LEG Immobilien SE

Investor Presentation • Aug 10, 2018

CAPTURE CHANCES DRIVE INNOVATION

LEG Immobilien AG 10 August 2018

H1-2018 Results

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.

Agenda

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

Overall company development in H1

 Portfolio revaluation:	Valuation uplift of +4.1% (€384m) in H1, further capital growth in H2 expected
 Acquisition:	Acquisition of c. 3,750 units in core markets close to signing

Accelerating rent momentum ahead

 In-place rent, l-f-l	€5.54/sqm (+2.7%; free financed units +3.5%); FY-2018 target c.3.0%
 EPRA-Vacancy, l-f-l	3.4% (-10 bps YOY)
 Maintenance/Capex	€11.3/sqm (+56.9% YOY)

Financials: On track for FY growth targets; Higher H1-18 maintenance expenses

 Net cold rent	€277.4m (+5.2% YOY from €263.7m)
 Adjusted EBITDA	€199.9m (+3.1% YOY from €193.8m)
	 Adj. EBITDA pre-maintenance (+5.4% YOY)
 FFO I	€156.4m (+5.1% YOY from €148.8m), €2.48 per share (+5.1% YOY from €2.36)
	 FFO I pre-maintenance (+7.6% YOY)
 EPRA-NAV (excl. goodwill)	€88.46 per share (up from €83.81 in Q4; +5.5% YTD despite DPS payout of €3.04)

Agenda

• HIGHLIGHTS H1-2018 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• BUSINESS UPDATE AND OUTLOOK IV.
• APPENDIX V.

Portfolio Overview

Positive rent development across all submarkets

	Total Portfolio
--	-----------------	--

of units 130,224 +2.5% In-place rent (sqm), l-f-l €5.54 +2.7% EPRA-Vacancy, l-f-l 3.4% -10 bps

30.06.2018 (YOY)

Strong results on the basis of tailor-made management strategies

High-Growth Markets

	30.06.2018	 (YOY)
# of units	41,341	+6.2%
In-place rent (sqm), l-f-l	€6.14	+2.6%
EPRA-Vacancy, l-f-l	1.9%	+20 bps

Stable Markets

	30.06.2018	 (YOY)
# of units	47,565	+1.2%
In-place rent (sqm), l-f-l	€5.27	+2.6%
EPRA-Vacancy, l-f-l	3.1%	-20 bps

Higher-Yielding Markets 30.06.2018 (YOY) # of units 39,468 0.6% In-place rent (sqm), l-f-l €5.19 +3.0% EPRA-Vacancy, l-f-l 5.8% -20 bps

Accelerating rent growth ahead Rent Development

Capex & Maintenance Rising value enhancing investments ahead

• HIGHLIGHTS H1-2018 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.

FINANCIAL PERFORMANCE III.

• BUSINESS UPDATE AND OUTLOOK IV.
• APPENDIX V.

Financial Highlights H1-2018

Margin expansion story is set to continue

Income Statement H1-2018

€ million	H1-2018	H1-2017	 Higher rental income
Net rental and lease income	206.3	202.7	(+€13.7m YOY/+5.2%)  Lower increase of net rental income due to higher
Net income from the disposal of investment property	-0.5	-0.7	maintenance expenses (+€5.9m YOY) from a low H1-
Net income from the valuation of investment property	383.9	480.1	2017 level
Net income from the disposal of real estate inventory	-1.2	-1.6	 Portfolio revaluation resulted in 4.1% appraisal gain
Net income from other services	2.2	2.7
Administrative and other expenses	-19.3	-19.3	 Recurring admin. costs also nearly stable (€16.8m/+€0.6m YOY)
Other income	0.4	0.2
Operating earnings	571.8	664.1	 Net income from fair value
Net finance costs	-27.4	-103.6	measurement of derivatives €17.1m; thereof €16.9m from convertibles (H1-2017: -€42m)
Earnings before income taxes	544.4	560.5	 Lower cash interests (€38.8m; -€1.7m YOY) despite rising debt volume
Income tax expenses	-121.4	-137.2
Consolidated net profit	423.0	423.3	 Cash taxes (-€4.1m)

