LEG Immobilien SE

Earnings Release • Nov 27, 2013

LEG Immobilien AG

Q1 – Q3 Results 2013

27th November 2013

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

• I. Highlights Q1–Q3 2013
• II. Portfolio and Operating Performance
• III. Financial Performance
• IV. Business Update and Outlook
• V. Appendix

I. Highlights Q1–Q3 2013

Highlights Q1–Q3 2013

Overall Company Development

• Acquisition of approx. 4,200 units in the past months in four off-market transactions
• Well on track to reach acquisition targets
• Overall good start with the integration of the acquired units
• Higher free-float (63.22%) and index-weightings post secondary placement

Sound Underlying Operational Performance

• In-place rent €4.94 /sqm (+1.9% YOY; +2.1% adjusted for vacancy reduction)
• Accelerating momentum for Q4 expected
• Occupancy at 97.2% on L-F-L basis (+80bps YOY; 97% including acquisitions); Positive development across all segments
• Slightly higher maintenance/turn costs due to strong letting momentum
• 9M-2013 capex/maintenance of €9.30 /sqm line with FY-2013 budget of c. €14 /sqm
• FY-2013 capex /maintenance ratio expected to revert to historic average of approx. 50/50

Financial Performance Firmly on Track for FY Targets

• Rental income €269.2m (+4.4% YOY from €257.8m)
• Adjusted EBITDA €170.3m (-0.1% from €170.5m); +5.1% adjusted for higher maintenance
• FFO I €103.5m (+2.3% from €101.2m)
• AFFO €79m (+4.9% from €75.3m)
• NAV €2,446.3m / €46.19 per share (+ 3.3% from Q4-2012; €0.41 dividend payout in Q3)

II. Portfolio and Operating Performance

Portfolio Overview Rent and Occupancy Growth across all Submarkets

Note: Light blue areas indicate areas where LEG does not own properties.

Total Portfolio
	30-Sep 2013	 (YOY)
# of units	93,525	+4.2%
In-place rent (sqm)	€4.94 (€4.95)	+1.9% (+2.1%)**
Occupancy	97.0% (97.2%)	+60bps (+80bps)
** adjusted for vacancy reduction

High Growth Markets
	30-Sep 2013	 (YOY)
# of units	31,542	+4.2%
In-place rent (sqm)	€5.51 (€5.52)	+2.8% (+3,0%)
Occupancy	98.7% (98.7%)	+20bps (+20bps)

Stable Markets with Attractive Yields
	30-Sep 2013	 (YOY)
# of units	33,808	+5.5%
In-place rent (sqm)	€4.65 (€4.65)	+0.9% (+0.9%)*
Occupancy	96.5% (96.7%)	+100bps (+120 bps)

* due to negative one-off effect from refinancing of subsidised loans in Q4-2012 (adjusted growth +2.0%)

Higher Yielding Markets
	30-Sep 2013	 (YOY)
# of units	26,698	+2.5%
In-place rent (sqm)	€4.56 (€4.57)	+0.9% (+1.2%)
Occupancy	95.7% (96.0%)	+70bps (+100bps)

(#.#%) = occupancy rate excl. acquisition-effect

Sound Organic Growth – Accelerating Momentum Ahead for Q4

• Organic rent growth of +2.6% YOY
• Negative one-off from refinancing of subsidised loans in Q4-2012 (impact: €1.2m p.a.; c.30bps ); Effect expires in Q4-2013
• Significant vacancy reduction in Green and Purple markets; adjusted rent growth of +2.1% shows rent dynamics

Occupancy Development

Very Low Vacancy Provides Evidence for Quality of Assets

• Adjusted for recent acquisition vacancy rate of only 2.8% /-80bps YOY (top position among German residential peers)
• LEG benefitting from favourable demand/supply environment
• Positive development across all sub-markets with strong letting performance in Green and Purple markets:
• Well-maintained asset base, good quality of micro locations, re-organisation of management platform

