LEG Immobilien SE

Investor Presentation • Mar 8, 2018

CAPTURE CHANCES DRIVE INNOVATION

LEG Immobilien AG 8 March 2018

FY-2017 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.

• I. HIGHLIGHTS FY-2017
• II. PORTFOLIO AND OPERATING PERFORMANCE
• III. FINANCIAL PERFORMANCE
• IV. BUSINESS UPDATE AND OUTLOOK
• V. APPENDIX

Overall company development in Q4

• Internal growth: Focus on continuous process optimisations
• Transaction markets: Low supply; single data points suggest a continuing yield compression
• Portfolio revaluation: Valuation gain of €557m (+6.3%) in H2-2017

Strong operating performance on basis of high capital efficiency

• In-place rent, l-f-l €5.46/sqm (+3.3% total portfolio, +4.1% for free-financed units)
• EPRA-Vacancy, l-f-l 2.8% (-20 bps YOY)
• Maintenance/Capex €22.4/sqm (+23.1% YOY)

Financials: Margin expansion story fully on track

Net cold rent €534.7m (+4.5% YOY from €511.7m) Adjusted EBITDA €385.7m (+8.4% YOY from €355.7m) FFO I (excl. minorities) €295.3m (+10.1% YOY from €268.3m), €4.67 per share (+9.6% YOY from €4.26) EPRA-NAV (excl. goodwill) €83.81 per share (+24.8% YOY) DPS €3.04 (+10.1% YOY, payout ratio 65%)

II. PORTFOLIO AND OPERATING PERFORMANCE

Portfolio Overview

Positive rent development across all submarkets

Total Portfolio

	31.12.2017	 (YOY)
# of units	130,085	+1.2%
In-place rent (sqm), l-f-l	€5.46	+3.3%
EPRA-Vacancy, l-f-l	2.8%	-20 bps

Strong results on the basis of tailor-made management strategies

High-Growth Markets

	31.12.2017	 (YOY)
# of units	41,000	+4.6%
In-place rent (sqm), l-f-l	€6.04	+2.7%
EPRA-Vacancy, l-f-l	1.1%	-10 bps

Stable Markets with Attractive Yields

	31.12.2017	 (YOY)
# of units	47,650	+1.4%
In-place rent (sqm), l-f-l	€5.19	+3.5%
EPRA-Vacancy, l-f-l	2.9%	-10 bps

Higher-Yielding Markets
	31.12.2017	 (YOY)
# of units	39,559	-2.1%
In-place rent (sqm), l-f-l	€5.11	+3.3%
EPRA-Vacancy, l-f-l	5.2%	-30 bps

Rent Development

Accelerating rent growth underscores strong fundamentals

EPRA-Vacancy Development (like-for-like) Decreasing vacancies across all submarkets

• Very strong Q4-2017 letting result (-100 bps QOQ)
• Decreasing vacancies despite reorganization of operations during the year

Capex & Maintenance Rising value enhancing investments ahead

III. FINANCIAL PERFORMANCE

Financial Highlights FY-2017 Margin expansion story is set to continue

Income Statement

FY-2017

€ million	FY-2017	FY-2016	 Higher rental income
Net rental and lease income	399.4	373.1	(+€23.0m/+4.5%)  Adj. NRI-margin rose from 74.5% to 76.5% YOY (scale
Net income from the disposal of investment property	-1.4	7.6	effects, insourcing of craftsmen services, process
Net income from the valuation of investment property	1,036.8	616.6	optimisations)
Net income from the disposal of real estate inventory	-2.3	-2.4	 FY-2017 portfolio valuation (+13.0% l-f-l YOY)
Net income from other services	6.3	3.7	 Acquisition related one-time costs of €34.4m in FY-2016
Administrative and other expenses	-41.3	-78.2	 Recurring admin. costs slightly increased to €33.3m
Other income	1.4	16.4	(-€1.2m YOY) mainly due to an extraordinary item in 2016
Operating earnings	1,398.9	936.8	 One-time refinancing costs (€50.4m)
Net finance costs	-278.6	-157.2	 Net income from fair value measurement of derivatives (-€138.2m; thereof €138.8m
Earnings before income taxes	1,120.3	779.6	from convertibles)  Slightly lower cash interests (€80.9m; -€2.3m YOY) despite
Income tax expenses	-275.5	-200.4	rising debt volume
Consolidated net profit	844.8	579.2	 Cash taxes (-€8.2m)

