LEG Immobilien SE

Investor Presentation • Nov 9, 2016

LEG Immobilien AG

9M-2016

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

II.I. Portfolio and Operating Performance

III.I.I. Financial Performance

VI.I. Appendix

Highlights 9M-2016

Overall company development

• Additional capex programme paves way for accelerated organic rent growth
• €200m additional value enhancing capex (FY: 2017-2019)
• Additional contribution to FFO (2018: c.€5.0m, 2019 c.€8.0m) and l-f-l rent growth (2018: +50bps; 2019: +90bps)
• Unlocking value through early repayment of subsidised loans
• Value uplift due to expected earlier exploitation of rent potential; estimated positive net NAV effect of €75-85m
• Portfolio revaluation: LEG portfolio bears significant catch-up potential
• Estimated valuation uplift in the range of €420m to €440m (5.7% 6.0%) in FY-2016

Strong letting performance on basis of high capital efficiency

	In-place rent, l-f-l	€5.31/sqm (+2.4% total portfolio, +3.3% for free-financed units) Slight growth acceleration in Q4 on the cards
	EPRA-Vacancy, l-f-l	3.1% (stable YOY)
	Maintenance/Capex	€11.3/sqm (FY-2016 target of approx. €18/sqm)

Financials: Steady margin expansion supports dynamic earnings growth

 Net cold rent	€381.3m (+17.2% YOY from €325.3m)
 Adjusted EBITDA	€276.2m (+22.5% YOY from €225.4m)
	Strong margin expansion excl. maintenance (c.+370 bps YOY)
 FFO I (excl. minorities)	€210.6m (+32.9% YOY from €158.5m), €3.35 per share (+21.4% YOY from €2.76)
 AFFO	€163.8m (+31.0% YOY from €125.0m)
 EPRA-NAV (excl. goodwill)	€58.79 per share

II.I. Portfolio and Operating Performance

Portfolio Overview

Strong operational performance across all submarkets

Strong results on the basis of tailor made management strategies

High-Growth Markets
 30.09.2016 (YOY)
# of units	39,027	+3.8%
In-place rent (sqm), l-f-l	€5.87	+2.3%
EPRA-Vacancy, l-f-l	1.6%	+10 bps

Stable Markets with Attractive Yields
	30.09.2016	 (YOY)
# of units	46,728	+14.8%
In-place rent (sqm), l-f-l	€5.00	+2.3%
EPRA-Vacancy, l-f-l	3.1%	- 30 bps

Total Portfolio			Higher-Yielding Markets
	30.09.2016	 (YOY)		30.09.2016	 (YOY)
# of units	127,941	+16.7%	# of units	40,291	+35.0%
In-place rent (sqm), l-f-l	€5.31	+2.4%	In-place rent (sqm), l-f-l	€4.93	+2.3%
EPRA-Vacancy, l-f-l	3.1%	- 8 bps	EPRA-Vacancy, l-f-l	5.4%	-10 bps

Attractive portfolio + operational excellence = sound rent growth L-f-l Residential Rent (€/sqm/month) Rent Development L-f-l Free-financed Rent (€/sqm/month) 5.45 5.63

Development of free financed units remains best proxy for underlying performance

Q3-2015 Q3-2016

• High capital efficiency maintained (growth relative to capital expenditure)
• Regional focus as competitive edge

5.31

Q3-2015 Q3-2016

5.18

EPRA-Vacancy Development (like-for-like)