FFO Calculation

H1-2018

€ million	H1 -2018	H1 -2017
Net cold rent	277.4	263.7	 +€13.7m/+5.2%
Profit from operating expenses	-4.2	-3.5
Maintenance (externally -procured services)	-26.7	-20.9	 Higher share of maintenance measures in comparison to low
Staff costs	-30.3	-26.6	H1 -2017 level.
Allowances on rent receivables	-4.3	-3.7	 Growth in staff costs mainly due to additional FTE's for
Other	-2.7	-3.5	crafts services and enhanced
Non -recurring project costs (rental and lease)	3.7	0.4	capex program (also some reorganisation costs)
Recurring net rental and lease income	212.9	205.9
Recurring net income from other services	3.4	3.8	 NRI pre-maintenance increased by +€12.9m YOY
Staff costs	-12.0	-10.8	(+5.5%)
Non -staff operating costs	-6.7	-8.2
Non -recurring project costs (admin.)	1.9	2.8	 Admin. costs nearly flat (YOY); slightly higher
Recurring administrative expenses	-16.8	-16.2	personnel expenses (e.g. for
Other income and expenses	0.4	0.3	legal)
Adjusted EBITDA	199.9	193.8	 EBITDA pre maintenance
Cash interest expenses and income	-38.8	-40.5	increased by +€12m YOY (+5.4%)
Cash income taxes from rental and lease	-3.6	-3.2
FFO I (including non -controlling interests)	157.5	150.1	 Lower interest costs (end Q2 - 2018:1.75% vs. 1.85% in Q2 -
Non -controlling interests	-1.1	-1.3	2017)
FFO I (excluding non -controlling interests)	156.4	148.8
FFO II (including disposal of investment property)	155.7	148.1
Capex -adjusted FFO I (AFFO)	93.5	118.6

FFO Bridge H1-2018

Cash Effective Interest Expense H1-2018

€ million	H1-2018	H1-2017
Reported interest expense	47.4	64.5	 One-off refinancing effect of €4.9m in FY-2017 from
Interest expense related to loan amortisation	-5.8	-14.6	refinancing of subsidised loans (loan amortisation)
Prepayment penalties / breakage costs	0.0	-6.7	 Release of swaps and fixed
Interest costs related to valuation of assets/liabilities	-0.4	-0.7	interest loans (refinancing); total refinancing costs €11.7m in FY-2017
Leasing related interest expense	-0.5	-0.5
Interest expenses related to changes in pension provisions	-1.2	-1.2
Other interest expenses	-0.4	0.0
Cash effective interest expense (gross)	39.1	40.8
Cash effective interest income	0.3	0.3	 Interest coverage improved
Cash effective interest expense (net)	38.8	40.5	further (5.2x up from 4.8x YOY)

EPRA-Net Asset Value

Positive outlook for further yield compression; services as hidden gem

€ million	30.06.2018	31.12.2017
Equity (excl. minority interests)	4,326.1	4,087.4	 €423.0m net profit  -€192.1 dividends
Effect of exercising options, convertibles and other rights	564.3	559.2	 €7.8m others
NAV	4,890.4	4,646.6
Fair value measurement of derivative financial instruments	242.3	259.8
Deferred taxes1)	1,008.2	899.3
EPRA-NAV	6,140.9	5,805.7
(m)2) Number of shares fully-diluted incl. convertible	68.824	68.644
EPRA-NAV per share in €	89.23	84.58
Goodwill resulting from synergies	52.7	52.7
Adjusted EPRA-NAV (excl. goodwill)	6,088.2	5,753.0
Adjusted EPRA-NAV per share in €	88.46	83.81

Attractive rental yield of 5.7% leaves upside for capital growth (thereof free financed portfolio: 5.9%)

Value of services business not included in NAV

Scenario: additional value approx. €3.90-€5.90 per share (discount rate of 4.0%-6.0%)3)