FFO Calculation

FY-2017

€ million	FY-2017	FY-2016
Net cold rent	534.7	511.7	 (+€23.0m/+4.5%)
Profit from operating expenses	-2.8	-1.6
Maintenance (externally-procured services)	-51.2	-72.0	 Disproportional growth in staff
Staff costs	-55.8	-42.2	costs mainly due to new crafts business (offset by lower
Allowances on rent receivables	-7.2	-7.2	procured services); adjusted for
Other	-12.2	-10.3	this effect increase of +2.0%
Non-recurring project costs (rental and lease)	3.4	2.7
Recurring net rental and lease income	408.9	381.1	 +€27.8m (+7.3% YOY)
Recurring net income from other services	8.7	6.0	 NRI-margin increased from 74.5% to 76.5% YOY
Staff costs	-22.2	-21.6
Non-staff operating costs	-18.5	-53.7	 Acquisition related one-time
Non-recurring project costs (admin.)	7.4	43.2	costs in FY-2016
Extraordinary and prior-period expenses	0.0	0.0	 Slight increase due to release
Recurring administrative expenses	-33.3	-32.1	of a provision in 2016
Other income and expenses	1.4	0.7	(number of FTE's decreased)
Adjusted EBITDA	385.7	355.7
Cash interest expenses and income	-80.9	-83.2	 +€30.0m (+8.4% YOY)
Cash income taxes from rental and lease	-6.4	-3.9	 EBITDA margin 72.1% vs. 69.5% in FY-16
FFO I (including non-controlling interests)	298.4	268.6
Non-controlling interests	-3.1	-0.3	 Lower average interest costs
FFO I (excluding non-controlling interests)	295.3	268.3	(FY-17 avg. cost c.1.82% vs. c.2.08% in FY-16)
FFO II (including disposal of investment property)	294.1	292.3
Capex-adjusted FFO I (AFFO)	179.8	190.8

FFO Bridge FY-2017

Cash Effective Interest Expense FY-2017

€ million	FY-2017	FY-2016
Reported interest expense	152.3	177.2	 One-off refinancing effect of €41m in FY-2017 from
Interest expense related to loan amortisation	-57.8	-81.3	refinancing of subsidised loans (loan amortisation)
Prepayment penalties / breakage costs	-9.5	-6.0	 Release of swaps and fixed
Interest costs related to valuation of assets/liabilities	-0.4	-1.8	interest loans (refinancing); total refinancing costs €50.4m
Leasing related interest expense	-0.9	-1.6
Interest expenses related to changes in pension provisions	-2.4	-3.2
Other interest expenses	0.0	0.1
Cash effective interest expense (gross)	81.3	83.4
Cash effective interest income	0.4	0.2	 Interest coverage improved
Cash effective interest expense (net)	80.9	83.2	further (4.8x up from 4.3x YOY)

EPRA-Net Asset Value

LEG's portfolio well positioned in the cycle; services as hidden gem

€ million	31.12.2017	31.12.2016
Equity (excl. minority interests)	4,087.4	3,414.5	 €844.8m net profit
Effect of exercising options, convertibles and other rights	559.2	435.6	 -€174.4m dividend  €17.1m other comprehensive
NAV	4,646.6	3,850.1	income (derivatives)
Fair value measurement of derivative financial instruments	259.8	146.7
Deferred taxes1)	899.3	644.2
EPRA-NAV	5,805.7	4,641.0
(m)2) Number of shares fully-diluted incl. convertible	68.644	68.466
EPRA-NAV per share in €	84.58	67.79
Goodwill resulting from synergies	52.7	43.8
Adjusted EPRA-NAV (excl. goodwill)	5,753.0	4,597.2
Adjusted EPRA-NAV per share in €	83.81	67.15

