LEG Immobilien SE

Investor Presentation • Mar 10, 2016

LEG Immobilien AG 10 March 2016

FY 2015 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.I. Highlights FY-2015

Highlights FY-2015

Overall company development Q4-2015

• LEG expands its leading market position in NRW with acquisitions of c.14,900 units in Q4 (c.21,000 units FY-2015) allowing for attractive scale effects
• Acquisition of 13,570 units from Vonovia SE (rental yield 8.0%)
• Purchase of 1,291 in Siegen (rental yield 7.7%)
• Pipeline for further bolt-on acquisitions
• Tailor-made equity raising of €306.7m in November (ABB of 7.7% new shares) supports value accretive growth
• Portfolio analysis regarding more active capital recycling (sales portfolio of approx. 2,000 to 3,000 units)

Strong letting performance combined with high capital efficiency

• In-place rent €5.21/sqm (+2.7% like-for-like, +3.6% for free-financed units)
• EPRA-Vacancy 2.5% l-f-l (-20 bps YOY)
• Maintenance/Capex of c.€16.1/sqm

Financials: Dynamic earnings and capital growth at low risk

• Rental income €436.1m (+11.8% YOY from €390.1m)
• Adjusted EBITDA €293.7m (+13.3% YOY from €259.3m)
• Margin expansion excl. maintenance c.+160 bps YOY
• FFO I €206.0m (+25.9% YOY from €163.6m), €3.53 per share (+16.1% YOY from €3.04)
• AFFO €146.2m (+21.6% YOY from €120.2m)
• EPRA-NAV (excl. goodwill) €58.92 per share (+11.8% YOY)
• DPS €2.26, +15.3% YOY, payout ratio of 68.9%

II.I. Portfolio and Operating Performance

Portfolio Overview Strong operational performance across all submarkets

Total Portfolio
	31 Dec 2015	 (YOY)
# of units	108,916	+1.8%
In-place rent (sqm)	€5.21 (€5.21*)	+2.6% (+2.7%*)
EPRA-Vacancy	2.6% (2.5%*)	-20 bps (-20 bps)

High-Growth Markets
	31 Dec 2015	 (YOY)
# of units	37,329	+1.4%
In-place rent (sqm)	€5.76 (€5.77*)	+2.3% (+2.6%*)
EPRA-Vacancy	1.2% (1.2%*)	-10 bps (-10 bps*)

Stable Markets with Attractive Yields
	31 Dec 2015  (YOY)
# of units	40,523	+2.9%
In-place rent (sqm)	€4.92 (€4.91*)	+2.8% (+2.5%*)
EPRA-Vacancy	2.6% (2.6%*)	-60 bps (-50 bps*)

Higher-Yielding Markets
31 Dec 2015  (YOY)
# of units	29,607	+2.7%
In-place rent (sqm)	€4.83 (€4.83*)	+2.6% (+2.7%*)
EPRA-Vacancy	4.8% (4.8%*)	+/-0 bps (+10 bps*)

* like-for-like

Portfolio Cluster

Update of the scoring system leads to minor amendments of submarkets

Criteria Reclassified Locations

• Population trend 2011 to 2014
• Forecast of household numbers from 2012 to 2030
• Purchasing power index 2014
• Number of people in employment and paying social security contributions 2005 to 2014
• Rent levels Q3 2014 until Q2 2015
• Vacancy rate 2014 (replacement of rent multiples)

Rent Development

Attractive portfolio + operational excellence = strong rent growth

EPRA-Vacancy Development (like-for-like) Attractive portfolio + operational excellence = low vacancies

Very strong Q4-letting result (vacancy -70bps QOQ)

• Traditionally strong Q4 seasonality
• Investment strategy with focus on vacant apartments
• Net immigration into Germany fuels demand for affordable housing

