Aareal Bank AG

Investor Presentation • May 11, 2022

Analyst Conference Call

Q1 2022 results

May 11, 2022 Jochen Klösges (CEO) Marc Hess (CFO)

Agenda

• Q1 2022 key points
• Group results
• Segments
• Capital, funding & liquidity
• Outlook
• Appendix

Good operating performance in Q1 2022 Voluntary public tender offer received

1

Growth strategy continued in all 3 segments despite challenging geopolitical and macro-economic environment

2 Good quarterly results; LLP for remaining Russian exposure; significant increase in income

Very solid capital position maintained following significant portfolio growth; successful funding activities

4

3

Voluntary public tender offer launched by Atlantic BidCo. (Tender period from 26 April to 24 May 2022)

Atlantic BidCo1) launched voluntary public tender offer 26 April 2022, Cash consideration of € 33 per Aareal Bank share (incl. €1.60 dividend)2)

Atlantic BidCo fully supports "Aareal Next Level" strategy and existing Aareal Bank Group composition

Intention is to accelerate growth initiatives launched under "Aareal Next Level" strategy across all three divisions; Management's business plan for next 5 years envisages staff expansion in relevant divisions and is supported by Atlantic BidCo 2

Investment agreement and the terms of the offer mainly unchanged compared to previous Atlantic BidCo's offer;

• Cash consideration increased to € 33.00 per Aareal Bank share (incl. € 1.60 dividend)2) and irrevocable undertakings to tender 37% of Aareal Bank shares provided by certain shareholders
• 4

5

3

1

3

Unanimous support by Aareal Bank's Management Board and Supervisory Board; Offer considered highly beneficial for further development of Aareal Bank Group; Reasoned statement of Management and Supervisory Board published on 6 May 2022

Offer document published on 26 April 2022; Tender period from 26 April to 24 May 2022 (expected) 37.79% of shares were tendered3) according to notification of Atlantic BidCo dated 10 May 2022

1) Atlantic BidCo GmbH ("Atlantic BidCo"), a company indirectly held by funds managed by Advent International and Centerbridge Partners, CPP Investment Board Europe S.àr.l, a wholly owned subsidiary of Canada Pension Plan Investment Board ("CPP Investments") and funds managed by Goldman Sachs ("Investors"), publish a new voluntary public tender offer to acquire all outstanding Aareal Bank shares 2) Cash consideration incl. initially announced €1.60 dividend; Management Board and Supervisory Board have decided to postpone

the ordinary Annual General Meeting initially scheduled for 18 May 2022 to a later date 3) https://atlantic-offer.com/download/companies/ma1071/1071_01pflicht/Aarea_Bank_AG_announcement_10052022.pdf

Envisaged timeline; if public offer is successful, closing is subject to timing of regulatory clearances

Process voluntary public tender offer (schematic)

Corporate events Aareal Bank

1) Extended by 2 weeks if offer is amended; 2 weeks additional tender period if minimum acceptance threshold reached

Delivering on strategy in a challenging environment: growth in all segments

Structured Property Financing

• By leveraging market opportunities and focusing on an attractive risk-return profile, the portfolio volume increased to € 30.8 bn by the end Q1 2022 (12/2021: € 30.0 billion)
• With € 3.3 bn new business generated which is the highest level since Q4 2018

Banking & Digital Solutions

• Expansion of the product range and development of new market and customer groups through acquisition of FinTech CollectAI
• Broader range of services in customer communication through AI-based solutions for interactive invoices and intelligent dunning
• Deposit volume significantly increased

Aareon

• Sales revenues further increased
• Increased shareholding in Dutch PropTech company OSRE B.V. to > 50%, expanding presence in Dutch Market as part of international growth strategy

"Overall, we are showing good results for the first quarter of 2022, despite an additional risk provision for Russia, thanks to very strong growth in income. We continue to implement our strategy consistently without losing sight of geopolitical risks."