Attractive portfolio + operational excellence = low vacancies

Strong letting momentum promises vacancy reduction in Q4 of c. 30-50bps

Especially strong momentum in the commuter belts of Dusseldorf/Cologne

Capex & Maintenance High quality standards and capital discipline maintained

III.I.I. Financial Performance

Financial Highlights 9M-2016

Margin expansion on back of attractive scale effects + cost discipline

Income Statement

9M-2016

FFO Calculation

9M-2016

€ million	9M-2016	9M-2015
Net cold rent	381.3	325.3	 +€56.0m (+17.2% YOY)
Profit from operating expenses	-0.9	-0.6
Maintenance	-44.9	-36.5
Staff costs	-30.2	-27.4
Allowances on rent receivables	-5.5	-4.7
Other	-5.0	-10.4
Non-recurring project costs (rental and lease)	0.9	1.8	 +€48.2m (+19.5% YOY)
Current net rental and lease income	295.7	247.5	 Rising adj. NRI margin despite higher maintenance
Current net income from other services	4.0	1.8	expenses
Staff costs	-16.0	-16.4
Non-staff operating costs	-48.1	-14.8
LTIP (long-term incentive programme)	0.0	0.2	 One-time costs (€34.4m non capitalised transaction costs including RETT)
Non-recurring project costs (admin.)	40.4	6.4
Extraordinary and prior-period expenses	0.0	0.1
Current administrative expenses	-23.7	-24.5	 Decreasing admin. cost base in 2016 & 2017 expected
Other income and expenses	0.2	0.6	despite volume growth
Adjusted EBITDA	276.2	225.4	 +€50.8m (+22.5% YOY)
Cash interest expenses and income	-62.3	-66.7	 EBITDA margin 72.4% vs.
Cash income taxes	-3.1	-0.2	69.3% in 9M-2015 (excl. maintenance +370bps)
FFO I (including non-controlling interests)	210.8	158.5
Non-controlling interests	-0.2	-	 Lower interest charges (end Q3-2016 avg. cost
FFO I (excluding non-controlling interests)	210.6	158.5	2.05% vs. 2.3% in Q3-2015)
FFO II (including disposal of investment property)	218.3	159.2
Capex-adjusted FFO I (AFFO)	163.8	125.0

FFO Bridge 9M-2016

Cash Effective Interest Expense 9M-2016

€ million	9M-2016	9M-2015
Reported interest expense	89.6	145.9	 One-off refinancing
Interest expense related to loan amortisation	-16.6	-27.4	effect of €7.3m in 9M 2015
Prepayment penalties / breakage costs	-4.5	-46.7	 Release of swaps
Interest charges relating to valuation of assets/liabilities	-2.1	-1.3	(refinancing)
Leasing related interest expense	-1.5	-1.0
Interest expenses related to changes in pension provisions	-2.4	-2.2
Interest income	0.0	-0.6
Cash effective interest expense	62.3	66.7	 Interest coverage improved further (4.4x up from 3.4x YOY)

EPRA-Net Asset Value

30 September 2016

Attractive rental yield bears potential for sound capital growth

€ million	30.09.2016	31.12.2015
Equity (excl. minority interests)	2,904.1	2,967.8
Effect of exercising options, convertibles and other rights	491.5	427.2
NAV	3,395.6	3,395.0
Fair value measurement of derivative financial instruments	208.3	165.5
Deferred taxes1)	457.6	466.6
EPRA-NAV	4,061.5	4,027.1
(m)2) Number of shares fully-diluted incl. convertible	68.466	67.904
EPRA-NAV per share in €	59.32	59.31
Goodwill, resulting from synergies	36.7	26.4
Adjusted EPRA-NAV (excl. goodwill)	4,024.8	4,000.7
Adjusted EPRA-NAV per share in €	58.79	58.92

• Dividend -€141.9m Capital increase €32.4m

• €86.0m net profit -€15.0m other comprehensive income (derivatives)

• Attractive rental yield of 7.1% significantly above current asking prices in investment markets

• Value of services business not included in NAV
• Scenario: Additional value approx. €2.60 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%

Balance Sheet 30 September 2016

Strong balance sheet; further positive impact from year end valuation expected

€ million	30.09.2016	31.12.2015
Investment property	7,288.8	6,398.5	 Additions €1,030.8m  Capex €46.8m
Prepayment for investment property	5.1	203.1	 Reclassification/disposals
Other non-current assets	176.0	296.8	-€195.1m
Non-current assets	7,469.9	6,898.4
Receivables and other assets	79.1	37.2
Cash and cash equivalents	303.8	252.8	 Cash flow from operating
Current assets	382.9	290.0	activities €146.1m  Dividend -€141.9m
Assets held for disposal	76.8	6.7
Total Assets	7,929.6	7,195.1
Equity	2,927.0	2,985.0
Non-current financial liabilities	3,394.5	2,745.6
Other non-current liabilities	749.0	673.7
Non-current liabilities	4,143.5	3,419.3
Current financial liabilities	385.8	496.0
Other current liabilities	473.3	294.8
Current liabilities	859.1	790.8
Total Equity and Liabilities	7,929.6	7,195.1