Capex & Maintenance

Temporary Higher Maintenance/Capex due to Strong Letting Performance

III. Financial Performance

Financial Highlights Q1–Q3 2013

Income Statement Q1–Q3 2013

Condensed Income Statement (€ million)	2012	Q1-Q3 2013	Q1-Q3 2012	 Higher rental income
Net rental and letting income	247.7	188.1	180.2	(+€11.4m/+4.4%); organic growth (+2.6%)
Net income from the disposal of investment property	-1.4	-0.8	-1.2	 Higher maintenance expenses (-€8.9m)  Lower vacancy costs
Net income from the valuation of investment property	120.3	--	109.3	(+€1.5m)  Lower opex (incl. bad debt)
Net income from the disposal of real estate inventory	-1.8	-1.4	-1.3
Net income from Other services	3.0	1.9	3.4	 €2.5m Long Term Incentive Plan – non-cash pass
Administrative and Other expenses	-59.4	-38.3	-34.5	through item  €4.1m risk provision for former development project  Recurring admin. costs of €26.1m
Other income	1.7	0.5	2.1
Operating earnings	310.1	150.0	258.0	 Lower cash interest (€67m
Net finance costs	-195.6	-90.7	-144.3	vs. €70.6m)  Lower non-cash loan amortisation (mainly due to
Earnings before income taxes	114.5	59.3	113.7	refinancing effect in 2012)  9M-2012 burdened by €26m prepayment penalties
Income tax expense	-2.4	-7.4	-5.6
Consolidated net profit	112.1	51.9	108.1	 Deferred taxes (thereof cash taxes: +€0.2m)

Adjusted EBITDA Q1–Q3 2013

€ million	2012	Q1-Q3 2013	Q1-Q3 2012	 Q3-2013 contained
EBITDA	318.7	156.5	264.5	revaluation gains of €109.3m (next appraisal Q4-2013)
Net income from the valuation of investment property	-120.3	--	-109.3	 €8.9m higher maintenance cost in 9M-2013
Long-term incentive program (LTIP)	0.0	2.6	--	 Refinancing fees (€2.1m)
Non-recurring project costs	20.3	5.8	14.0	 Restructuring costs  Other one-time charges (incl. IPO related costs)
Extraordinary and prior-period expenses and income	1.2	3.2	-1.2	 €4.1m risk provision
Net income from the disposal of investment property	1.4	0.8	1.2	for a former development project
Net income from the disposal of real estate inventory	1.8	1.4	1.3	 Winding down of
Adjusted EBITDA	223.1	170.3	170.5	former development business  Disposals at €1.5m
				premium to book values of €4.3m  Inventories: €12.5m

FFO Calculation Q1–Q3 2013

€ million	2012	Q1-Q3 2013	Q1-Q3 2012
Adjusted EBITDA	223.1	170.3	170.5	 Lower interest costs post
Cash interest expenses and income	-90.1	-67.0	-70.6	refinancing (Ø3.3% Q1- Q3 2013 vs. 3.6% in Q1- Q3 2012)
Cash income taxes	3.5	0.2	1.3	 Tax reimbursement in Q1-2012 (€1.5m)
FFO I (not including disposal of investment property)	136.5	103.5	101.2
Net income from the disposal of investment property	-1.4	-0.8	-1.2
FFO II (including disposal of investment property)	135.1	102.7	100.0
Capex	-41.5	-24.5	-25.9
Capex-Adjusted FFO I (AFFO)	95.0	79.0	75.3	 €7.5m higher capex & maintenance (YOY)

FFO Bridge Q1–Q3 2013

Focus: Cash Effective Interest Expense Q1–Q3 2013

€ million	Q1-Q3 2013	Q1-Q3 2012
Reported interest expense	95.2	145.7
Interest expense related to loan amortisation	-18.2	-38.3	 Effect from refinancing in 2012  Smaller positive
Refinancing fees	-2.9	-0.6	effect from rising interest rates in Q3
Prepayment penalties	0.0	-25.8
Interest on shareholder loans	-0.2	-0.9
Interest charges relating to valuation of assets/liabilities	-1.9	-2.6
Leasing related interest expense	-1.2	-1.2
Interest expenses related to changes in pension provisions	-2.9	-3.4
Other interest expenses	0.0	-0.9
Interest income	-0.9	-1.3
Cash effective interest expense	67.0	70.7