Agenda

• Q1 2022 key points
• Group results
• Segments
• Capital, funding & liquidity
• Outlook
• Appendix

Group Results

Good quarterly results; LLP for remaining Russian exposure; significant increase in income

€ mn	Q1 '21	Q2 '21	Q3 '21	Q4 '21	Q1 '22	Comments
Net interest income	138	142	155	162	159	Significant increase yoy driven by further portfolio growth and good margins
Loss allowance	7	33	39	54	49	Net underlying LLP reversal due to further normalisation of the pandemic; but offset by additional LLP for remaining Russian exposure
Net commission income	59	59	56	71	64	Increase yoy mainly driven by Aareon
Derecognition result	0	8	7	8	9	Positive effects from early loan repayments
FV- / hedge-result	-4	-2	-5	-24	2
Admin expenses	150	118	125	135	153	Slightly above Q1 2021 reflecting Aareon growth
Others	-4	-15	1	4	-2
Operating profit (EBT)	32	41	50	32	30	Good quarterly results; LLP for remaining Russian exposure; significant increase in income
Income taxes	11	29	27	20	11	FY tax ratio of ~36% expected
Minorities	1	1	0	-1	1
AT1	4	3	3	4	3
Consolidated net income allocated to ord. shareholders	16	8	20	9	15
Earnings per share (€)	0.27	0.13	0.33	0,16	0.25

Net interest income (NII) / Net commission income (NCI)

Income significantly increased compared to last year

Significant increase yoy driven by further portfolio growth and good margins

• NII increase of 15% yoy
• Strong new business generation with good margins above plan leveraging market opportunities
• Portfolio further increased as planned
• Successful funding transactions
• TLTRO contribution of € 7 mn (€ 5 mn in Q1 2021 / € 7 mn in Q4 2021)

NCI Development yoy mainly driven by Aareon

• M&A-activities in 2021
• Higher penetration from digital products
• Shift from license to SaaS/Subscription

Admin expenses / Loan loss provisions (LLP)

Admin reflecting Aareon growth, additional LLP for remaining Russian exposure mitigated by net underlying LLP reversal

Admin expenses Slightly above Q1 2021 reflecting Aareon growth Bank:

• Largely stable
• Mid-term target of a CIR <40% in the SPF segment1) already achieved in Q1

Aareon:

▪ Increase mainly driven by M&A activities in 2021

Net underlying LLP reversal due to further normalisation of the pandemic; additional LLP for remaining Russian exposure

• Net underlying LLP reversal of € 12 mn
• € 61 mn relates to remaining Russian exposure

1) Structured Property Financing segment: in line with common practice in the banking sector, bank levy and contributions to the deposit guarantee scheme are not included

Implications of the Russian war against Ukraine

New Russian NPL ~30% provisioned; No exposure in Ukraine

Russian operations

• Rep office with 2 employees in Moscow
• Russia defined as non-core market about a decade ago
• Last newly acquired business in 2012
• From more than € 1 bn in 2010 portfolio significantly reduced to a net exposure of around € ~200 mn

Russian exposure

• Two financings with a net exposure of € ~200 mn as of 31.12.2021, EURO denominated; one financing almost fully provisioned
• The second financing has been classified as NPL in Q1 as loan due in Q4 2022 and as of today on-time payback is uncertain
• In Q1 2022 € ~60 mn additional LLP booked (Stage 3); remaining net exposure of € ~140 mn
• Remaining net exposure equals ~50% of 10/2021 market value

▪ Property characteristics:

• Office complex in Moscow
• Nearly fully let to international and Russian tenants
• Client able and willing to pay (DSCR >> 100%)
• Currently Russian sanctions hinder cash transfer out of Russia

As of today impacts from geopolitical and macroeconomic environment are not predictable. However the markdown reflects volatility seen in other crisis in the past.

