cash inflow of around €141 million
• the repayment of the shareholder loan in the amount of approx. €-56 million
• repayments and new loans for project financing with a balance of approx. €-39 million In total, a positive cash flow of €44.5 million remains.

22 | Source: Audited historical financials, Company information. .

Investor Relations contact:

Thomas Eisenlohr Head of Investor Relations Instone Real Estate Group AG Baumstraße 25, 45128 Essen T +49 201 45355-365 | F +49 201 45355-904 Thomas.Eisenlohr@instone.de

Financial calendar / Events:

• 28 Nov 18 Exane BNP Paribas MidCap CEO Conference, Paris
• 21 Jan 19 UniCredit Kepler Cheuvreux German Corporate Conference, Frankfurt
• 28 Mar 19 Publication of Annual Financial Report 2018
• 28 May 19 Publication of Quarterly Statement as of 31/03/2019
• 13 June 19 Annual General Meeting
• 27 Aug 19 Publication of Quarterly Report as of 30/06/2019
• 26 Nov 19 Publication of Quarterly Statement as of 30/09/19