Capex & Maintenance High quality standards and capital efficiency maintained

Financial Highlights FY-2015

Margin expansion on back of attractive scale effects + cost discipline

Income Statement FY-2015

Condensed Income Statement (€ million)	FY-2015	FY-2014	 Higher rental income
Net rental and lease income	320.5	284.9	(+€46m/+11.8%)  NRI-margin increased from 73.0% to 73.5% YOY (74.5%
Net income from the disposal of investment property	3.6	-1.7	to 75.1% w/o one-time costs) despite higher maintenance
Net income from the valuation of investment property	285.5	143.0	(+19% YOY)
Net income from the disposal of real estate inventory	-1.2	-3.1	 Higher one-time costs (+€13.8m to €19.0m)  Recurring admin. costs of
Net income from other services	0.9	-0.3	€36.7m (+€3.6m YOY), temporary increase mainly due to first time consolidation
Administrative and other expenses	-58.1	-41.6	effects and M&A costs  Decreasing admin. costs
Other income	0.9	0.5	expected to contribute to further margin expansion
Operating earnings	552.1	381.7	 One-time refinancing costs (-€56.2 m); thereof €47.8m
Net finance costs	-252.4	-162.2	cash effective  Net income from fair value measurement of derivatives
Earnings before income taxes	299.7	219.5	(-€75.8m); thereof (-€74.0m) from convertible
Income tax expense	-82.0	-63.9*	 Cash taxes (-€1.6m), including an aperiodic effect of (-€1.0m)
Consolidated net profit	217.7	155.6

* Q4-2015: Adjustment arising from final PPA of Vitus transaction

FFO Calculation FY-2015

€ million	FY-2015	FY-2014
Rental income	436.1	390.1	 +€46.0m (+11.8% YOY)
Profit from operating expenses	1.2	1.3
Maintenance	-54.4	-45.7
Staff costs	-37.4	-33.2
Allowances on rent receivables	-6.0	-5.4	 +€36.9m (+12.7% YOY)
Other	-14.4	-18.0	 Adj. NOI margin 75.1% (+60 bps YOY)
Non-recurring project costs (rental and lease)	2.3	1.4	 Further cost savings from
Current net rental and lease income	327.4	290.5	efficiency program expected
Current net income from other services	2.9	1.8
Staff costs	-22.7	-21.6
Non-staff operating costs	-33.3	-17.9	 One-time costs (€12.3m M&A,
LTIP (long-term incentive programme)	0.2	1.2	€1.1m energy services,
Non-recurring project costs (admin.)	19.0	5.2	efficiency program etc.)
Extraordinary and prior-period expenses	0.1	0.0
Current administrative expenses	-36.7	-33.1	 Decreasing admin. cost base in 2016 & 2017 expected
Other income and expenses	0.1	0.1
Adjusted EBITDA	293.7	259.3	 +€34.4m (+13.3% YOY)
Cash interest expenses and income	-87.5	-94.5
Cash income taxes	-0.2	-1.2	 +€42.4m supported by topline growth, margin expansion and
FFO I (not including disposal of investment property)	206.0	163.6	lower interest charges
Net income from the disposal of investment properties	3.6	-1.7
FFO II (including disposal of investment property)	209.6	161.9	 Additional value contribution
Capex	-59.8	-43.4	from sale of non core assets
Capex-adjusted FFO I (AFFO)	146.2	120.2

FFO Bridge FY-2015

Focus: Cash Effective Interest Expense FY-2015

€ million	FY-2015	FY-2014	 Refinancing costs of
Reported interest expense	181.5	128.5	€56.2m (P+L effective); thereof €8.4m non-cash
Interest expense related to loan amortisation	-38.6	-24.6	 Including valuation of
Prepayment penalties	-8.3	0.0	the convertible of €6.4m, (+€1.6m YOY) and effects from refinancing
Interest charges relating to valuation of assets/liabilities	-1.6	-2.3	of €8.4m
Leasing related interest expense	-1.4	-1.5
Interest expenses related to changes in pension provisions	-2.9	-4.0
Other interest expenses	-40.6	-0.1	 Release of swaps (refinancing) ~€39.5m
Bank charges	0.0	-0.3
Interest income	-0.6	-1.2	 Lower ø cost of debt
Cash effective interest expense	87.5	94.5	(c.-50bp)  Interest coverage improved further (3.4x up from 2.7x YOY)

EPRA-Net Asset Value FY-2015

Attractive capital growth on basis of moderate yield compression

€ million	31.12.2015	31.12.2014
Equity (excl. minority interests)	2,967.8	* 2,476.2
Effect of exercising options, convertibles and other rights	427.2	308.7
NAV	3,395.0	2,784.9
Fair value measurement of derivative financial instruments	165.5	136.1
Deferred taxes**	466.6	373.7
EPRA-NAV	4,027.1	3,294.7
Number of shares fully-diluted incl. convertible (m)***	67.904	62.043
EPRA-NAV per share in €	59.31	53.10
Goodwill, resulting from synergies	26.4	* 26.4
Adjusted EPRA-NAV (excl. goodwill)	4,000.7	3,268.3
Adjusted EPRA-NAV per share in €	58.92	52.69

• €217.7m net profit
• Capital increases €375.8m

• Dividend distribution (-€111.8m)

• Attractive rental yield of 6.9% 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%