Non performing loans (NPL)

Positive underlying development clouded by Russian exposure

Non performing loans (NPL)

Deep dive

• NPL classification depends on a variety of triggers (e.g. arrears, NOI, DSCR, LTVs, yields, prices, marketability, …)
• NPL classification might be triggered even if no nominal loss will be made but contractual payments are or potentially will not be received in line with the agreement (timing / amounts)
• Current NPL portfolio:
  • 39% of NPL portfolio with LTV <100%
  • 48% of NPL portfolio with DSCR >100%1)
  • ➔ Only 22% of NPL portfolio with LTV >100% and DSCR <100%

➔ Meaningful share of NPLs with decent risk parameters

1) In FY 2021, interest payments are made for more than 70% of the NPL portfolio

2) Based on current market values

3) Based solely on asset performance (not including sponsor support)

Agenda

• Q1 2022 key points
• Group results
• Segments
• Capital, funding & liquidity
• Outlook
• Appendix

Strong new business origination with focus on logistics

1) Pre FX

Further portfolio increase in Q1 as planned

1) Performing CREF-portfolio only (exposure)

2) Incl. Student housing

16

• By leveraging market opportunities and focusing on attractive risk-return profile REF-portfolio further increased
• Sticking to overall country and asset diversification with increasing importance of logistics financings, as well as portfolio-transactions with risk reducing cross collateralisation
• Increasing share of green loans governed by "Green Finance Framework" totalling € ~670 mn (€ ~240 mn in Q1 2022)

KPIs continue to improve with the Covid-19 pandemic subsiding, overall portfolio-LTV back on pre-crisis level

Segment: Banking & Digital Solutions

Deposit volume further increased

Stable NCI yoy

Acquisition of CollectAI will support further revenue growth

• AI-based solutions for interactive invoices and intelligent dunning processes
• Expanding range of products and services by adding end-customer communications functionality
• Opportunity of exploring new markets and client groups, and for further growth with existing clients from the housing sector and related industries

Deposit volume further increased, above target level

• Particularly sticky deposit types also increasing steadily
• Increase supporting CREF portfolio growth
• Deposits as a crisis proven important funding source, by year-end limited outflow expected due to ESF1) reform

1) ESF: Deposit Protection Fund of the Association of German Banks (Einlagensicherungsfonds des Bundesverbandes deutscher Banken e.V.)

Segment: Aareon

M&A well on track, Ongoing shift to SaaS/Subscription

• Switch of revenue model from lisence to SaaS/ Subscription provides foundation for healthy recurring revenue share run-rate (>70%) going forward
• Sales revenues increased by € 6 mn to € 72 mn (+9% yoy); PS ongoing challenging
  • Digital revenues ex PS up 20% yoy (incl. PS1) up 15%)
  • ERP revenues ex PS up 9% yoy (incl. PS1) up 8%)
• Adj. EBITDA increased by € 1 mn to € 16 mn (+7% yoy) and adj. EBITDA margin stable yoy as a result of the aforementioned switch of revenue model
• Intensifying of partnership with OSRE (NL) Aareon rises share (>50%), further cross selling opportunities
• Attractive M&A pipeline; hunting line increased to € 350 mn

Note: Numbers not adding up refer to rounding 1) PS (Professional Services) = Consulting business

Agenda

• Q1 2022 key points
• Group results
• Segments
• Capital, funding & liquidity
• Outlook
• Appendix

Capital

2) preliminary

Very solid capital position maintained following significant portfolio growth

• Very solid capital ratios throughout Covid-19 crisis and despite ongoing portfolio growth
• Moderate decrease in CET1 ratio (B4 phase-in) in Q1 mainly due to RWA increase from strong new business; partly pending collateral consideration
• Increase in CET1 mainly driven by further decreased pension provisions
• Originally announced dividend payout (1.60€ per share) fully deducted from CET1
• Solid T1-Leverage ratio at 5.3%2) despite TLTRO participation and portfolio growth
• Remaining regulatory uncertainties (models, ICAAP, ILAAP, B4, etc.)

