LEG Immobilien SE

Investor Presentation • May 10, 2017

LEG Immobilien AG 10 May 2017

Q1-2017 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 Q1-2017
• II. PORTFOLIO AND OPERATING PERFORMANCE
• III. FINANCIAL PERFORMANCE
• IV. BUSINESS UPDATE AND OUTLOOK
• V. APPENDIX

Highlights Q1-2017

Overall company development

• Property valuation: positive impact from rent development and yield compression in FY-2017 expected
• Mid single-digit valuation uplift (in %) in Q2 and further capital growth in Q4 expected
• Extension of capex programme: mid term l-f-l rent growth target (5 years) of 3-3.5% p.a.
• Mid term investment target of c.€24-29/sqm
• Early refinancing of subsidised loans: additional positive NAV impact of c.€50m-€60m in 2017 expected
• Acquisitions: Attractive pipeline of several midsized deals
• Positive FFO PS effect expected

Accelerating rent growth on basis of high capital efficiency

In-place rent, l-f-l €5.40/sqm (+2.9% total portfolio, +3.6% for free-financed units) EPRA-Vacancy, l-f-l 3.2% (up c.30 bps YOY, due to temporary reorganisation effect) Maintenance/Capex €2.6/sqm

Financials: Steady margin expansion supports dynamic earnings growth

 Net cold rent	€131.9m (+11.2% YOY from €118.6m)
 Adjusted EBITDA	€97.8m (+16.3% YOY from €84.1m) Strong margin expansion excl. maintenance (c.+220 bps YOY)
 FFO I (excl. minorities)	€75.2m (+20.1% YOY from €62.6m), €1.19 per share (+19.0% YOY from €1.00)
 AFFO	€66.2m (+32.7% YOY from €49.9m)
 EPRA-NAV (excl. goodwill)	€67.48 per share

II. PORTFOLIO AND OPERATING PERFORMANCE

Portfolio Overview

Positive rent development across all submarkets

Total Portfolio

of units 127,076 +10.1% In-place rent (sqm), l-f-l €5.40 +2.9%

EPRA-Vacancy, l-f-l 3.2% +30 bps

31.03.2017 (YOY)

Strong results on the basis of tailor-made management strategies

High-Growth Markets

	31.03.2017	 (YOY)
# of units	38,941	+1.9%
In-place rent (sqm), l-f-l	€5.95	+2.6%
EPRA-Vacancy, l-f-l	1.5%	+20 bps

Stable Markets with Attractive Yields

	31.03.2017	 (YOY)
# of units	47,019	+6.7%
In-place rent (sqm), l-f-l	€5.13	+3.0%
EPRA-Vacancy, l-f-l	3.5%	+30 bps

	Higher-Yielding Markets
	31.03.2017	 (YOY)
# of units	39,221	+23.9%
In-place rent (sqm), l-f-l	€5.02	+2.9%
EPRA-Vacancy, l-f-l	5.6%	+60 bps

Attractive portfolio + operational excellence = sound rent growth Rent Development

EPRA-Vacancy Development (like-for-like) Low vacancies despite temporary drag from reorganisation

• Traditionally weaker Q1 seasonality
• Low absolute vacancies maintained despite temporary effects from the reorganisation / optimisation of operational units
• Outlook FY-2017: Rising l-f-l occupancy expected (starting H2); already lower y-o-y increase in Q1-2017 vs. Q4-2016

Capex & Maintenance Rising value enhancing investments ahead

• Investments of €2.6/sqm well below FY-run rate; stronger seasonality in coming quarters
• Enhanced capex programme starting in H2-2017
• Outlook FY-2017: c.€24/sqm due to enhanced capex programme (€40m additional capex in 2017)