EPRA-Net Asset Value Q1–Q3 2013

€ million	30.09.2013	2012
Equity*	2,184.0	2,085.5	 €40.5m increase from
Note: Shareholder loans to be converted in to equity	--	40.5	shareholder debt-to equity swap in Q1-2013
Effect of exercising options, convertible loans and other rights	--	0.0
NAV	2,184.0	2,085.5	 Rising interest rates
Fair value of financial derivatives	53.6	89.7	with positive impact on valuation of interest hedges
Deferred taxes	208.7	193.1
EPRA NAV	2,446.3	2,368.3
Number of shares outstanding (m)	52,963	52,963
EPRA NAV per share in €	46.19	44.72	 No portfolio revaluation during FY-2013
* including minorities			 Next appraisal: end 2013

Balance Sheet Q1–Q3 2013

Strong Balance Sheet Secures Defensive Profile and Paves Way for Growth

€ million	30.09.2013	2012	 Capex €24.4m  Acquisitions
Investment property	5,050.6	4,937.1	€89.1m (net)
Prepayment for investment property	13.8
Other non-current assets	106.0	114.1	 For acquisition consolidated as of
Non-current assets	5,170.4	5,051.2	Oct.
Receivables and other assets	62.2	50.7
Cash and cash equivalents	43.0	133.7
Current assets	105.2	184.4
Assets held for disposal	2.8	2.2
Total Assets	5,278.4	5,237.8
Equity	2,184.0	2,085.5
Non-current financial liabilities	2,390.6	2,102.9
Other non-current liabilities	455.2	480.2
Non-current liabilities	2,845.8	2,583.1	 Closing of several
Current financial liabilities	127.0	396.8	refinancing in Q1-
Other current liabilities	121.6	172.4	2013
Current liabilities	248.6	569.2
Total Equity and Liabilities	5,278.4	5,237.8

LTV Q1–Q3 2013

Ample Liquidity for Acquisitions and Headroom to Enhance LTV (max. 55%)

€ million	30.09.2013	2012
Financial debt	2,517.6	2,499.7
Cash & cash equivalents	43.0	133.7
Net Debt	2,474.6	2,366.0
Investment properties	5,050.6	4,937.1
Properties held for sale	2.8	2.2
Prepayment for investment properties	13.8	-
	5,067.2	4,939.3
Loan to Value (LTV) in %	48.84	47.90

• Liquidity for acquisitions of c. 10,000 units (4,200 already signed)
• LTV headroom for total of c. 18,000 units

Financing Structure Q1–Q3 2013

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

IV. Business Update and Outlook

Business Update Accelerating Deal Momentum Expected

Acquisitions:

• Successful signing of c. 4,200 units in core markets YTD (off-market transactions)
• Several smaller and midsized portfolios in due diligence process
• Well on track to reach FY-2013 target of 5,000 units / total of 10,000 units by end of FY-2014
• Financial flexibility and broad presence in core market are key success factors

Successful integration of the acquired portfolios

• Integration of c. 2,700 units in August and c. 800 units in October
• Overall positive operational performance of the acquired portfolios (initial FFO Yield >8%)
• Budgeted higher turn costs are expected to trigger additional positive letting momentum

Rising free float post secondary placement

• As a result of the secondary placement (7m shares) the free float climbed to 63.22%
• Deal execution and positive share performance signal high investor demand
• Rising index weightings in the MDAX and the EPRA indices

Acquisitions in Q1–Q3 2013 – Strong Transaction Momentum

Track Record	Bocholt	Dortmund, Essen, Bochum	Osnabruck, Dusseldorf, Minden
Closing Units Price Initial FFO Yield	mainly Dec.-2012 1,244 na >10%	01-Aug.-2013 ~2,200 na >8%	01-Aug.-2013 538 ~€23m* >8%
Closing: - In place rent /sqm - Vacancy rate	€5.26 /sqm 3.9%	€4.74 /sqm 8.2%	€4.92 /sqm 8.7%
Target: - In place rent /sqm - Vacancy rate	Year 5 €6.08 /sqm 1.5%	Year 5 €5.25 /sqm 4.3%	Year 5 €5.85 /sqm 4.7%
Track Record: - In place rent /sqm - Re-letting - Vacancy rate	€5.41 /sqm €6.74 /sqm (+28%) 2.0% (-190 bps)