Attractive rental yield of 5.9% leaves upside for capital growth (thereof free financed portfolio: 6.1%)

• 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 Revaluation

H2-2017 – Broadbased valuation uplifts gaining traction

Breakdown Revaluation Gains

Value drivers
•	Rent & vacancy development	€171 m
•	Discount rate	€383 m
•	Repayment of subsidized loans	€101 m
•	Others (e.g. cost adjustments)	€ -13 m	€642 m
Allocation	capital growth
•	Revaluation gains	€557 m
	thereof repayment of subsidized loans	€101 m
•	Capex	€85 m

Valuation Uplift by Markets

	Valuation uplift H2-17	Gross yield
High-growth markets	7.1% (15.5% in FY-17, l-f-l)	4.7%
Stable markets	6.5% (12.5% in FY-17, l-f-l)	6.5%
Higher-yielding markets	4.5% (8.8% in FY-17, l-f-l)	7.3%
Total portfolio	6.3% (13.0% in FY-17, l-f-l)	5.9%

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

Portfolio Sound property fundamentals basis for value growth

As of 31.12.2017

Market	Residential Units	GAV Residential Assets (€m)	% of Total Residential GAV	GAV/ sqm (€)	In-Place Rent Multiple	Multiples, Estimated Rental Values	GAV Commercial/ Other Assets (€m)	Total GAV
High Growth Markets	41,000	4,174	46%	1,540	21.2x	18.4x	214	4,388
Stable Markets	47,650	2,838	31%	926	15.3x	14.3x	108	2,946
Higher Yielding Markets	39,559	1,923	21%	793	13.7x	13.1x	61	1,985
Subtotal NRW	128,209	8,935	98%	1,090	17.1x	15.6x	384	9,319
Portfolio outside NRW	1,876	146	2%	1,152	16.5x	15.5x	2	147
Total Portfolio	130,085	9,081	100%	1,091	17.0x	15.5x	385	9,466
Other Assets
Total								9,518

EPRA-Net Asset Value

* valuation effects derivatives + deferred taxes are added back

Balance Sheet

Strong balance sheet

€ million	31.12.2017	31.12.2016
Investment property	9,460.7	7,954.9	 Revaluation gains
Prepayment for investment property	-	27.3	€1,036.8m  Additions €396.8m
Other non-current assets	172.3	182.3	 Capex €115.5m
Non-current assets	9,633.0	8,164.5	 Reclassification -€41.0m
Receivables and other assets	63.7	47.7
Cash and cash equivalents	285.4	166.7	 Cash flow from operating
Current assets	349.1	214.4	activities €269.6m
Assets held for sale	30.9	57.0	 Dividend -€174.4m
Total Assets	10,013.0	8,435.9
Equity	4,112.4	3,436.7
Non-current financing liabilities	3,821.4	3,222.3
Other non-current liabilities	1,158.8	870.3
Non-current liabilities	4,980.2	4,092.6	 Bond issue +€495m
Current financing liabilities	478.2	552.0	 Convertible bond +€395m  Repayment of subsidised
Other current liabilities	442.2	354.6	loans -€288.5m and other
Current liabilities	920.4	906.6	bank loans -€193.8m  Commercial paper +€100m
Total Equity and Liabilities	10,013.0	8,435.9