LTV 30 September 2016

Strong credit profile leaves headroom for growth investments

€ million	30.09.2016	31.12.2015
Financing debt	3,780.3	3,241.6	 Lower LTV at year end
Deferred purchase price liabilities	119.3	0.0	due to portfolio
Cash & cash equivalents	303.8	252.8	revaluation expected  Low LTV leaves
Net Debt	3,595.8	2,988.8	headroom for additional capex and acquisitions
Investment properties	7,288.8	6,398.5
Properties held for sale	76.8	6.7
Prepayments for investment properties	5.1	203.1	 Significant positive
Prepayments for business combinations	-	146.1	impact on LTV from future conversion of
Property values	7,370.7	6,754.4	convertible expected (currently -360bps)
Loan to Value (LTV) in %	48.8	44.2
Pro-forma LTV post conversion in %	45.2	40.4

Financing Structure - 30 September 2016

7.6%

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

Average debt maturity:	10.9 years
Interest costs:	Ø 2.05%
Hedging ratio:	92.4%
Rating:	Baa1 (Moody's)

IV.I.I. Business Update and Outlook

Business Update Accelerating organic growth ahead

Additional capex programme promises accelerated organic rental growth

• In-depth bottom-up portfolio analysis completed
• Improving market fundamentals provide further headroom for rent adjustments
• Potential for additional capex measures identified
• Total volume €200m over the next three years (€40m in FY-2017e) already backed by clearly defined projects
• IRR hurdle of 6%
• Ramp-up phase just started (recruiting of staff etc.)

Margin expansion is set to continue

• Continuous process of cost optimisation allows for further expansion of leading operating profitability
• Target EBITDA margin of ~73% in 2018 despite short term drag from rent restricted sub-portfolio

Lifting value potential from partial repayment of subsidised loans

• Repayment of subsidised loans of c.€200m (~35%) triggers positive valuation effect (net NAV impact €75-85m)
• Additional future upside from early repayments of loans

Business Update Accelerating organic growth ahead

Significant revaluation gains on the cards while conservative valuation is maintained

• Revaluation gains of €420m to €440m expected (5.7% 6.0%)
• Yield compression in all market segments
• Implied rental yield of around 6.7% 6.8% below current transaction values

Acquisitions: Capital discipline remains key

• Acquisition of c.2,000 units closed y-t-d at attractive yields
• Several deals rejected due to mismatch of price expectations
• Pipeline: negotiation process for several portfolios; visibility on outcome is still low
• Outlook: clear priority for value over volume growth; 5,000 unit target is uncertain
• Disposals: approx. 4,000 non-core units sold at attractive premium to book values (disposal gains €24.6m, ~13%)

Year-end Portfolio Valuation

Yield compression across all market segments expected

Expected	revaluation	gains

Markets	Change
Total valuation uplift	€420m - €440m (approx. +5.7-6.0%)
(FY-2016 estimate) / in-place rent multiple	~14.8x
High-growth markets	+7.0-7.2%
Stable markets	+5.8-6.0%
Higher-yielding markets	+3.1-3.3%

Capex Programme Improving market fundamentals

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

• Comprehensive bottom-up analysis of portfolio completed
• 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%
• Following an in-depth analysis, construction work will start in H2-2017 with first effects on rent development in FY 2018

Early refinancing of subsidised loans Positive impact on NAV and FFO growth

Exploiting additional opportunities for internal growth

• Rents remain bound to cost rent system for the next ten years
• Positive valuation effect on assets of €150-160m (DCF model) are outweighing the negative effects on the liabilities (IFRS values of loans below nominal values)
• FFO guidance based on stable refinancing costs of subsidised debt

Acquisitions: Leading Management Skills Paying Off Strong acquisition track record since IPO – Creating tangible value