III. FINANCIAL PERFORMANCE

Financial Highlights Q1-2017

Margin expansion on back of attractive scale effects + cost discipline

Income Statement

Q1-2017

€ million	Q1-2017	Q1-2016	 Higher rental income
Net rental and lease income	102.6	88.6	(+€13.3m/+11.2%)  Rise in staff costs resulting from crafts business (+€3.0m
Net income from the disposal of investment property	0.1	-0.1	YOY), offset by decrease in externally-procured services
Net income from the valuation of investment property	0.0	1.0	 Adj. NRI-margin rose from 76.1% to 79.1% YOY also due to temporary lower
Net income from the disposal of real estate inventory	-1.0	-0.6	maintenance
Net income from other services	1.4	1.3	 Acquisition related one-time costs of €34.5m in Q1-2016
Administrative and other expenses	-9.8	-43.0	 Recurring admin. costs slightly increased to €8.5m (-€0.6m YOY) due to
Other income	0.2	0.1	extraordinary items (number of FTE's decreased)
Operating earnings	93.5	47.3	 Lower burden from fair value measurement of derivatives
Net finance costs	-46.4	-47.1	offsetting one-time costs for refinancing (€11.7m)
Earnings before income taxes	47.1	0.2	 Slightly higher cash interests (€20.9m; +€0.7m YOY) despite volume growth
Income tax expenses	-14.3	-12.3
Consolidated net profit	32.8	-12.1	 Cash taxes (-€1.3m)

FFO Calculation

Q1 -2017

€ million	Q1 -2017	Q1 -2016
Net cold rent	131.9	118.6	 +€13.3m (+11.2% YOY)
Profit from operating expenses	-1.1	-1.4
Maintenance (externally -procured services)	-9.8	-12.9	 Disproportional growth in staff costs mainly due to new
Staff costs	-13.4	-10.2	crafts business (offset by
Allowances on rent receivables	-1.9	-1.7	lower procured services); adjusted for this effect
Other	-1.6	-2.4	moderate increase of +2.0%
Non -recurring project costs (rental and lease)	0.2	0.2	 +€14.1m (+15.6% YOY)
Recurring net rental and lease income	104.3	90.2	 NRI-margin increased sharply
Recurring net income from other services	1.9	1.7	from 76.1% to 79.1% in Q1 - 2017; also with support from
Staff costs	-5.7	-5.5	temporary lower maintenance
Non -staff operating costs	-4.0	-36.9	 Acquisition related one -time
Non -recurring project costs (admin.)	1.2	34.5	costs in Q1 -2016
Extraordinary and prior -period expenses	0.0	0.0
Recurring administrative expenses	-8.5	-7.9	 Slight increase due to extraordinary items
Other income and expenses	0.1	0.1
Adjusted EBITDA	97.8	84.1	 +€13.7m (+16.3% YOY)
Cash interest expenses and income	-20.9	-20.2	 Strong increase in EBITDA margin 70.9% vs. 74.1% in
Cash income taxes	-1.3	-1.1	Q1 -17; (pre maintenance
FFO I (including non -controlling interests)	75.6	62.8	+220 bp )
Non -controlling interests	-0.4	-0.2	 Lower average interest costs
FFO I (excluding non -controlling interests)	75.2	62.6	(Q1-17 avg. cost 1.95% vs.
FFO II (including disposal of investment property)	75.3	62.5	2.15% in Q1 -16)
Capex -adjusted FFO I (AFFO)	66.2	49.9

FFO Bridge Q1-2017

Cash Effective Interest Expense Q1-2017

€ million	Q1-2017	Q1-2016
Reported interest expense	38.9	30.1	 One-off refinancing effect of €4.9m in Q1-2017 from
Interest expense related to loan amortisation	-9.9	-6.0	refinancing of subsidised loans (loan amortisation)
Prepayment penalties / breakage costs	-6.8	-2.2	 Release of swaps and fixed
Interest charges relating to valuation of assets/liabilities	-0.4	-0.4	interest loans (refinancing); total refinancing costs €11.7m
Leasing related interest expense	-0.3	-0.4
Interest expenses related to changes in pension provisions	-0.6	-0.8
Cash effective interest expense (gross)	20.9	20.2
Cash effective interest income	0.0	0.0	 Interest coverage improved
Cash effective interest expense (net)	20.9	20.2	further (4.7x up from 4.2x YOY)