LTV

Strong credit profile leaves headroom for growth investments

€ million	31.12.2017	31.12.2016
Financial liabilities	4,299.6	3,774.3
Cash & cash equivalents	285.4	166.7
Net Debt	4,014.2	3,607.6
Investment properties	9,460.7	7,954.9
Properties held for sale	30.9	57.0
Prepayments for investment properties	-	27.3
Prepayments for acquisitions	2.0	-
Property values	9,493.6	8,039.2
Loan to Value (LTV) in %	42.3	44.9
Pro-forma LTV post conversion in %	39.4	41.5

• Low gearing below current target LTV (approx. 45%) leaves headroom for growth
• Yield compression is likely to trigger a further LTV decline in

Significant positive impact on LTV from future conversion of 1st convertible (€300m nominal) expected (currently -290bps)

Financing Structure – 31 December 2017

LT financing secures future earnings growth

1) Commercial paper

2) €300 m convertible bond with investor put option 2019

3) Corporate bond (€500 m)

4) €400 m convertible bond

*Including	commercial	paper
------------	------------	-------

	Key Facts		Maturities
Average debt maturity	8.3 years (8.1 years*)	1-2 years	0.2% (2.4%*)
Interest costs	Ø 1.78% (1.74%*)	3-5 years	18.8% (18.4%*)
Hedging ratio	93.6% (91.5%*)	6-8 years	52.6% (51.4%*)
Rating	Baa1 (Moody's)	≥ 9 years	28.4% (27.7%*)

22 I March 2018

IV. BUSINESS UPDATE AND OUTLOOK

Business Update Best-in-class management platform

Leading letting performance

• Strong "bread-and-butter growth" excluding capex (FY-2017: approx. 2.5%)
• Strong integration track record
• Rent-CAGR 3.5% in average c.32 months, lower vacancies
• Acquired portfolios with high exposure to Green and Purple markets

Leading operating profitability

• EBITDA margin target of 74% for 2019
• Estimated short term drag from rent restricted units c.150 bps (i.e. adjusted target margin >75%)
• Process innovations/digitisation remain key margin driver
• Launch of new tenant related services also contributing positively to margin targets
• New product: Pilot phase for leasing concept of kitchen equipment (in cooperation with strategic partners)

Further capital growth on the cards

• Portfolio well positioned in the cycle with high exposure to B-locations in the catchment areas of A-cities
• 93% of properties located in structural growth markets or in their respective commuter belts
• Recently observed transcation prices some 10% above year-end valuation…
• …but low liquidity in the market (delta up to c.25%)

Market Leading Platform with External Growth Potential Strong acquisition track record since IPO – Creating tangible value

		Closing		31.12.2017		Change
	Units	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy
Total Portfolio1)	39,649	4.90	94.6%	5.38	95.1%	0.48 (+9.8%)	~ +50 bp
Vitus portfolio	9,299	4.76	96.1%	5.37	96.2%	0.61 (+12.8%)	~ +10 bp
portfolio2) Charlie	11,525	4.81	93.6%	5.21	92.3%	0.40 (+8.3%)	~ -130 bp

Outlook for 2018 - 2019

Steady Expansion of Leading Profitability

FFO I per share (€)

EBITDA Margin

V. APPENDIX

Generating Appealing Shareholder Returns

Net Immigration Expected to Remain at a High Level Stabilising net immigration with decreasing share of refugees

for NRW

2) Deutsche Bundesbank

3) BAMF Federal Agency of Migration and Refugees, migration monitoring report

4) Federal Statistical Office, press release 2 Nov 2017

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

Strong volume growth at decreasing overhead cost…

…leads to a significant drop of the admin. costs ratio

EPRA Net Initial Yield FY-2017

€ million	31.12.2017	31.12.2016
Investment properties	9,448.0	7,950.9
Assets held for sale	30.9	57.0
Market value of residential property portfolio (net)	9,478.9	8,007.9
Estimated incidental costs	934.3	789.2
Market value of residential property portfolio (gross)	10,413.2	8,797.1
Annualised cash flow from rental income (gross)	531.8	500.3
Non recoverable operating costs	-60.4	-79.1
Annualised cash flow from rental income (net)	471.4	421.2
EPRA Net Initial Yield in %	4.5	4.8