2) Actual number of shares outstanding 63.19m 1) And goodwill resulting from deferred taxes on EPRA-adjustments 3) Assumption: expected 2019 FFO, growth rate of 0%

Portfolio Valuation H1-2018

Broadbased valuation uplifts continue across market segments

Breakdown revaluation gains

Value drivers
•	Rent & vacancy development	€267 m
•	Discount rate	€177 m
•	Others (e.g. cost adjustments)	€1 m
			m1) €445
Allocation	capital growth
•	Revaluation gains	€383.9 m
•	Capex	€61.2 m

Valuation uplift by markets (l-f-l)

	Valuation uplift H1-18	Gross yield
High-Growth Markets	4.7% (15.5% in FY-17, l-f-l)	4.6%
Stable markets	3.1% (12.5% in FY-17, l-f-l)	6.5%
Higher-yielding markets	3.7% (8.8% in FY-17, l-f-l)	7.1%
Total portfolio	4.1% (13.0% in FY-17, l-f-l)	5.7%
1) Change in Gross Asset Value, l-f-l

• Increasingly positive momentum in the B-cities including higheryielding markets
• Reported IFRS values still show a gap to recently observed market transactions/ asking prices

EPRA-Net Asset Value 30 June 2018

* valuation effects derivatives + deferred taxes are added back

Portfolio

Sound property fundamentals basis for value growth

As of 30.06.2018

Market	Residential Units	GAV Residential Assets (€m)	% of Total Residential GAV	GAV/ sqm (€)	In-Place Rent Multiple	Market Multiples, Estimated Rental Values	GAV Commercial/ Other Assets (€m)	Total GAV
High Growth Markets	41,341	4,439	47%	1,620	21.8x	19.3x	216	4,655
Stable Markets	47,565	2,945	31%	962	15.5x	14.4x	101	3,046
Higher Yielding Markets	39,468	2,004	21%	828	14.0x	13.3x	59	2,062
Subtotal NRW	128,374	9,387	98%	1,142	17.5x	16.1x	376	9,763
Portfolio outside NRW	1,850	156	2%	1,251	17.7x	16.6x	2	158
Total Portfolio	130,224	9,543	100%	1,144	17.5x	16.1x	378	9,921
Other Assets
Total								9,986

Balance Sheet

Strong balance sheet

€ million	30.06.2018	31.12.2017
Investment property	9,941.5	9,460.7	 Revaluation €383.9 m
Prepayment for investment property	0.0	-	 Additions €36.2m  Capex €61.2m
Other non-current assets	177.3	172.3
Non-current assets	10,118.8	9,633.0
Receivables and other assets	103.7	63.7
Cash and cash equivalents	152.9	285.4
Current assets	256.6	349.1	 Cash flow from operating
Assets held for sale	19.2	30.9	activities €130.1m  Investing activities - €94.2m
Total Assets	10,394.6	10,013.0	 Financing activities
Equity	4,353.0	4,112.4	- €168.4m
Non-current financing liabilities	3,936.8	3,821.4
Other non-current liabilities	1,267.6	1,158.8	 Loan proceeds €150.2m
Non-current liabilities	5,204.4	4,980.2	 Repayment of loans
Current financing liabilities	387.7	478.2	-€26.6m and of commercial paper -€100m
Other current liabilities	449.5	442.2
Current liabilities	837.2	920.4
Total Equity and Liabilities	10,394.6	10,013.0

LTV

Strong credit profile leaves headroom for growth investments

€ million	30.06.2018	31.12.2017
Financial liabilities	4,324.5	4,299.6	 Low gearing below current
Cash & cash equivalents	152.9	285.4	target LTV (up to 45%) leaves headroom for growth
Net Debt	4,171.6	4,014.2	investments without raising fresh equity (c.3,750 units close to signing)  Yield compression is likely to trigger a further LTV decline in H2-2018
Investment properties	9,941.5	9,460.7
Properties held for sale	19.2	30.9
Prepayments for investment properties	-	-
Property values	9,960.7	9,491.6	 Significant positive impact on
Loan to Value (LTV) in %	41.9	42.3	LTV from future conversion
Pro-forma LTV post conversion in %	39.1	39.4	of 1st convertible (€300m nominal) expected (currently -280bps)

