LEG Immobilien SE

Earnings Release • May 11, 2016

LEG Immobilien AG

Q1-2016

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 Q1-2016

Overall company development

• Approx. €300m early refinancing at 1.45% CoD (11 year maturities) prompts upward revision of FFO I guidance
• Updated FFO I guidance 2016: €257m - €262m (previously €254m - €259m), 2017: €284m - €289m (previously €279m - €284m)
• Successful continuation of bolt-on acquisition strategy
• Acquisition of 1,100 units from Grainger plc at attractive initial yield (rental yield 7.5%)
• Option to pay the purchase price in LEG shares ideally complements tailor-made financing strategy
• Pipeline for further bolt-on acquisitions

Strong letting performance combined with high capital efficiency

 In-place rent, l-f-l	€5.25/sqm (+2.4% total portfolio, +3.3% for free-financed units) Slight growth acceleration in course of FY-2016 on the cards
 EPRA-Vacancy	2.8% l-f-l (-40 bps YOY)
 Maintenance/Capex	€3.4/sqm (FY-2016 target of €17/sqm reiterated)

Financials: Dynamic earnings and capital growth at low risk

	Rental income	€118.6m (+10.5% YOY from €107.3m)
	Adjusted EBITDA	€84.1m (+12.3% YOY from €74.9m) Margin expansion excl. maintenance c.+270 bps YOY
	FFO I (excl. minorities)	€62.6m (+21.8% YOY from €51.4m), €1.00 per share (+11.1% YOY from €0.90)
	AFFO	€49.9m (+9.4% YOY from €45.6m)
	EPRA-NAV (excl. goodwill)	€59.42 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
	31.03.2016	 (YOY)
# of units	38,232	+3.4%
In-place rent (sqm), l-f-l	€5.82	+2.5%
EPRA-Vacancy, l-f-l	1.4%	-10 bps

Stable Markets with Attractive Yields
	31.03.2016	 (YOY)
# of units	44,065	+13.2%
In-place rent (sqm), l-f-l	€4.95	+2.3%
EPRA-Vacancy, l-f-l	3.0%	-80 bps

	Total Portfolio			Higher-Yielding Markets
	31.03.2016	 (YOY)		31.03.2016	 (YOY)
# of units	115,419	+8.1%	# of units	31,665	+7.7%
In-place rent (sqm), l-f-l	€5.25	+2.4%	In-place rent (sqm), l-f-l	€4.85	+1.9%
EPRA-Vacancy, l-f-l	2.8%	-40 bps	EPRA-Vacancy, l-f-l	5.0%	-20 bps

Rent Development

Attractive portfolio + operational excellence = strong rent growth

• Performance of free financed units remains best proxy for underlying fundamentals
• Further slight growth acceleration on the cards
• Strict capital discipline maintained
• Regional focus as competitive edge

EPRA-Vacancy Development (like-for-like)

Attractive portfolio + operational excellence = low vacancies

• Net immigration into Germany fuels demand for affordable housing
• Traditionally weaker Q1 seasonality; rising occupancy in coming quarters ahead
• Especially strong momentum in the commuter belts of economic centres
• (e.g. Dortmund, Mönchengladbach, Monheim)

Capex & Maintenance High quality standards and capital efficiency maintained

III.I.I. Financial Performance

Financial Highlights Q1-2016

Margin expansion on back of attractive scale effects + cost discipline

Income Statement

Q1-2016

€ million	Q1-2016	Q1-2015
Net rental and lease income	88.6	80.8	 Higher rental income (+€11.3m/+10.5%)  NRI-margin nearly stable
Net income from the disposal of investment property	-0.1	1.3	despite higher maintenance (+30% YOY; low level Q1-15)
Net income from the valuation of investment property	1.0	-	 Higher one-time costs
Net income from the disposal of real estate inventory	-0.6	-0.7	(+€34.1m to €34.5m) due to non-capitalised transaction costs (€33.7m; mainly real
Net income from other services	1.3	-0.1	estate transfer tax)  Recurring admin. costs
Administrative and other expenses	-43.0	-8.9	stable at €7.9m reflecting rising efficiency (decreasing cost base inr FY-16 and FY
Other income	0.1	0.2	17 expected)
Operating earnings	47.3	72.6	 Lower financing costs (-€46.9 YOY) due refinancing costs (€13.0m in Q1-15) and
Net finance costs	-47.1	-94.0	lower burdens from fair value measurement of derivatives
Earnings before income taxes	0.2	-21.4	(-€33.8m YOY to €18.9m)  Lower cash interests (€20.2m vs. €23.3m in Q1-15)
Income tax expense	-12.3	-9.0
Consolidated net profit	-12.1	-30.4	 Cash taxes (-€1.1m)

