LEG Immobilien SE

Investor Presentation • Nov 14, 2014

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.

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Agenda

• I. Highlights 9M-2014
• II. Portfolio and Operating Performance
• III. Financial Performance
• IV. Business Update and Outlook
• V. Appendix

I. Highlights 9M-2014

Highlights 9M-2014

Overall company development in Q3

• Strong acceleration of value-enhancing external growth
• Acquisition of approx. 2,400 units in core markets in September
• Preparation of acquisition of c.9,600 units; capital markets and M&A transactions in Q4
• Immediate positive value contribution; significant medium term upside

Strong organic growth continues

• In-place rent €5.10 /sqm (+3.4% like-for-like, +3.8% for free-financed units)
• Occupancy at 96.8% l-f-l, slight temporary decrease expected to revert in Q4
• On track for further l-f-l-occupancy improvement in FY-2014
• Maintenance/capex below FY run rate in 9M-2014
• Total expenses for maintenance/ capex of €8.72 /sqm in 9M-2014
• FY-2014 target of €13-14/sqm

Financials reflect dynamic rent growth and operating outperformance

• Rental income €286.6m (+6.5% YOY from €269.2m)
• Adjusted EBITDA €195.4m (+14.7% YOY from €170.3m);
• Strong underlying margin improvement
• FFO I €123.9m, €2.34 per share (+19.7% YOY from €103.5m)
• AFFO €97.2m (+23.0% YOY from €79.0m)
• NAV €48.85 per share (+4.2% y-t-d adjusted for DPS distribution)

II. Portfolio and Operating Performance

Portfolio Overview Positive Rent Dynamics across all Submarkets

Total Portfolio

	30 Sept. 2014	 (YOY)
# of units	97,487	+4.2%
In-place rent (sqm)	€5.10 (€5.10)**	+3.3% (+3.4%)**
Occupancy	96.8% (96.8%)**	-20 bps (-26 bps)**

High-Growth Markets
30 Sept. 2014  (YOY)
# of units	31,072	+0.5%
In-place rent (sqm)	€5.71 (€5.70)**	+3.5% (+3.5%)**
Occupancy	98.8% (98.8%)**	+10 bps (+10 bps)**

Stable Markets with Attractive Yields
30 Sept. 2014  (YOY)
# of units	36,028	+6.6%
In-place rent (sqm)	€4.81 (€4.79)**	+3.5% (+3.1%)**
Occupancy	96.3% (96.2%)**	-20 bps (-30 bps)**

Higher-Yielding Markets
30 Sept. 2014  (YOY)
# of units	28,288	+6.0%
In-place rent (sqm)	€4.71 (€4.69)**	+3.3% (+3.0%)**
Occupancy	95.1% (95.2%)**	-60 bps (-60 bps)**

** like for like

Rent Development

Attractive Portfolio + Excellent Property Management = Strong Organic Growth

• L-f-l rent growth (per sqm) of +3.4% shows further slight acceleration
• Rent growth of +3.8% l-f-l for free-financed units emphasizes strong underlying dynamics and operating performance

Occupancy Development

• L-f-l vacancy rate of 3.2%, temporary increase (+c.25 bps YOY) expected to revert already in Q4
• Higher investments in Q4 with focus on vacant apartments (attractive return potential)
• Temporary constraints of operating staff due to integrations resolved
• On track to reach L-F-L vacancy reduction in FY-2014; rising visibility on back of good start into Q4-2014
• KPI's rent growth and vacancy reduction are balanced with one another (optimsing the mix)