21 1) Underlying RWA estimate in accordance with the current version of the CRR plus revised AIRBA requirements for commercial property lending, based on the European Commission's draft for the European implementation of Basel IV dated 27.10.2021. The calculation also includes a buffer (maintaining the scaling factor of 1.06 for AIRBA risk weights, and the 370% risk weight for the IRBA equity exposure class), to account for the uncertainty surrounding the final wording of CRR III as well as the implementation of further regulatory requirements such as EBA requirements for internal Pillar 1 models. When Basel IV enters into force on 01.01.2025, RWA will be calculated based on the European requirements, which will have been finalised by then, and the higher of the revised AIRBA and the revised CRSA (standardised approach for credit risk) phase-in output floor. The SREP recommendations concerning the NPL inventory and the ECB's NPL guidelines for the regulatory capital of NPLs and an additional voluntary and preventive capital deduction for regulatory uncertainties from ECB tests were taken into account.

Funding & Liquidity

Diversified funding sources and distribution channels

• Sustainable and strong housing industry deposits verified as an important part of well diversified funding mix
• Successful long term funding transactions of € ~2.4 bn in Q1 2022 and April includes:
  • € 750 mn Pfandbrief Benchmark (8Y)
  • € 500 mn Senior Preferred Inaugural Green Benchmark (6Y)
  • € 750 mn Pfandbrief Benchmark (7Y) and
• Due to higher interest environment, demand for private placements coming back:
  • € 300 mn senior unsecured and
  • € 100 mn mortgage backed (Hypothekenpfandbriefe) private placements with intermediate to long term maturities
• Continuous demand for green and conventional ECPs in EUR, USD and GBP with a total size of ~ € 400 mn
• Liquidity ratios significantly over fulfilled
  • NSFR > 100%
  • LCR >> 100%

Agenda

• Q1 2022 key points
• Group results
• Segments
• Capital, Funding & Liquidity
• Outlook 2022
• Appendix

Outlook 2022

Retaining operating profit guidance (but lower end of range expected)

	METRIC	2021	OUTLOOK 2022
p u o	▪ Net interest income ▪ Net commission income LLP1) ▪ ▪ Admin expenses	€ 597 mn € 245 mn € 169 mn € 528 mn	€ 600 - 630 mn € 270 - 290 mn € 140 - 180 mn (incl. € ~60 mn Russia) € 540 - 570 mn
Gr	▪ Operating profit Net income2) ▪ ▪ Earnings per share (EPS)	€ 155 mn € 53 mn € 0.89	€ 210 - 250 mn (lower end) 150 mn3) € 120 - (lower end) € 2.00 - 2.503) (lower end)

Outlook 2022: Subject to external uncertainties and potential costs if offer by Atlantic BidCo is successful

		METRIC	2021	OUTLOOK 2022
s nt e m g e S	Structured Property Financing	▪ REF Portfolio ▪ New business	€ 30.0 bn € 8.5 bn	€ ~31 bn4) € 7 - 8 bn
	Banking & Digital Solutions	▪ Deposit volume ▪ NCI	€ 12.4 bn € 28 mn	€ ~12 bn ~13% CAGR (2020-2023)
	Aareon	▪ Revenues ▪ Adj. EBITDA	€ 269 mn € 67 mn	€ 305 - 325 mn € 73 - 78 mn

1) Incl. value adjustments from NPL fvpl

2) Net income attributable to ordinary shareholder

3) Based on expected FY-tax ratio of ~36%

4) Subject to FX development

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Key takeaways

Aareal Bank Group is well on track in a challenging environment.

Operationally a good first quarter delivered:

Growth strategy is bearing fruit, and we are consistently and systematically pushing ahead with the numerous growth initiatives in all three segments.

Provisions have been made for remaining Russian exposure. Whether and to what extent potential further effects of the crisis may affect us is currently difficult to assess.