FFO Calculation

Q1-2016

€ million	Q1-2016	Q1-2015
Rental income	118.6	107.3	 +€11.3m (+10.5% YOY)
Profit from operating expenses	-1.4	-1.5
Maintenance	-12.9	-9.9
Staff costs	-10.2	-9.4
Allowances on rent receivables	-1.7	-1.8	 +€8.0m (+9.7% YOY)  Slightly lower adj. NOI
Other	-2.4	-2.7	margin due to higher
Non-recurring project costs (rental and lease)	0.2	0.2	maintenance expenses  Further cost savings from
Current net rental and lease income	90.2	82.2	efficiency program expected
Current net income from other services	1.7	0.4
Staff costs	-5.5	-5.3
Non-staff operating costs	-36.9	-3.1
LTIP (long-term incentive programme)	0.0	0.1	 One-time costs (€33.7m non capitalised transaction costs
Non-recurring project costs (admin.)	34.5	0.4	including RETT)
Extraordinary and prior-period expenses	0.0	0.0
Current administrative expenses	-7.9	-7.9	 Decreasing admin. cost base in 2016 & 2017 expected
Other income and expenses	0.1	0.2	despite volume growth
Adjusted EBITDA	84.1	74.9	 +€9.2m (+12.3% YOY)
Cash interest expenses and income	-20.2	-23.3	 EBITDA margin 70.9% vs.
Cash income taxes	-1.1	-0.2	69.8% in Q1-15
FFO I (including non-controlling interests)	62.8	51.4	 Lower interest charges
Non-controlling interests	-0.2	0.0	(end Q1-16 avg. cost 2.15% vs. 2.8% in Q1-15)
FFO I (excluding non-controlling interests)	62.6	51.4
FFO II (including disposal of investment property)	62.5	52.7
Capex-adjusted FFO I (AFFO)	49.9	45.6

FFO Bridge Q1-2016

Cash Effective Interest Expense Q1-2016

€ million	Q1-2016	Q1-2015
Reported interest expense	30.1	44.2
Interest expense related to loan amortisation	-6.0	-11.6
Prepayment penalties / breakage costs	-2.2	-7.5	 One-off refinancing effect of €5.5m in Q1- 2015
Interest charges relating to valuation of assets/liabilities	-0.4	-0.2
Leasing related interest expense	-0.4	-0.4
Interest expenses related to changes in pension provisions	-0.8	-0.7
Bank charges	0.0	0.0
Interest income	0.0	-0.4
Cash effective interest expense	20.2	23.3	 Interest coverage improved further (4.2x up from 3.2x YOY)

EPRA-Net Asset Value

Q1-2016

Attractive rental yield basis for future capital growth

€ million	31.03.2016	31.12.2015
Equity (excl. minority interests)	2,945.2	2,967.8
Effect of exercising options, convertibles and other rights	465.0	427.2
NAV	3,410.2	3,395.0
Fair value measurement of derivative financial instruments	198.0	165.5
Deferred taxes1)	473.8	466.6
EPRA-NAV	4,082.0	4,027.1
(m)2) Number of shares fully-diluted incl. convertible	67.904	67.904
EPRA-NAV per share in €	60.11	59.31
Goodwill, resulting from synergies	46.9	26.4
Adjusted EPRA-NAV (excl. goodwill)	4,035.1	4,000.7
Adjusted EPRA-NAV per share in €	59.42	58.92

-€12.1m net profit -€10.3m other comprehensive income (derivatives)

• Attractive rental yield of 7.1% leaves headroom for future capital growth
• 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 62.77m 1) And goodwill resulting from deferred taxes on investment properties 3) Assumption: growth rate of 0% Balance Sheet Q1-2016

Strong balance sheet secures defensive profile

€ million	31.03.2016	31.12.2015
Investment property	6,755.4	6,398.5	 Additions €357.3m
Prepayment for investment property	446.9	203.1	 Capex €12.7m  Reclassification -€14.2m
Other non-current assets	214.5	296.8
Non-current assets	7,416.8	6,898.4
Receivables and other assets	66.1	37.2
Cash and cash equivalents	310.1	252.8	 Cash flow from operating
Current assets	376.2	290.0	activities €63.5m
Assets held for disposal	16.1	6.7
Total Assets	7,809.1	7,195.1
Equity	2,973.2	2,985.0	 Equity ratio of 38.2%
Non-current financial liabilities	3,363.3	2,745.6
Other non-current liabilities	725.0	673.7
Non-current liabilities	4,088.3	3,419.3
Current financial liabilities	381.0	496.0
Other current liabilities	366.6	294.8
Current liabilities	747.6	790.8
Total Equity and Liabilities	7,809.1	7,195.1