Capex & Maintenance

Well Maintained Asset Base; Rising Investments in Q4

III. Financial Performance

Financial Highlights 9M-2014

Margin Expansion on back of Sound Topline Growth and Cost Discipline

Income Statement 9M-2014

Condensed Income Statement (€ million)	2013	9M-2014	9M-2013	 Higher rental income
Net rental and letting income	257.7	213.1	188.1	(+€17.4m/+6.5%)  Lower maintenance expenses (-€5.1m)
Net income from the disposal of investment property	-1.8	-0.3	-0.8
Net income from the valuation of investment property	81.6	0.0	0.0
Net income from the disposal of real estate inventory	-3.1	-2.6	-1.4	 €0.9m Long Term Incentive Plan – non-cash
Net income from Other services	2.3	0.0	1.9	pass-through item  Slightly lower recurring
Administrative and Other expenses	-51.5	-28.4	-38.3	admin. costs of €23.9m (9M-2013: €25.4m)
Other income	0.2	0.6	0.5	 €5.7m tax
Operating earnings	285.5	182.4	150.0	reimbursement
Net finance costs	-126.9	-87.7	-90.7	 €1.9m loss from derivatives
Earnings before income taxes	158.6	94.7	59.3	 Slightly higher cash interest expenses
Income tax expense	-21.7	-26.5	-7.4	(€70.4m vs. €67.0m)
Consolidated net profit	136.9	68.2	51.9	 Deferred taxes (thereof cash taxes: -€1.1m)

Adjusted EBITDA 9M-2014

€ million	2013	9M-2014	9M-2013	 +€17.4m higher rental
EBITDA	294.1	188.8	156.5	income  + €5.1m lower maintenance cost
Net income from the valuation of investment property	-81.6	0.0	0.0	 +€4.1m due to one-off from former development in FY-2013
Long-term incentive program (LTIP)	3.3	0.9	2.6	 + €2.8m lower admin. costs (project costs)
Non-recurring project costs	7.9	2.7	5.8
Extraordinary and prior-period expenses and income	3.2	0.1	3.2
Net income from the disposal of investment property	1.7	0.3	0.8
Net income from the disposal of real estate inventory	3.1	2.6	1.4	 Winding down of former development business  Smaller disposals at premium to book values
Adjusted EBITDA	231.7	195.4	170.3	 Total inventories: €4.3m

FFO Calculation 9M-2014

€ million	2013	9M-2014	9M-2013
Adjusted EBITDA	231.7	195.4	170.3	 Slightly higher financial charges due to
Cash interest expenses and income	-91.0	-70.4	-67.0	acquisitions (net debt +c.€130m YOY)  Interest cost ratio slightly
Cash income taxes	0.5	-1.1	0.2	decreasing
FFO I (not including disposal of investment property)	141.2	123.9	103.5
Net income from the disposal of investment property	-1.7	-0.3	-0.8	 Disposals of non-core assets at premium to book values
FFO II (including disposal of investment property)	139.5	123.6	102.7
Capex	-43.7	-26.7	-24.5
Capex-Adjusted FFO I (AFFO)	97.5	97.2	79.0	 Rising investments in Q4-2014 expected

FFO Bridge 9M-2014

Focus: Cash Effective Interest Expense 9M-2014

€ million	2013	9M-2014	9M-2013
Reported interest expense	131.4	93.8	95.2
Interest expense related to loan amortisation	-30.2	-14.0	-18.2
Interest expenses related to convertible bond (non cash)	-	-2.9	-
Refinancing fees	-2.9	0.0	-2.9
Prepayment penalties	0.0	0.0	0.0
Interest on shareholder loans	-0.2	0.0	-0.2
Interest charges relating to valuation of assets/liabilities	-2.3	-1.7	-1.9
Leasing related interest expense	-1.6	-1.0	-1.2
Interest expenses related to changes in pension provisions	-3.6	-2.9	-2.9
Other interest expenses	-0.2	-0.2	0.0
Bank charges	1.5	0.2	-
Interest income	-0.9	-0.8	-0.9
Cash effective interest expense	91.0	70.4	67.0

Moderate increase due to acquisitions

Interest coverage improved further (2.8X up from 2.5X YOY)

EPRA-Net Asset Value 9M-2014

Value of Attractive Multimedia Business is not Capitalised

€ million	30.09.2014	31.12.2013
Equity (excl. minority interests)	2,197.4	2,248.8	 +€68.2m net profit  -€28.8m O-C-I
Effect of exercising options, convertible loans and other rights	-	-	(valuation derivatives)  -€91.6m dividend payment
NAV	2,197.4	2,248.8
Fair value of financial derivatives	93.8	52.0
Deferred taxes	296.2	271.1
EPRA-NAV	2,587.4	2,571.9
Number of shares outstanding (m)	52,963	52,963	 Adjusted for DPS of
EPRA-NAV per share in €	48.85	48.56	€1.73 NAV increased by +4.2% y-t-d