Our current strategy is successful on a stand-alone basis. However, the ongoing offer by Atlantic BidCo provides attractive opportunities beyond our current growth plan.

Q1 2022 Group Results

Aareal Bank Group Results Q1 2022

	01.01.- 31.03.2022	01.01.- 31.03.2021	Change
	€ mn	€ mn
Profit and loss account
Net interest income	159	138	15%
Loss allowance	4 9	7	600%
Net commission income	6 4	5 9	8 %
Net derecognition gain or loss	9	0
Net gain or loss from financial instruments (fvpl)	6	-1	-700%
Net gain or loss on hedge accounting	-4	-3	33%
Net gain or loss from investments accounted for using the equity method	0	0
Administrative expenses	153	150	2 %
Net other operating income / expenses	-2	-4	-50%
Operating Profit	3 0	3 2	-6%
Income taxes	1 1	1 1	0 %
Consolidated net income	1 9	2 1	-10%
Consolidated net income attributable to non-controlling interests	1	1	0 %
Consolidated net income attributable to shareholders of Aareal Bank AG	1 8	2 0	-10%
Earnings per share (EpS)
Consolidated net income attributable to shareholders of Aareal Bank AG1)	1 8	2 0	-10%
of which: allocated to ordinary shareholders	1 5	1 6	-6%
of which: allocated to AT1 investors	3	4	-25%
Earnings per ordinary share (in €)2)	0.25	0.27	-7%
Earnings per ordinary AT1 unit (in €)3)	0.03	0.04	-25%

1) The allocation of earnings is based on the assumption that net interest payable on the AT1 bond is recognised on an accrual basis.

2) Earnings per ordinary share are determined by dividing the earnings allocated to ordinary shareholders of Aareal Bank AG by the weighted average of ordinary shares outstanding during the financial year (59,857,221 shares). Basic earnings per ordinary share correspond to diluted earnings per ordinary share.

3) Earnings per AT1 unit (based on 100,000,000 AT1 units with a notional amount of 3 € each) are determined by dividing the earnings allocated to AT1 investors by the weighted average of AT1 units outstanding during the financial year. Earnings per AT1 unit (basic) correspond to (diluted) earnings per AT1 unit.

Aareal Bank Group

Results Q1 2022 by segments

	Structured Property Financing			Banking & Digital Solutions	A a Aareon r e			Consolidation/ Reconciliation	Aareal Bank Group
	01.01.- 31.03. 2022	01.01.- 31.03. 2021	01.01.- 31.03. 2022	01.01.- 31.03. 2021	01.01.- 31.03. 2022	01.01.- 31.03. 2021	01.01.- 31.03. 2022	01.01.- 31.03. 2021	01.01.- 31.03. 2022	01.01.- 31.03. 2021
€ mn
Net interest income	150	127	1 2	1 1	-3	0	0	0	159	138
Loss allowance	4 9	7	0		0	0			4 9	7
Net commission income	2	2	7	7	5 8	5 3	-3	-3	6 4	5 9
Net derecognition gain or loss	9	0							9	0
Net gain or loss from financial instruments (fvpl)	6	-1							6	-1
Net gain or loss on hedge accounting	-4	-3							-4	-3
Net gain or loss from investments accounted for using the equity method			0		0	0			0	0
Administrative expenses	8 5	8 4	1 8	1 9	5 3	5 0	-3	-3	153	150
Net other operating income / expenses	-3	-5	0	0	1	1	0	0	-2	-4
Operating profit	2 6	2 9	1	-1	3	4	0	0	3 0	3 1
Income taxes	1 0	1 0	0	0	1	1			1 1	1 1
Consolidated net income	1 6	1 9	1	-1	2	3	0	0	1 9	2 1
Allocation of results
Cons. net income attributable to non-controlling interests	0	0	0	0	1	1			1	1
Cons. net income attributable to shareholders of Aareal Bank AG	1 6	1 9	1	-1	1	2	0	0	1 8	2 0