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

Capex Programme Lifting internal growth potential

Strict investment criteria maintained

• IRR hurdle of 6%
• Sole focus on Yield on Costs can trigger substantial misallocation of capital (NAV dilution)
• Construction work for enhanced capex programme started in Q3-2017
• Improving market conditions allow for larger investment volumes
• Instrument to capture reversionary potential in one step (especially in locations where rental laws prohibit higher one-time rent increases)

Selective external growth contributes positively to FFO PS growth in tough markets

Deal #	Units acquired	Geographic focus	Market	Annual net cold rent	In place rent/sqm	Vacancy rate	Closing
1	1,145	Dortmund, Essen, Wuppertal and others	Stable	~EUR 3.5m	EUR 5.50	32.5%	Oct 2017
2	250	Düsseldorf	High Growth	~EUR 2.1m	EUR 8.60	0.1%	Oct 2017
3	1,792	Düsseldorf, Neuss	High Growth	~EUR 9.6m	EUR 8.07	20.6%	July 2017
4	304	Düsseldorf, Neuss	High Growth	~EUR 1.7m	EUR 6.70	1.4%	Jan 2018
	c.3,500

Rent revisionary potential

Refinancing of subsidised loans lifting value

Rent Potential Subsidised Units

• In the following 10 years around 9,000 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

Spread to Market Rent € /sqm /month 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028ff 1.54 1.92 1.04 2.96 2.48 0.79 1.06 1.56 1.07 1.28 1.30

	≤ 5 years2)	10 years2) 6 –	≥ 10 years2)
In-place rent	€4.73	€4.35	€4.85
Market rent1)	€6.44	€5.61	€6.15
Upside potential3)	36%	29%	27%
Upside potential p.a.3)	€9.1m	€2.7m	€27.5m

Source: LEG as of FY-2017

• 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 = 2018-2022; 6-10 years = 2023-2027; ≥10 years = 2028ff.

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

Mietspiegel Overview New Mietspiegel in 2018

Sub-portfolios also include

restricted units

Release date	High-Growth Markets	Stable Markets	Higher-Yielding Markets	Total Portfolio
2018 (Q1)	6,063 units (mainly Bielefeld, Bocholt)	6,470 units (mainly Essen, Solingen)	3,702 units (mainly Herten, Hagen, Dorsten)	16,235 units
2018 (Q2)	-	667 units	-	667 units
2018 (Q3)	259 units	-	2,288 units (mainly Remscheid)	2,547 units
2018 (Q4)	5,717 units (mainly Düsseldorf)	-	-	5,717 units
Total 1	16,946 units	7,137 units	5,990 units	25,166 units

Thereof: - Bielefeld - Bocholt - Dorsten - Düsseldorf - Essen - Hagen - Herten - Lünen - Remscheid	3,254 units 1,429 units 5,260 units	3,116 units 792 units	1,216 units 1,212 units 1,274 units 2,212 units
- Solingen		1,492 units

Portfolio Overview

Well-balanced portfolio with significant growth potential

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 (31.12.2017): MDAX 2.93%; EPRA 2.70%
• Rating: Baa1 (stable) by Moody's

Share price (01.03.2018, indexed; 31.01.2013 = 100)

Source: LEG; shareholdings according to latest voting rights notifications

Financial Calendar

Date	Report/Event
08.03.2018	Annual Report 2017
20.-22.03.2018	Roadshow USA, Deutsche Bank
27.03.2018	Commerzbank German Real Estate Conference, London
28.03.2018	Bank of America Merrill Lynch European Real Estate Conference, London
12.04.2018	HSBC European Real Estate Conference, Frankfurt
08.05.2018	Quarterly Report Q1 as of 31 March 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 Tel: +49 (0) 211 4568-458 karin.widenmann@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.