Financing Structure – 30 June 2018

Variable interest 8.1%

Fixed interest 76.9%

LT financing secures future earnings growth

1) €300 m convertible bond with investor put option 2019

2) Corporate bond (€500 m)

3) €400 m convertible bond

Key Facts			Maturities
Average debt maturity	7.8 years	1-2 years	0.1%
Interest costs	Ø 1.75%	3-5 years	18.1%
Hedging ratio	91.9%	6-8 years	51.0%
Rating	Baa1 (Moody's)	≥ 9 years	30.8%

• HIGHLIGHTS H1-2018 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.

BUSINESS UPDATE AND OUTLOOK IV.

APPENDIX V.

Business Update

Strong access to off-markets deals major competitive edge

Imminent acquisition of c. 3,750 residential units creates additional upside to future FFO PS

• Transaction is currently close to signing (closing expected for Q4-2018)
• Acquisition in LEG core markets allows for high synergies & scale effects with existing portfolio
• Properties are mainly located in the Greater Ruhr area
• Off-market deal due to strong network and reputation in the NRW market
• No need to raise fresh equity due to strength of LEG balance sheet
• Deal expected to be FFO per share accretive and NAV neutral
• Due to initial investments full earnings impact is expected to become visible in FY-2020
• FFO 2019: smaller positive effect
• FFO 2020e: >€5m; assumption 100% debt financing

Accelerated asset sales for further portfolio optimisation planned for FY-2019

• Potential volume: 1,000-2,000 units
• Further streamlining of portfolio with expected positive impact on operating efficiency/margins
• Proceeds earmarked for financing of future growth (capital recycling)

Business Update

Outlook for 2018 - 2019

2018	 FFO I  L-F-L rent growth  L-F-L vacancy  EBITDA margin  Investments  Dividend	€315m - €323m / €4.99 - €5.11 per share ~3.0% slightly decreasing ~73% ~30/sqm 70 % of FFO I
2019	 FFO I  L-F-L rent growth  EBITDA margin  Investments	€338m - €344m / €5.35 - €5.44 per share ~3.5% ~74% ~€30/sqm
Mid-term	 L-F-L rent growth	3.0 - 3.5% (per year; until 2021)

Steady Expansion of Leading Profitability

FFO I per share (€)

EBITDA Margin

• HIGHLIGHTS H1-2018 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• BUSINESS UPDATE AND OUTLOOK IV.

APPENDIX V.

Generating Appealing Shareholder Returns

Attractive NRW Market

Positive demographics with stabilising net immigration

Cities entering upswing mode

2015 2016 2017E 2018-2020 Net immigration to Germany NRW ~0.5 m 3) ~25% ~1.0 m 1) (approx. +80% yoy) Sources: 0.5 m 2) 1.2 m 3)

• 1) Interview with director of Federal Agency of Migration and Refugees (Aug 2016)
• 2) Federal Statistical Office, press release 13 Mar 2018
• 3) Deutsche Bundesbank, Monthly Report June 2018
• 4) Federal Statistical Office, press release 2 Nov 2017

5) Bundesamt für Migration und Flüchtlinge, March 2018 and Federal Statistical Office, April 2018

Key facts

• Federal Agency of Migration and Refugees collected data that net immigration of foreigners to Germany amounted to about 0.25 million in H1-2017, thereof 0.12 million non-EU nationals 3)
• Deutsche Bundesbank forecasts 1.2 million additional immigrants (net) for 2018-20203)
• End of 2016, 1.6 million people seeking protection (incl. asylum seekers) were registered in Germany (+113% vs 2014), the majority living in NRW (27%) 4)
• Stabilising net immigration expected for the years to come with decreasing share of refugees (c. -70% asylum seekers 2017 YOY; c. 0.1 million of refugees (net) in 2017 estimated)5)
• Immigration is driving overall population growth, triggering additional growth in net new households
• Additional pressure on affordable housing segment
• Outperformance of German economy attracts qualified new immigration
• Liquid labour market and affordable living as pull-factors for NRW