* Adjustment arising from final PPA of Vitus transaction *** Actual number of shares outstanding 62.77m ** And goodwill resulting from deferred taxes on investment properties

EPRA-Net Asset Value Bridge FY-2015

First Moderate Yield Compression in Q4 2015

Strong Momentum in Orange Markets
Markets	Change
Total valuation uplift	€285.5m (+4.8%)
Orange markets (average)	+7.3%
Green markets (average)	+3.1%
Purple markets (average)	+2.7%

Selected Markets

Cities	Segment	Valuation Uplift
Dusseldorf	High-Growth	+11.3%
Cologne	High-Growth	+10.6%
Dortmund	Stable	+3.5%
Essen	Stable	+4.0%
Duisburg	Higher-Yielding	+1.4%
Gelsenkirchen	Higher-Yielding	+5.2%

Strong balance sheet secures defensive profile Balance Sheet FY-2015

€ million	31.12.2015	31.12.2014	 Additions €189.9m
Investment property	6,398.5	5,914.3	 Capex €59.8m
Prepayment for investment property	203.1	16.8	 Valuation uplift €285.5m  Reclassification (-€55.7m)
Other non-current assets	296.8	* 155.1
Non-current assets	6,898.4	6,086.2	 Cash flow from operating
Receivables and other assets	37.2	35.9	activities €166.9m
Cash and cash equivalents	252.8	129.9	 Dividend distribution (-€111.8m)
Current assets	290.0	165.8	 Net acquisitions and capex
Assets held for disposal	6.7	58.4	(-€492.5m)
Total Assets	7,195.1	6,310.4	 Capital increases €375.8m
Equity	2,985.0	* 2,490.4	 Equity ratio of 41.5%
Non-current financial liabilities	2,745.6	2,546.5
Other non-current liabilities	673.7	612.3
Non-current liabilities	3,419.3	3,158.8
Current financial liabilities	496.0	413.8
Other current liabilities	294.8	* 247.4
Current liabilities	790.8	661.2
Total Equity and Liabilities	7,195.1	6,310.4

* Adjustment arising from final PPA of Vitus transaction

€ million 31.12.2015 31.12.2014 Financial debt 3,241.6 2,960.3 Cash & cash equivalents 252.8 129.9 Net Debt 2,988.8 2,830.4 Investment properties 6,398.5 5,914.3 Properties held for sale 6.7 58.4 Prepayments for investment properties 203.1 16.8 Prepayments for business acquisitions 146,1 - Property values 6,754.4 5,989.5 Loan to Value (LTV) in % 44.2 47.3 Equity 2,985.0 2,490.4 Positive impact on LTV from future conversion of convertible expected (currently -380bps) * Also after full consolidation of the signed acquisitions proforma LTV stays below 50%

Strong credit profile and efficient capital structure maintained LTV FY-2015

* Adjustment arising from final PPA of Vitus transaction

Financing Structure - 31 December 2015 LEG benefits from further tightening of credit spreads

Value accretive growth on basis of a highly focused management platform

Acquisitions: Portfolio of 1,291 units signed in December

• Acquisition of approx. 21,000 units at attractive rental yield of 7.6%
• Purchase of 1,291 units in Siegen in December ideally fits into LEG's strategy
• Attractive rental yield of 7.7% and price per sqm <€700
• Undermanaged portfolio with significant future upside (vacancy 17.3%)
• Pipeline of smaller and midsized deals promises further expansion of leading market position in NRW

Net immigration fuels demand for LEG's affordable housing product

• Around 1.5 million people came to Germany in FY-2015 (thereof c.1.1 million refugees)
• NRW is key beneficiary of new immigration (c.30% of refugees arrived in NRW)
• LEG well recognised partner of municipalities in NRW; long-standing experience of managing residential settlements with tenants of different nations
• As end of February about 1,250 residential units were let to refugees

Value accretive growth on basis of a highly focused management platform

Financing: LEG in sweet spot of financing markets

• LEG benefits from further tightening of credit spreads in the secured lending market (1.25% for 10 year loan; implied margin approx. 65 bps)
• LEG's financing margins completely decoupled from margin volatility in the bond market
• Strong confirmation that LEG's financing strategy allows for lowest cost of capital across the cycle
• Best-in class terms also due to LEG's management track record

Capital recycling: Sales process is kicking-off

• Portfolio analysis completed
• Key objectives:
• Streamlining of the portfolio; rising efficiency
• Generating a "retail margin": premium pricing for smaller portfolios
• Targeted sales volume of around 2,000 to 3,000 units in FY-2015; proceeds earmarked for investments in portfolios with superior return potential