EPRA-Net Asset Value

Q2 revaluation promises further NAV growth

€ million	31.03.2017	31.12.2016
Equity (excl. minority interests)	3,458.7	3,414.5	 €32.8m net profit
Effect of exercising options, convertibles and other rights	451.8	435.6	 €9.9m other comprehensive income (derivatives)
NAV	3,910.5	3,850.1
Fair value measurement of derivative financial instruments	142.4	146.7
Deferred taxes1)	622.4	644.2
EPRA-NAV	4,675.3	4,641.0
(m)2) Number of shares fully-diluted incl. convertible	68.466	68.466
EPRA-NAV per share in €	68.29	67.79
Goodwill resulting from synergies	55.1	43.8
Adjusted EPRA-NAV (excl. goodwill)	4,620.2	4,597.2
Adjusted EPRA-NAV per share in €	67.48	67.15

• Attractive rental yield of 6.7% (6.8% for free financed units) leaves future upside
• Value of services business not included in NAV
• Scenario (incl. crafts buinsess): additional value approx. €3.40 per share at discount rate of 6%3)

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

Portfolio

Sound property fundamentals basis for value growth

As of 31.03.2017

Market	Residential Units	GAV Residential Assets (€ m)	% of Total Residential GAV	GAV/ sqm (€ )	In-Place Rent Multiple	Multiples, Estimated Rental Values (31.12.2016)	GAV Commercial/ Other Assets (€ m)	Total GAV
High Growth Markets	38,941	3,310	43%	1,289	18.2x	16.1x	190	3,499
Stable Markets	47,019	2,447	32%	809	13.5x	12.7x	106	2,553
Higher Yielding Markets	39,221	1,732	23%	721	12.7x	12.0x	60	1,792
Subtotal NRW	125,181	7,488	98%	937	15.0x	13.8x	356	7,844
Portfolio outside NRW	1,895	131	2%	1,023	15.2x	14.0x	2	132
Total Portfolio	127,076	7,619	100%	938	15.0x	13.8x	357	7,976
Other Assets								42
Total								8,020

Balance Sheet

Strong balance sheet

€ million	31.03.2017	31.12.2016
Investment property	7,993.0	7,954.9	 Additions €29.2m  Capex €9.0m
Prepayment for investment property	-	27.3
Other non-current assets	180.5	182.3
Non-current assets	8,173.5	8,164.5
Receivables and other assets	83.2	47.7	 Cash flow from operating activities €76.5m
Cash and cash equivalents	392.0	166.7	 Proceeds from disposals
Current assets	475.2	214.4	€9.3m  Excess cash from bond
Assets held for sale	0.1	57.0	issue; major part was used
Total Assets	8,648.8	8,435.9	for refinancing
Equity	3,482.0	3,436.7
Non-current financial liabilities	3,564.5	3,222.3
Other non-current liabilities	861.9	870.3
Non-current liabilities	4,426.4	4,092.6
Current financial liabilities	378.7	552.0	 Bond issue +€495m
Other current liabilities	361.7	354.6	 Repayment of subsidised loans -€182m and other
Current liabilities	740.4	906.6	bank loans -€159m
Total Equity and Liabilities	8,648.8	8,435.9

LTV

Strong credit profile leaves headroom for growth investments

€ million	31.03.2017	31.12.2016
Financial liabilities	3,943.2	3,774.3
Cash & cash equivalents	392.0	166.7
Net Debt	3,551.2	3,607.6
Investment properties	7,993.0	7,954.9
Properties held for sale	0.1	57.0
Prepayments for investment properties	-	27.3
Property values	7,993.1	8,039.2
Loan to Value (LTV) in %	44.4	44.9
Pro-forma LTV post conversion in %	41.0	41.5

Financing Structure – 31 March 2017

Post refinancing of subsidised loans and bond issue

1) Maturity 2021 with investor put option 2019 (€300 m convertible bond)

2) Payback of corporate bond (€500 m)

	Key Facts		Maturities
Average debt maturity	9.7 years	1-2 years	0.0%
Interest costs	Ø 1.95%	3-5 years	16.2%
Hedging ratio	93.6%	6-8 years	38.0%
Rating	Baa1 (Moody's)	≥ 9 years	45.8%