Scalability of platform + cost discipline support value accretive growth Acquisitions: Leading Management Skills Paying Off

Strong volume growth at decreasing overhead cost…

…leads to a significant drop of the administrative costs ratio

LEG – Adj. EBITDA Margin

Leading profitability despite short term distortion from restricted units

Adj. EBITDA margin	FY-2017			FY-2016
	€m	margin %	€m	margin %
As reported	385.7	72.1	355.7	69.5
Gap restricted vs. unrestricted rents1)	30.1	73.6	26.3	71.0

1) €/sqm: €4.74 vs. €5.81 in 2017, €4.67 vs. €5.56 in 2016

	EBITDA as reported distorted by restricted units (compensation for lower rents included in interest result below the EBITDA line)
	Scenario analysis: closing gap between restricted vs. unrestricted rents; Adjusted EBITDA margin approx. 150 bps higher

Rent revisionary potential

Refinancing of subsidised loans lifting value

Rent Potential Subsidised Units

• In the following 10 years more than 25,000 units will come off rent restriction
• Units show significant upside to market rents
• Subject to general legal and other restrictions, the economic upside can theoretically be realised the year after restrictions expire

146 745 827 124 39 175 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029ff # Units Number of Units Coming Off Restriction and Rent Upside c. 8,100 1,737 2,730 1,494 17,760

Spread to Market Rent (in €/sqm/month)

	≤ 5 years2)	10 years2) 6 –	≥ 10 years2)
In-place rent	€4.67	€4.80	€4.88
Market rent1)	€6.23	€6.50	€5.89
Upside potential3)	33%	35%	21%
Upside potential p.a.3)	€8.8m	€15.1m	€13.3m

Source: LEG as of H1-2018

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 = 2019-2023; 6-10 years = 2024-2028; ≥10 years = 2029ff.

3) Rent upside is defined as the difference between LEG in-place rent as of H1-2018 and market rent (defined in footnote 1) as of FY-2017.

LEG Share Information

Basic data Well-balanced shareholder structure

• Prime Standard, Frankfurt Stock Exchange
• Total no. of shares: 63,188,185
• Ticker symbol: LEG
• ISIN: DE000LEG1110
• Indices: MDAX, FTSE EPRA/NAREIT, GPR 250, Stoxx Europe 600
• Weighting (30.06.2018): MDAX 2.91%; EPRA 2.53%
• Rating: Baa1 (stable) by Moody's

Share price (31.07.2018, indexed; 31.01.2013 = 100)

Source: LEG; shareholdings according to voting rights notifications

Date	Report/Event
08.05.2018	Quarterly Report Q1 as of 31 March 2018
17.05.2018	Annual General Meeting, Düsseldorf
10.08.2018	Quarterly Report Q2 as of 30 June 2018
29.08.2018	Berenberg Conference, Helsinki
30.08.2018	Commerzbank Sector Conference, Frankfurt
11.-13.9.2018	Jefferies US Roadshow, New York
24.09.2018	Goldman Sachs & Berenberg Corporate Conference, Munich
25.09.2018	Baader Investment Conference, Munich
09.11.2018	Quarterly Statement Q3 as of 30 September 2018

Contact

Investor Relations

Burkhard Sawazki

Head of Investor Relations & Strategic Business Analysis Tel: +49 (0) 211 4568-204 burkhard.sawazki@leg.ag

Karin Widenmann

Manager Investor Relations & Strategic Business Analysis Tel: +49 (0) 211 4568-458 karin.widenmann@leg.ag

Benedikt Kupka

Manager Investor Relations & Strategic Business Analysis Tel: +49 (0) 211 4568-286 benedikt.kupka@leg.ag

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

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

Thank you for your interest.