Aareal Bank Group

Preliminary results – quarter by quarter

	Structured Property Banking & Digital Financing			Solutions				Consolidation / Reconciliation					Aareal Bank Group
	Q1 2022	Q4	Q3 2012	Q2	Q1	Q1 2022	Q4	Q3 2012	Q2	Q1	Q1 2022	Q4	Q3 2012	Q2	Q1	Q1 2022	Q4	Q3 2012	Q2	Q1	Q1 2022	Q4	Q3	Q2 2012	Q1
€ mn
Net interest income	150	154	146	133	127	12	10	11	11	11	- 3	- 2	- 2	- 2	0	0	0	0	0	0	159	162	155	142	138
Loss allow ance	49	54	39	33	7	0					0	0	0	0							49	54	39	33	7
Net commission income	2	2	2	2	2	7	8	7	6	7	58	64	50	54	53	- 3	- 3	- 3	- 3	- 3	64	71	56	59	59
Net derecognition gain or loss	9	8	7	8	0																9	8	7	8	0
Net gain / loss from fin. instruments (fvpl)	6	-23	- 3	- 3	- 1		0														6	-23	- 3	- 3	- 1
Net gain or loss on hedge accounting	- 4	- 1	- 2	1	- 3																- 4	- 1	- 2	1	- 3
Net gain / loss from investments acc. for using the equity method		0				0	0		- 1		0	- 1	0	0	0						0	- 1	0	- 1	0
Administrative expenses	85	63	59	50	84	18	20	17	17	19	53	55	52	54	50	- 3	- 3	- 3	- 3	- 3	153	135	125	118	150
Net other operating income / expenses	- 3	8	- 1	-15	- 5	0	- 1	0	0	0	1	- 2	2	1	1	0	0	0	0	0	- 2	5	1	-14	- 4
Operating profit	26	31	51	43	29	1	- 3	1	- 1	- 1	3	4	- 2	- 1	4	0	0	0	0	0	30	32	50	41	32
Income taxes	10	14	28	30	10	0	0	0	- 1	0	1	6	- 1	0	1						11	20	27	29	11
Consolidated net income	16	17	23	13	19	1	- 3	1	- 1	- 1	2	- 2	- 1	- 1	3	0	0	0	0	0	19	12	23	12	21
Cons. net income attributable to non controlling interests	0	0	0	0	0	0	0	0	0	0	1	- 1	0	1	1						1	- 1	0	1	1
Cons. net income attributable to ARL shareholders	16	17	23	13	19	1	- 3	1	0	- 1	1	- 1	- 1	- 2	2	0	0	0	0	0	18	13	23	11	20

Asset quality

Spotlight: Inflation impact on real estate markets

General

• Various protection mechanisms installed between bank and client as well as between client and tenant
• Various mitigating factors depending on property type (eg. Structural changes, Corona recovery, Higher construction costs / material shortage supporting existing properties)
• Cap Rates: stable so far, still high spreads compared to alternative investments

Protection mechanism
Property type	Relationship Bank – Client (loan contract)	Relationship Client – Tenant
Office	+ Generally DSCR/ICR covenants + NOI 12M forward looking + Interest: Hedged rate (eg contractually agreed cap) or fixed rate	+ Rents in many cases index-linked + Mix of various tenants + Rental agreements with different maturities
Retail		+ Rent includes sales revenue based component → inflation caused sales revenue increase supporting rent + Mix of various tenants + Rental agreements with different maturities
Logistic	+ Cash sweep in case of covenants breach	+ In many cases portfolio transactions → mix of various tenants + Tenants regularly with group support + Rents in many cases index-linked
Hotel	+ Various covenants (eg DSCR/ICR, YoD, LTV) + NOI 12M retrospectively1) + Interest: Hedged rate or fixed rate + Cash sweep in case of covenants breach	+ Rent per room changeable short-term
Well protected against "normal" inflation. Stagflation could trigger challenges