IV. BUSINESS UPDATE AND OUTLOOK

Business Update

Acquisitions: Attractive pipeline of midsized deals in core markets

Extracting superior value from an attractive asset base

• Negotiations for several midsized deals (LEG gained exclusivity)
• Financial metrics meet investment criteria: FFO per share accretive

Revaluation gains in Q2 expected

• Accelerating rent growth and tightening yield are contributing to NAV
• Adjustment of target rents are key driver for expected Q2 revaluation
• Expected valuation uplift in the mid single digit range (in %)
• Further capital growth in Q4 ahead (reflection of yield compression)

Capex programme: Extension expected to drive mid term rent growth

• Portfolio analysis: current enhanced investment programme is likely to be extented to a period of five years (c.€24- €29/sqm)
• Mid term target like-for-like rent growth (next five years): 3-3.5% p.a.

Early redemption of subsidised loans: Additional positive impact in 2017 expected

• Early repayment of another €100m of subsidised loans on the agenda
• Expected positive NAV contribution of c.€50m-€60m

Acquisitions: Leading Management Skills Paying Off

Operational improvements reflect strong management track record

		Closing		31.03.2017		Change
	Units	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy
Total Portfolio1)	39,789	4.90	94.6%	5.28	94.9%	0.38 (+7.7%)	~ +30 bp
Vitus portfolio	9,319	4.76	96.1%	5.25	96.2%	0.49 (+10.4%)	~ +10 bp
portfolio2) Charlie	11,629	4.81	93.6%	5.12	93.7%	0.31 (+6.5%)	~ +10 bp

Outlook for 2017 - 2018

2017	Guidance
FFO I	€288m -€ 293m / € 4.56 -€ 4.64 per share
EBITDA margin	~72%
L-F-L rent growth	3.0 - 3.3%
L-F-L vacancy	-20 - -40 bps
Investments	~€ 24/sqm
Dividend	65% of FFO I

2018
FFO I	€310m -€ 316m / € 4.91 -€ 5.00 per share
EBITDA margin	~73%
L-F-L rent growth	~3.0%
Investments	~€ 29/sqm

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

Sources:

1) Interview with director of Federal Agency of Migration and Refugees (Aug 2016)

2) Deutsche Bundesbank

3) Regional government of North Rhine-Westpahlia

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 Q1-2017

€ million	31.03.2017	31.12.2016
Investment properties	7,988.3	7,950.9
Assets held for sale	0.1	57.0
Market value of residential property portfolio (net)	7,988.4	8,007.9
Estimated incidental costs	787.3	789.2
Market value of residential property portfolio (gross)	8,775.7	8,797.0
Annualised cash flow from rental income (gross)	507.9	500.3
Non recoverable operating costs	-73.5	-79.1
Annualised cash flow from rental income (net)	434.4	421.2
EPRA Net Initial Yield in %	5.0	4.8

LEG – Adj. EBITDA Margin

Leading profitability despite short term distortion from restricted units

Adj. EBITDA margin	FY-2016		FY-2015
	€m	margin %	€m	margin %
As reported	355.7	69.5	293.7	67.3
Gap restricted vs. unrestricted rents1)	26.3	71.0	22.5	68.9

1) €/sqm: €4.67 vs. €5.56 in 2016, €4.67 vs. €5.48 in 2015

• 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

Additional upside for value enhancing capex measures due to steadily improving market fundamentals

• Additional investment programme of €200m with significant contribution to l-f-l rent and FFO growth
• Emphasis on attractive locations in high-growth markets (c.65% of total investment) with significant rent potential (e.g. Münster, Bonn, Monheim in catchment area of Düsseldorf)
• Strict capital discipline maintained IRR hurdle of 6%
• Construction work will start in H2-2017 with first effects on rent development in FY-2018

Rent revisionary potential

Refinancing of subsidised loans lifting value

Rent Potential Subsidised Units

• In the following 10 years around 11,000 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

* Thereof 2,095 units in Q1-2017

	≤ 5 years2)	6 – 10 years2)	≥ 10 years2)
In-place rent	€4.71	€4.67	€4.88
Market rent1)	€6.32	€5.54	€6.03
Upside potential3)	34%	19%	23%
Upside potential p.a.3)	€8.1m	€3.6m	€24.6m

Source: LEG as of Q1-2017

• 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 = 2017-2021; 6-10 years = 2022-2026; ≥10 years = 2027ff.