Strong credit profile and efficient capital structure maintained

€ million	31.03.2016	31.12.2015
Financial debt	3,744.3	3,241.6
Cash & cash equivalents	310.1	252.8
Net Debt	3,434.2	2,988.8	 Also after full consolidation of the
Investment properties	6,755.4	6,398.5	signed acquisitions pro forma LTV stays below
Properties held for sale	16.1	6.7	50%
Prepayments for investment properties	-	203.1
Prepayments for acquisitions	467,3	146,1	 Significant positive
Property values	7,238.8	6,754.4	impact on LTV from future conversion of
Loan to Value (LTV) in %	47.4	44.2	convertible expected (currently -360bps)
Pro-forma LTV post conversion in %	43.8	40.4

Financing Structure - 31 March 2016

LEG benefits from further tightening of credit spreads

IV.I.I. Business Update and Outlook

Business Update

Start of FY-2016 a strong confirmation of LEG's business case

Acquisition of 1,100 units in April; value accretive external growth continues

• Acquisition of approx. 1,100 units (€53m) in core markets at attractive rental yield of 7.5% (below sellers appraiser value)
• Transaction underscores LEG's strong competitive position
• Option for settlement in LEG shares perfectly complements LEG's tailor-made financing strategy
• Pipeline for further bolt-on deals promises generation of further scale effects

Rising transactional evidence for yield compression (also in Higher Yielding markets)

• Successful signing of disposal non-core portfolio at premium to book value (439 units, premium 9.4%)
• Assets located in northern parts of Duisburg suffering from weak socio-demographic forecasts
• Capital recycling progressing well; very promising start of marketing process for further non-core portfolios

Refinancing €300m at very attractive terms; improved FFO outlook

• €300m loans refinanced in March/April at very attractive terms
• Interest costs 1.45%, maturity 11 years, implied credit margin c.70-75 bps
• Interest savings prompt upward revision of FFO guidance for FY-2016 (+€3m) and for FY-2017 (+€5m)
• One-time refinancing costs of c.€12m with payback period of 2.3 years

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

		Closing		30.04.2016		Change
	Units	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy
Portfolio incl. Vitus transaction	20,8801)	4.87	95.5%	5.19	96.1%	0.32 (+6.5%)	~ +60 bp
Vitus portfolio	9,546	4.76	96.1%	5.03	96.4%	0.27 (+5.7%)	~ +30 bp

Operating performance confirms reversionary potential and LEG's management skills

1) Acquisitions since year end 2012

• Average in-place rents +6.5% (within avg. 23.2 months), rent CAGR of 3.3%
• Vitus NRW portfolio (rent/sqm +5.7%, vacancy -30 bps; within 18 months), rent CAGR of 3.7%

Portfolio development: Strong volume growth at stable overhead cost

Overview Acquisitions FY-2015 / FY-2016

Deal #	Units acquired	Geographic focus	Market	Annual net cold rent	In place rent/sqm	Vacancy rate	Signing	Purchase price	Closing
1	713	Cologne, Leverkusen, Sankt Augustin	High Growth/ Stable	EUR 3.5m	EUR 5.33	2.9%	April 2015	not disclosed	June 2015
2	3,539	Top 2 locations ~60% (Bielefeld, Detmold)	Stable	EUR 14.2m	EUR 5.19	3.6%	November 2015	EUR 225m	January 2016
3	2,037	Duisburg, Essen	Stable/ Higher Yielding	EUR 7.7m	EUR 5.04	6.7%	August 2015	not disclosed	January 2016
4	13,570	NRW (esp. Ruhr area)	Higher Yielding/ Stable	EUR 48m	EUR 4.86	5.3%	December 2015	c.EUR 600m	April 2016
5	1,291	Siegen	Stable	EUR 4.6m	EUR 5.16	17.3%	December 2015	c.EUR 60m	January / July 2016
6	~1,100	Recklinghausen, Herne	Stable/ Higher Yielding	~EUR 4.0m	EUR 4.46	5.4%	April 2016	c.EUR 53m	Q2-2016
	c.22,000

Outlook for 2016 & 2017

2016	Guidance
FFO I:	€257m - €262m / €4.09 - €4.17 per share
L-F-L rent growth:	2.4 - 2.6%
L-F-L vacancy:	Stable (FY-15 comparable: 2.5%)
Dividend:	65% of FFO I

2017
FFO I:	€284m - €289m / €4.52 - €4.60 per share
L-F-L rent growth:	3.0 – 3.3%

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) Federal Statistical Office (press release 21.03.2016)
• 2) Deutsche Bundesbank
• 3) it.NRW (press release 21.03.2016)

Key Facts

• In 2015, net immigration of foreign nationals to Germany amounted to about 1.1m, of which around 278,0003) came to NRW
• Deutsche Bundesbank forecasts 1.5 million additional refugees by 2017
• 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 pullfactors