Source: * excl. transaction costs

Acquisitions in Q1–Q3 2013 – Strong Transaction Momentum

Track Record	Greater Dusseldorf Region / Solingen	Ruhr Area
Closing Units Price Initial FFO Yield	01 Oct.-2013 829 ~€34m >10%	08 Nov.-2013 735 ~€26m >8%
Closing: - In place rent /sqm - Vacancy rate	€4.92 /sqm 5.6%	€4.86 /sqm 7.3%
Target: - In place rent /sqm - Vacancy rate	Year 5 €5.27 /sqm 4.4%	Year 5 €5.48 /sqm 4.8%
Track Record: - In place rent /sqm - Re-letting - Vacancy rate

Attractive Market Fundamentals Promise Continued Defensive Growth

2013	Guidance
Rental income:	L-F-L rent growth > 2%
Maintenance/Capex:	approx. €14 /sqm (capex ratio c. 50%)
Acquisitions:	10,000 units by end 2014
FFO I:	€138.5m - €141.5m/ €2.62 - 2.67 per share (vs. €133m in 2012*)
Dividend	65% of FFO I
2014	Guidance

FFO I	+10% (excl. future acquisitions)

* excl. extraordinary tax effect

V. Appendix

Mietspiegel Overview

Expected New Mietspiegel in Q4 2013 and 2014

Release Date (expected)	Growth Market1	Market1 Stable	Higher Yielding1	Total Portfolio1,2
2013 (Q4)	128 units			128 units
2014 (Q1)	8,491 units (mainly Bonn/Dusseldorf)	10,838 units (mainly Hamm/Solingen)	1,620 units (mainly Hagen/Lunen)	21,038 units
2014 (Q2)	369 units	1,034 units	520 units	1,923 units
2014 (Q3)	209 units	311 units	4,998 units (mainly Gelsenkirchen)	5,518 units
2014 (Q4)	285 units	166 units	1,729 units (mainly Recklinghausen)	2,180 units
Total	9,482 units	12,349 units 8,867 units		30,787 units
Thereof: - Aahlen - Bochum - Bonn - Dusseldorf/Ratingen	2,234 units 6,095 units	1,049 units 1,477 units
- Gelsenkirchen - Hamm/Oelde		3,976 units	2,542 units
- Kreuztal/Neunk. - Recklinghausen		1,027 units	1,729 units	1) Sub-portfolios also include restricted units
- Solingen - Unna		1,451 units	1,211 units	2) Total Portfolio also include 89 units Non NRW

LEG Share Information

• Well-balanced shareholder structure with many property specialists
• Free float 63.22%

Source: LEG

Financial Calendar

Date	Report
27.11.2013	Quarterly Report Q3 as of 30th September 2013
27.03.2014	Annual Report 2013
15.05.2014	Quarterly Report Q1 as of 31st March 2014
25.06.2014	Annual General Meeting
12.08.2014	Quarterly Report Q2 as of 30th June 2014
14.11.2014	Quarterly Report Q3 as of 30th September 2014

Portfolio (as of 30th September 2013)

Stable Asset Values Driven by Property Fundamentals: Rental Growth and Occupancy

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 Markets	31,542	2,144	45%	1,028	15.8x	179	2,323
Stable Markets with Attractive Yields	33,808	1,499	32%	692	12.9x	82	1,581
Higher Yielding Markets	26,698	1,025	22%	621	11.9x	43	1,068
Subtotal NRW	92,048	4,668	98%	791	13.8x	304	4,973
Portfolio outside NRW	1,477	83	2%	850	14.0x	15	98
Total Portfolio	93,525	4,751	100%	792	13.8x	319	5,070
Other Assets							37
Total (Incl. Landbank and DevCo)							5,108

Contact

LEG Immobilien AG – Investor Relations

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

Frank Hilbertz Manager Investor Relations Tel: +49 211 4568 284 frank.hilbertz@leg-nrw.de

Hans-Boeckler-Str. 38 40476 Dusseldorf

Thank you for your interest.