1) For risk assessment also considering forward looking NOI

CREF portfolio by country

€ 30.2 bn highly diversified

CREF portfolio by property types

€ 30.2 bn highly diversified

Western Europe (ex Germany) CREF portfolio

Total volume outstanding as at 31.03.2022: € 11.0 bn

1) Incl. Student housing 2) Performing CREF-portfolio only (exposure)

German CREF portfolio

Total volume outstanding as at 31.03.2022: € 3.0 bn

1) Performing CREF-portfolio only (exposure)

Southern Europe CREF portfolio

Total volume outstanding as at 31.03.2022: € 2.8 bn

1) Performing CREF-portfolio only (exposure)

Central- and East Europe CREF portfolio

Total volume outstanding as at 31.03.2022: € 1.7 bn

Northern Europe CREF portfolio

Total volume outstanding as at 31.03.2022: € 1.5 bn

1) Performing CREF-portfolio only (exposure)

North America CREF portfolio

Total volume outstanding as at 31.03.2022: € 8.9 bn

1) Performing CREF-portfolio only (exposure)

Asia / Pacific CREF portfolio

Total volume outstanding as at 31.03.2022: € 1.3 bn

B/S & Treasury Portfolio

B/S structure according to IFRS

Well balanced

1) Other assets includes € 0.2 bn private client portfolio and WIB's € 0.3 bn public sector loans

Treasury portfolio

€ 7.0 bn of high rating quality and highly liquid assets

As at 31.03.2022 – all figures are nominal amounts 1) Composite Rating

Funding & Liquidity

Very successful Senior Preferred Inaugural Green benchmark transaction

Successful announcement of Green Financing Framework and receiving of Second Party Opinion from Sustainalytics supported strong entry into Green debt markets with highly successful Green ECP & Green SP Benchmark transactions:

• € 500 mn Senior Preferred Inaugural Green Benchmark Transaction with maturity of 6 years
• 88% of allocation to ESG related investors
• ECPs € 405 mn Green & \$ 76 mn Green till 12/2021
• Broader investor base

"Based on the above, Sustainalytics is confident that Aareal is well-positioned to finance green loans and issue green bonds

and that the Aareal Bank Green Finance Framework - Liabilities is robust, transparent, and in alignment with the four core components of the Green Bond Principles 2021 and Green Loan Principles 2021."

Segment: Aareon

Segment: Aareon Q1 2022 P&L and other KPIs

P&L Aareon segment - Industry format1) € mn	Q1'21	Q1'22	∆ Q1 '22/'21
Sales revenue ▪ Thereof ERP ▪ Thereof Digital	66 49 16	72 53 19	9% 8% 15%
Costs2) ▪ Thereof material	-55 -12	-59 -14	6% 12%
EBITDA	10	13	27%
Adjustments2)	-4	-3	-41%
Adj. EBITDA	15	16	7%
EBITDA	10	13	27%
D&A / Financial result	-7	-11	61%
EBT / Operating profit	4	3	-31%

• RPU (last 12 months) at 23 €. With cross-selling opportunities to be harvested this is expected to gradually increase
• R&D spend slightly above 25%, but expected to stay in line with communicated pattern of 25% threshold

• Operating Cash Flow at € 16mn (Q1/21: € 18 mn) slightly lower due to shifts in working capital composition

• 1) Calculation refers to unrounded numbers

• 2) Incl. New product, VCP, Ventures, M&A and one-offs

Real Estate is transitioning to a more sustainable, digitised and connected future