		Closing		30.09.2016		Change
	Units	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy
Portfolio1)	28,393	4.94	95.1%	5.20	95.5%	0.26 (+5.3%)	~ +40 bp
Vitus portfolio	9,528	4.76	96.1%	5.06	96.3%	0.30 (+6.4%)	~ +20 bp
Charlie portfolio2)	11,615	4.81	93.6%	4.82	93.8%	0.01 (+0.1%)	~ +20 bp

1) Acquisitions since year end 2012; excl. Charlie acquisition (13,570 units)

2) Charlie portfolio excl. disposal of ~2,000 units in September 2016

Operating performance confirms reversionary potential and LEG's management skills

• Average in-place rents +5.3% (within avg. 22 months), rent CAGR of 2.7%
• Vitus NRW portfolio (rent/sqm +6.4%, vacancy -20 bps; within 23.3 months), rent CAGR of 3.2%
• Charlie portfolio: rent increase scheduled for Q1-2017

Acquisitions: Leading Management Skills Paying Off Strong acquisition track record since IPO – Creating tangible value

Portfolio development: Strong volume growth at stable overhead cost…

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

Average acquistion yield of 7.4% underscores LEG's strength to source attractive deals

Deal #	Units acquired	Geographic focus	Market	Annual net cold rent	In place rent/sqm	Vacancy rate	Signing	Purchase price	Closing
1	~1,100	Recklinghausen, Herne	Stable/ Higher Yielding	~EUR 4.0m	EUR 4.46	5.4%	Apr 2016	c.EUR 53m	May 2016
2	~560	Hamm, Krefeld, Duisburg	High Growth/ Stable	~EUR 1.8m	EUR 4.96	7.1%	July 2016	not disclosed	Dec 2016
3	~320	Duisburg, Herten	Higher Yielding/ Stable	~EUR 2.0m	EUR 4.62	2.1%	Aug 2016	not disclosed	Jan 2017
	c.2,000

Outlook for 2016 - 2018

2016	Guidance
EPRA-NAV:	€66 - €67 per share
FFO I:	€261m - €265m / €4.14 - €4.21 per share
EBITDA margin:	70%
L-F-L rent growth:	2.4 - 2.6%
L-F-L vacancy:	Stable (FY-15 comparable: c.2.6%)
Dividend:	65% of FFO I
2017
FFO I:	€284m - €289m / €4.50 - €4.57 per share
EBITDA margin:	72%
L-F-L rent growth:	3.0 – 3.3%
2018
FFO I:	€307m - €313m / €4.86 - €4.95 per share
EBITDA margin:	73%

L-F-L rent growth: ~3.0%

Steady Expansion of Leading Profitability

Generating Appealing Shareholder Returns

Net Immigration Expected to Remain at a High Level About 25% of all refugees coming to Germany migrate to NRW

Sources:

• 1) Interview with director of Federal Agency of Migration and Refugees (Aug 2016)
• 2) Deutsche Bundesbank
• 3) Thereof approx. 0.4 million immigrants (excl. refugees), Deutsche Bundesbank
• 4) Federal Ministry of the Interior (BMI), Sep 2016

Key Facts

• In 2015, net immigration of foreign nationals to Germany amounted to about 1.0 million3)
• Federal Agency of Migration and Refugees forecasts 0.3 million additional refugees in 2016
• In the first nine months of 2016, 210,000 refugees entered Germany (gross figure) 4)
• Additional pressure on affordable housing segment
• Outperformance of German economy attracts qualified new immigration
• Immigration is driving overall population growth, triggering additional growth in net new households
• Liquid labour market and affordable living as pull-factors

LEG's impact

• At the end of Sep 2016, LEG let 1,835 units or ~1.4% of its residential portfolio to refugees, either direct (45%) or via municipalities (55%)
• LEG almost fully let with a vacancy rate of 3.5% scope to let further apartments to refugees is limited
• Upward pressure on rents, limited upside on occupancy

EPRA Net Initial Yield Q3-2016

€ million	30.09.2016	31.12.2015
Investment properties	6,953.3	6,101.6
Assets held for sale	76.4	6.7
Market value of residential property portfolio (net)	7,029.7	6,108.3
Estimated incidental costs	692.7	601.5
Market value of residential property portfolio (gross)	7,722.4	6,709.8
Annualised cash flow from rental income (gross)	508.4	428.1
Non recoverable operating costs	-71.5	-61.4
Annualised cash flow from rental income (net)	436.9	366.7
EPRA Net Initial Yield in %	5.7	5.5