3) Rent upside is defined as the difference between LEG in-place rent as of Q1-2017 and market rent (defined in footnote 1) as of Q1-2017.

Mietspiegel Overview Expected new Mietspiegel in 2017

Release date (expected)	High-Growth Markets	Stable Markets	Higher-Yielding Markets	Total Portfolio
2017 (Q1)	3,902 units (Cologne)	15,148 units (mainly Dortmund, Wuppertal)	5,876 units (Herne, Recklinghausen)	24,926 units
2017 (Q2)	8,661 units1 (mainly Bocholt, Mü nster)	3,658 units (mainly Solingen)	17,715 units2 (mainly Gelsenkirchen, Duisburg, Dorsten)	30,034 units
2017 (Q3)	-	2,060 units (mainly Krefeld)	263 units	2,323 units
2017 (Q4)	469 units	36 units	2,462 units (Castrop-Rauxel)	2,967 units
Total 1	13,032 units	20,902 units	26,316 units	60,250 units
Thereof: - Castrop-Rauxel - Cologne - Dortmund	3,902 units	13,165 units	2,462 units
- Duisburg - Gelsenkirchen			6,673 units 6,735 units	Sub-portfolios also include restricted units
- Herne - Munster - Recklinghausen	6,080 units		3,184 units 2,692 units	1 Mietspiegel for Münster (6,080 units affected) already published in Q1-2017
- Solingen - Wuppertal		1,474 units 1,983 units		2 Mietspiegel for Marl (774 units affected) already published in Q1-2017

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 (31.03.2017): MDAX 2.53%; EPRA 2.39%
• Rating: Baa1 (stable) by Moody's

Source: LEG; shareholdings according to latest voting rights notifications

Diversification of LEG's funding sources Capital Market Financing

Corporate Bond
Issue Size	EUR 500m
Term /	7 years /
Maturity Date	23 January 2024
Coupon	1.250 % p.a.
Issue	99.409 %
Price
Initial Re-offer	1.339 %
Yield
Financial	Incurrence-based:
Covenants	• Net financial debt / total assets ≤ 60%
	Secured financial debt / total assets ≤ 45%1) •
	• Unencumbered assets / unsecured financial debt ≥ 125%1)
	Maintenance-based:
	• Adj. EBITDA / net cash interest ≥ 1.8x
ISIN	XS1554456613
WKN	A2E4W8

	Convertible Bond
Issue Size	EUR 300m
Term /	7.2 years /
Maturity Date	1 July 2021
Coupon	0.500 % p.a.
Initial Conversion Price	EUR 62.39
Adjusted	EUR 56.8403 (as of 20 May 2016)
Conversion Price
Investor Put	1 July 2019
Issuer Call	From 22 July 2019, if the LEG share price exceeds 130 % of the then applicable conversion price
ISIN	DE000LEG1CB5
WKN	LEG1CB

1) After 31 July 2017

Financial Calendar

Date	Report/Event
10.05.2017	Quarterly Statement Q1 as of 31 March 2017
11./12.05.2017	Roadshow London, Exane BNP Paribas
17.05.2017	Annual General Meeting, Düsseldorf
23.05.2017	Berenberg European Conference, New York
30.05.2017	Roadshow Copenhagen, Bankhaus Lampe
01.06.2017	Kepler Cheuvreux & UniCredit German Property Day, Paris
07.06.2017	Kempen & Co's 14th European Property Seminar, Amsterdam
08.06.2017	Roadshow Helsinki, Berenberg Bank
13.06.2017	Roadshow Edinburgh, M.M. Warburg
21.06.2017	dbAccess German, Swiss & Austrian Conference, Berlin
22.06.2017	Morgan Stanley Property Conference, London
10.08.2017	Quarterly Report Q2 as of 30 June 2017

Contact

Investor Relations

Burkhard Sawazki Head of Investor Relations 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

Katharina Wicher Investor Relations Tel: +49 (0) 211 4568-294

katharina.wicher@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.