LEG's impact

• At the end of April 2016, LEG let about 1,400 units or ~1% of its residential portfolio to refugees, either direct (40%) or via municipalities (60%)
• LEG almost fully let with a vacancy rate of 3.0% scope to let further apartments to refugees is limited
• Upward pressure on rents, limited upside on occupancy

EPRA Net Initial Yield Q1-2016

€ million	31.03.2016	31.12.2015
Investment properties	6,454.0	6,101.6
Assets held for sale	16.1	6.7
Market value of residential property portfolio (net)	6,470.1	6,108.3
Estimated incidental costs	636.3	601.5
Market value of residential property portfolio (gross)	7,106.4	6,709.8
Annualised cash flow from rental income (gross)	463.2	428.1
Non recoverable operating costs	-66.7	-61.4
Annualised cash flow from rental income (net)	396.5	366.7
EPRA Net initial yield in %	5.6	5.5

Portfolio

Sound property fundamentals basis for value growth

As of 31.03.2016

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	38,232	2,858	44%	1,159	16.7x	14.9x	171	3,029
Stable Markets with Attractive Yields	44,065	2,213	34%	759	12.9x	12.1x	94	2,307
Higher Yielding Markets	31,665	1,292	20%	669	12.0x	11.5x	40	1,331
Subtotal NRW	113,962	6,362	99%	870	14.1x	13.1x	304	6,666
Portfolio outside NRW	1,457	91	1%	946	14.4x	13.3x	1	92
Total Portfolio	115,419	6,454	100%	871	14.1x	13.2x	305	6,759
Other Assets								485
Total (incl. Landbank	and DevCo)							7,244

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

Mietspiegel Overview Expected new Mietspiegel in 2016

Release date (expected)	High-Growth Markets1	Markets1 Stable	Higher-Yielding Markets1	Total Portfolio1
2016 (Q1)	4,249 units (mainly Bielefeld)	1,683 units (mainly Detmold)	6,669 units (Hochsauerlandkreis)	12,601 units
2016 (Q2)	3,832 units (mainly Bonn)	667 units	1,477 units (Bochum)	6,000 units2
2016 (Q3)	2,262 units (mainly Bocholt)	8,229 units (mainly Essen, Wuppertal, Witten)	1,250 units (mainly Herten)	11,741 units
2016 (Q4)	2,421 units (mainly Gütersloh)	36 units		2,457 units
Total 1	12,764 units	10,615 units	9,396 units	32,799 units2
Thereof: - Bielefeld	3,657 units
- Bocholt	1,412 units
- Bochum			1,477 units
- Bonn	2,286 units
- Detmold - Essen		1,449 units 2,991 units
- Gütersloh	1,965 units
- Hochsauerlandkr.			5,479 units
- Unna		1,210 units	1,210 units
- Witten		1,518 units		1 Sub-portfolios also include
- Wuppertal		2,031 units		restricted units 2 Total Portfolio also includes 24 units non-NRW

LEG Share Information

• Prime Standard, Frankfurt Stock Exchange
• Total no. of shares: 62,769,788
• Ticker symbol: LEG
• ISIN: DE000LEG1110
• Indices: MDAX, FTSE EPRA/NAREIT, GPR 250, Stoxx Europe 600

• Weighting (31.03.2016): MDAX 3.27%; EPRA 2.58%

• Maturity date: 1 July 2021

• Aggregate principal amount: EUR 300 million
• Initial conversion price:EUR 62.39
• Adjusted conversion price (25 June 2015): EUR 58.4317
• Coupon: 0.50% per annum
• ISIN: DE000LEG1CB5

Share price (29.04.2016, indexed; 31.01.2013 = 100) Convertible bond data

Financial Calendar

Date	Report/Event
11.05.2016	Quarterly Report Q1 as of 31 March 2016
12.05.2016	Roadshow London, Deutsche Bank
19.05.2016	Annual General Meeting 2016, Dusseldorf
25.05.2016	Kempen & Co's 14th European Property Seminar, Amsterdam
01.06.2016	nd 2 German Property Day - Kepler Cheuvreux / UniCredit, Paris
09.06.2016	dbAccess German, Swiss & Austrian Conference, Berlin
20.06.2016	Roadshow Milan/Lugano, Berenberg Bank
22.06.2016	Roadshow Edinburgh, Berenberg Bank
23.06.2016	Morgan Stanley Europe & EEMEA Property Conference, London
29.06.2016	Roadshow Munich, Baader Bank
10.08.2016	Quarterly Report Q2 as of 30 June 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 Golke Investor Relations Tel: +49 (0) 211 4568-294 katharina.golke@leg.ag

40476 Dusseldorf, Germany 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.