• Property valuation: Value uplift in Q4 ahead due to strong rent growth
• Value multimedia:
• Discount rate 6% > Value approx. €100m / c.€1.9 per share
• Additional future upside from acquistions

Balance Sheet 9M-2014

Strong Balance Sheet Secures Defensive Profile and Paves Way for Growth

€ million	30.09.2014	31.12.2013	 Purchases €178.6m
Investment property	5,348.0	5,163.4	 Capex €26.7m  Reclassification
Prepayment for investment property	-	6.9	-€20.7m
Other non-current assets	91.7	91.9
Non-current assets	5,439.7	5,262.2
Receivables and other assets	60.3	33.8
Cash and cash equivalents	303.6	110.7
Current assets	363.9	144.5
Assets held for disposal	6.8	16.4
Total Assets	5,810.4	5,423.1
Equity	2,230.5	2,276.1	 Equity ratio of 38.4%
Non-current financial liabilities	2,720.8	2,396.7
Other non-current liabilities	542.2	443.9
Non-current liabilities	3,263.0	2,840.6
Current financial liabilities	189.9	187.0
Other current liabilities	127.0	119.4
Current liabilities	316.9	306.4
Total Equity and Liabilities	5,810.4	5,423.1

LTV 9M-2014

Significant Headroom for Acquisitions (max. LTV 55%)

€ million	30.09.2014	31.12.2013
Financial debt	2,910.7	2,583.7
Cash & cash equivalents	303.6	110.7
Net Debt	2,607.1	2,473.0
Investment properties	5,348.0	5,163.4	 Financial firepower
Properties held for sale	6.8	16.4	c.€600m post Q4 transactions (pro forma LTV < 50%)
Prepayment for investment properties	-	6.9
	5,354.8	5,186.7
Loan to Value (LTV) in %	48.7	47.7

Financing Structure 9M-2014

LT Secured Debt, Well-Balanced Maturity Profile, Low Cost of Debt

External growth supports further decrease in average interest costs

IV. Business Update and Outlook

Business Update Scale Effects in Core Markets + Operational Excellence Drive Value Creation

Acquisitions: Attractive FFO yields and significant future upside

• Significantly over-delivered on external growth targets while maintaining strict investment criteria
• Purchase of c.2,400 units 09/2014 and c.9,600 units (NRW Vitus-portfolio) 10/2014
• Total acquisition volume c.19,000 units since IPO; FFO yield >8%
• NRW Vitus-portfolio at attractive entry point of property cycle
  • Commuter belts increasingly benefitting from spill-over effects

  • 85% of portfolio within a 60 km radius of Dusseldorf and Cologne

  • Monchengladbach (5,741 units) negative population trend just reversed
• Significant potential for synergies and rents
• Immediate value contribution due to attractive initial FFO yields (normalised >9%)
• Positive impact on margins and above average rent growth on the cards

Margin expansion reflects continued operational outperformance

• Adjusted EBITDA margin (at stable maintenance costs) climbs by 300bps to 66.2% YOY
• Additionally interest advantage of restricted units is shown below the EBITDA line
• Key success factors:
• Superior organic and external growth allow for noticeable scale effects
• Rigorous cost and capital discipline
• Portfolio concentration on attractive market

Acquisitions: Creating Tangible Value

		30.09.2014	Closing			Change
Units	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy	In-place rent € / sqm	Occupancy
8,176	5.19	94.2%	4.95	94.7%	0.24 (+4.8%)	-45 bp

New-letting [Closing – 30.06.2014]		Previous rent [Closing –	30.06.2014]
sqm	In-place rent € / sqm	sqm	In-place rent € / sqm	Change In-place rent
51,795	5.75	55,658	5.26	+9.3%

• Dynamic rent growth confirms attractive reversionary potential
• Average in-place rents +4.6% (within avg. 11 months), re-lettings +9.3%
• Initiated capex-programme further offers significant upside
• L-f-l vacancy decreased in Q2+Q3 sequentially
• Further rising occupancy in Q4 -2014 expected

Outlook 2014 & 2015

Full Earnings Effect from Signed Acquisitions and Multimedia in FY-2015

2014	Guidance
L-F-L rent growth:	approx. 3.0%
Maintenance/Capex:	€13-€14/sqm (capex ratio c. 50%)
FFO I:	€158m - €161m (+ first effects from NRW Vitus)
Dividend:	Temporarily > 65% of FFO I (due to 4.1m new shares in Oct.)