Overview Acquisitions FY-2015

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
	c.21,000

Acquisitions: Leading Management Skills paying off Strong acquisition track record since IPO – Creating tangible value

		31.12.2015		Closing		Change
	Units	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy
Portfolio incl. Vitus transaction	20,881*	5.12	96.5%	4.87	95.5%	0.25 (+5.1%)	~ +100 bp

Operating performance confirms reversionary potential and LEG's management skills

• Average in-place rents +5.1% (within avg. 19.2 months); CAGR of 3.2%
• Vitus NRW portfolio (rent/sqm +4.2%, vacancy -100 bps; within 14 months)

* Acquisitions since year end 2012

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

Sources:

• 1) Bundesinnenministerium (press release 06.01.2016)
• 2) Landesregierung NRW
• 3) Deutsche Bundesbank

Outlook for 2016 & 2017

2016	Guidance
FFO I:	€254m - €259m / €4.05 - €4.13 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:	€279m - €284m / €4.44 - €4.52 per share
L-F-L rent growth	3.0 – 3.3%

Steady Expansion of Leading Profitability

Generating appealing Shareholder Returns

EPRA Net Initial Yield FY-2015

€ million	31.12.2015	31.12.2014
Investment properties	6,101.6	5,673.6
Assets held for sale	6.7	58.4
Market value of residential property portfolio (net)	6,108.3	5,732.0
Estimated incidental costs	601.5	558.7
Market value of residential property portfolio (gross)	6,709.8	6,290.6

Annualised cash flow from rental income (gross)	428.1	419.5
Non recoverable operating costs	-61.4	-58.4
Annualised cash flow from rental income (net)	366.8	361.1

EPRA Net initial yield in %	5.5	5.7
--------------------------------	-----	-----

Portfolio (as of 31 Dec 2015)

Sound property fundamentals basis for value growth

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	37,329	2,855	47%	1,157	17.1x	14.9x	171	3,025
Stable Markets with Attractive Yields	40,523	1,937	32%	745	13.1x	12.1x	89	2,025
Higher Yielding Markets	29,607	1,219	20%	668	12.2x	11.5x	37	1,256
Subtotal NRW	107,459	6,011	99%	872	14.5x	13.1x	296	6,307
Portfolio outside NRW	1,457	91	1%	943	14.5x	13.3x	1	92
Total Portfolio	108,916	6,102	100%	873	14.5x	13.2x	297	6,399
Other Assets								236
Total (incl. Landbank	and DevCo)							6,635

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 rents*	22.5	68.9	21.2	68.2

* €/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)	4,202 units (mainly Bielefeld)	586 units	6,562 units (Hochsauerlandkreis, Hagen)	11,350 units
2016 (Q2)	5,113 units (mainly Bonn, Gütersloh)	2,319 units (mainly Detmold)	1,477 units (mainly Bochum)	8,909 units
2016 (Q3)	2,262 units (mainly Bocholt)	8,084 units (mainly Essen, Wuppertal, Witten)	225 units	10,571 units
2016 (Q4)	456 units		36 units	492 units
Total 1	12,033 units	10,989 units	8,300 units	31,346 units2
Thereof: - Bielefeld - Bocholt - Bochum - Bonn - Detmold - Essen - Gütersloh - Hochsauerlandkr. - Unna - Witten - Wuppertal	3,657 units 1,412 units 2,286 units 1,787 units	1,448 units 2,907 units 1,210 units 1,518 units 2,031 units	1,477 units 5,372 units 1,210 units	1 Sub-portfolios also include restricted units 2 Total Portfolio also includes 24 units non-NRW

LEG Share Information

Financial Calendar

Date	Report/Event
10.03.2016	Annual Report 2015
11.03.2016	Commerzbank German Residential Property Forum 2016, London
14.03.2016	Roadshow London, Societe Generale
06.04.2016	Roadshow Zurich, Bankhaus Lampe
13.04.2016	Bankhaus Lampe Conference, Baden-Baden
15.04.2016	Roadshow Brussels, Kempen & Co.
11.05.2016	Quarterly Report Q1 as of 31 March 2015

LEG Immobilien AG – Investor Relations Team

Burkhard Sawazki Head of Investor Relations Phone: +49 211 4568 204 burkhard.sawazki@leg.ag

Karin Widenmann Katharina Golke Manager Investor Relations Investor Relations Phone: +49 211 4568 458 Phone: +49 211 4568 294 karin.widenmann@leg.ag katharina.golke@leg.ag

Hans-Boeckler-Str. 38 40476 Dusseldorf Germany

Thank you for your interest.