Portfolio

Sound property fundamentals basis for value growth

As of 30.09.2016

Market	Residential Units	GAV Residential Assets (€m)	% of Total Residential GAV	GAV/ sqm (€)	In-Place Rent Multiple	Multiples, Estimated Rental Values (31.12.2015)	GAV Commercial/ Other Assets (€m)	Total GAV
High Growth Markets	39,027	2,971	42%	1,151	16.6x	14.9x	175	3,146
Stable Markets with Attractive Yields	46,728	2,244	32%	746	12.7x	12.1x	99	2,344
Higher Yielding Markets	40,291	1,690	24%	683	12.2x	11.5x	48	1,737
Subtotal NRW	126,046	6,905	98%	856	14.0x	13.1x	322	7,227
Portfolio outside NRW	1,895	123	2%	961	14.4x	13.3x	1	124
Total Portfolio	127,941	7,027	100%	858	14.0x	13.2x	323	7,351
Other Assets								45
Total								7,396

LEG – Adj. EBITDA Margin

Leading profitability despite short term distortion from restricted units

Adj. EBITDA margin		2015		2014
	€m	margin %	€m	margin %
As reported	293.7	67.3	259.3	66.5
Gap restricted vs. unrestricted rents1)	22.5	68.9	21.2	68.2

1) €/sqm: €4.67 vs. €5.48 in 2015, €4.61 vs. €5.33 in 2014

• 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. 160 bps higher

units non-NRW

Mietspiegel Overview Expected new Mietspiegel in 2016/2017

Release date (expected)	High-Growth Markets1	Markets1 Stable	Higher-Yielding Markets1	Total Portfolio1
2016 (Q4)	3,578 units (mainly Bocholt)	2,543 units (mainly Wuppertal)	7,757 units (mainly Gelsenkirchen, Herten)	13,902 units2
2017 (Q1)	11,152 units (mainly Dusseldorf, Cologne)	15,176 units (mainly Dortmund, Solingen)	13,691 units (mainly Duisburg, Marl, Herne)	40,019 units
2017 (Q2)	6,075 units (mainly Munster)	816 units	2,023 units (mainly Dorsten)	8,914 units
2017 (Q3)		2,169 units (mainly Krefeld)	486 units	2,655 units
Total 1	20,805 units	20,704 units	23,957 units	65,490 units2

Thereof: - Dortmund - Duisburg - Gelsenkirchen - Dusseldorf - Munster - Cologne - Marl - Herne - Wuppertal - Solingen	6,610 units 6,075 units 3,903 units	13,165 units 2,028 units 1,474 units	7,053 units 6,732 units 2,727 units 2,049 units	1 Sub-portfolios also include
				restricted units 2 Total Portfolio also includes 24

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 (30.09.2016): MDAX 3.21%; EPRA 2.61%

• Maturity date: 1 July 2021

• Aggregate principal amount: EUR 300 million
• Initial conversion price:EUR 62.39
• Adjusted conversion price (20 May 2016): EUR 56.8403
• Coupon: 0.50% per annum
• ISIN: DE000LEG1CB5

Share price (01.11.2016, indexed; 31.01.2013 = 100) Convertible bond data

Financial Calendar

Date	Report/Event
09.11.2016	Quarterly Report Q3 as of 30 September 2016
10./11.11.2016	Roadshow London, Morgan Stanley
14.11.2016	Roadshow Amsterdam, Deutsche Bank
15.11.2016	Roadshow Paris, BNP Paribas
02.12.2016	Roadshow Munich, Bankhaus Lampe
06.12.2016	Berenberg European Conference 2016, London
12./13.12.2016	HSBC Global Real Estate Conference 2016, Cape Town
05.01.2017	Oddo Forum, Lyon
11.01.2017	J.P. Morgan European Real Estate CEO Conference, London
16.01.2017	16th German Corporate Conference, KeplerCheuvreux & UniCredit, Frankfurt
09.03.2017	Annual Report as of 31 December 2016

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 Dusseldorf, 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

Appendix Thank you for your interest.