2015
FFO I:	€188m - €193m/ €3.29 - €3.39; excl. future acquisitions
Acquisitions (mid term target):	≥ 5,000 units p.a.

V. Appendix

Mietspiegel Overview

Expected New Mietspiegel in 2014

Release Date (expected)	High-Growth Market1	Market1 Stable	Higher-Yielding Market1	Total Portfolio1,2
2014 (Q1)	8,650 units (mainly Dusseldorf, Ratingen)	8,630 units (mainly Siegen, Solingen)	1,334 units (mainly Hagen)	18,614 units
2014 (Q2)	110 units	2,928 units (mainly Hamm, Bochum)		3,038 units
2014 (Q3)	209 units	1,526 units (mainly Ahlen)	5,377 units (mainly Gelsenkirchen, Unna)	7,112 units
2014 (Q4)	343 units	1,129 units	2,569 units (mainly Recklinghausen)	4,041 units
Total 1,2	9,312 units	14,213 units	9,280 units	32,805 units

Thereof: - Ahlen - Bochum		1,049 units 1,477 units
- Dusseldorf	3,285 units
- Gelsenkirchen			2,922 units
- Hamm		3,975 units
- Ratingen	2,793 units
- Recklinghausen			1,765 units	1) Sub-portfolios also include
- Siegen		1,027 units		restricted units
- Solingen - Unna		1,451 units	1,210 units	2) Total Portfolio also include 99 units Non NRW

LEG – Adj. EBITDA Margin

Adj. EBITDA margin	2012		2013
	€m	Margin %	€m	Margin %
Reported	223.1	64.8	231.7	64.3
Gap restricted vs. unrestricted rents*	19.4	66.7	22.5	66.4
Positive effect from subsidised loans on interest result**	17.6	66.5	17.4	65.9

• *€4.48 per sqm vs. €5.13 in 2013, €4.49 vs. €5.27 in 2013

• **€ Financing costs 1.4% (maturity 30 years) vs. Swap 2.6% +175 bps margin

• Reported EBITDA distorted by restricted units (compensation for lower rents included in interest results)
• Scenario analysis: closing gap between restricted vs. unrestricted rents; quantifying the impact from subsidised loans
• Adjusted EBITDA margin approx. 160-210 bps higher
• Lower Margin in 2013 YOY due to higher maintenance

Portfolio (as of 30 September 2014)

Sound property fundamentals Basis for Value Growth

Market	Residential Units	GAV Residential Assets (€m)	% of Total Residential GAV	GAV/ sqm (€)	In-Place Rent Multiple	GAV Commercial/ Other Assets (€m)	Total GAV
High Growth	31,702	2,212	44%	1,064	15.7x	168	2,380
Markets
Stable Markets with Attractive Yields	36,028	1,641	33%	707	12.7x	86	1,728
Higher-Yielding Markets	28,288	1,103	22%	632	11.7x	45	1,149
Subtotal NRW	96,018	4,957	98%	807	13.6x	300	5,257
Portfolio outside NRW	1,469	86	2%	880	14.0x	10	95
Total Portfolio	97,487	5,043	100%	808	13.6x	309	5,352
Other Assets							28
Total (Incl. Landbank and DevCo)				5,380

LEG Share Information

Financial Calendar

Date	Report/Event
14.11.2014	Quarterly Report Q3 as of 30th September 2014
20.11.2014	Roadshow Amsterdam (Kempen & Co)
21.11.2014	Roadshow Frankfurt (KeplerCheuvreux)
24.-25.11.2014	Roadshow London (Morgan Stanley)
26.11.2014	Roadshow Paris (Société Générale)
25.03.2015	Annual Report 2014

Contact

LEG Immobilien AG – Investor Relations

Burkhard Sawazki Head of Investor Relations Tel: +49 211 4568 204 burkhard.sawazki@leg-nrw.de

Karin Widenmann Manager Investor Relations Tel: +49 211 4568 458 karin.widenmann@leg-nrw.de

Hans-Boeckler-Str. 38 40476 Dusseldorf Germany

Thank you for your interest.