Fostering this transition

ESG1) is (and has always been) fundamental to our business	▪ Lasting value of our properties is in our own interest ▪ No financing of controversial industry sites / projects ▪ Environmental quality is a major consideration in business origination and quality deficiencies will have an impact on the structuring of the loan or may reject the transaction
Integration of ESG in decision making initiated group-wide	▪ 2011: Introduction of corporate ESG compliance ▪ 2017: Focus on developing sustainability performance of core business ▪ September 2020: ESG@Aareal initiative initiated - "ESG Integration" throughout the group embedding ESG strongly into the business and decision-making processes
Strategic sustainability management based on five criteria	▪ Measurable contribution to sustainability transformation [AMBITION] ▪ Investable on the asset and liability side [INVEST] ▪ Retain existing customers and attract new ones [CLIENT] ▪ Manage relevant ESG risks [RISK] ▪ Comply with regulatory requirements [REGULATION]
We have impact!	▪ Contributing to the transition to a low carbon economy with every green financing ▪ Enabling customers to improve their sustainability performance with every smart digital solution connecting multiple parties and equipment

1) Environmental, Social, Governance

Increasing demand for future oriented, energy efficient buildings

€ 0.3 bn newly acquired business in Q1 2022 met green criteria1)

1) Acc. to Aareal Green Finance Framework

2) Exposure as at 31.03.2022

Exposure is allocated to individual properties of the finance project weighted according to market values.

49 ESG-Data as at 31.03.2022.

Major Milestones in Sustainable Finance Strategy achieved

Green loans for green properties refinanced by green funding instruments

Significant progress1) in ESG transparency and performance:

Verified2) ESG-Transparency for

~40%

of our portfolio through documentation of proof in IT systems

94% transparency based on client information

Since the launch in June 2021

€ ~430 mn

in Green Loans

have been issued

Verified2), individual Green Properties

of CREF portfolio

with more potential subject to ongoing validation

17%

Since implementation of Green Finance Framework – Funding

€ ~1 bn

has been issued via our inaugural Senior Preferred Green Bond as well as via the green Commercial Paper Program

1) Portfolio data as at 31.12.2021

Consistently positive rating results

Rewarding Aareal's ESG performance

Aareal Green Finance Framework: Eligibility criteria

Building on our modern portfolio and extensive know-how

Aareal Bank Group – Set for Growth!

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Acceleration of our successful strategy 'Aareal Next Level' based on strong and crisis resilient capital base

▪ SPF: From ACTIVATE! to GROW!

➔ Grow REF portfolio to € ~33 bn in 2024

▪ BDS: From ELEVATE! to LEVERAGE!

➔ Segment and independent value proposition established; cross- and upselling of payment services and digital products well advanced

▪ Aareon: continue to ACCELERATE!

➔ Adj. EBITDA target 2025 raised from € ~135 mn to € ~155 mn

▪ Maintaining Aareal's strong funding and capital position

Structured Property Financing From ACTIVATE! to GROW!

GROW! Structured Property Financing Targets

Growth of REF portfolio from € 30 bn to € ~33 bn in 2024 in line with current risk policy based on strong capital base…

• Significant attractive market opportunities available in our "home turf" with a strong focus on Green Properties and Green Loans
• Expand business in CRE and adjacent segments based on our capabilities and risk policy
• Continued evaluation of risk-return metrics incl. correlations and granularity
• Maintaining strict cost discipline and implementing efficiency measures
• …and highly attractive marginal RoE above cost of equity, supported by continuous management of back book
• Continued focused syndication efforts

REF portfolio:

• € ~1 bn growth p.a.
• YE 2024: € ~33 bn

Additional Green Loan volume:

▪ Until YE 2024: € ~2 bn

SPF CIR:

▪ YE 2023: <40%1)

Banking & Digital Solutions From ELEVATE! to LEVERAGE!

LEVERAGE! Banking & Digital Solutions Targets

Strong and independent value proposition of housing and adjacent business to be leveraged – increase cross selling and NCI

• Expand payments platform with software solutions and financial products
• Explore international "win-win" opportunities in the payments space with Aareon
• Focus on core-competencies and value-add products
• Pursuing selected M&A opportunities

Strong focus on maintaining crisis resilient deposit base

▪ Long-term upside potential in rising rate environment

Grow NCI:

• CAGR of ~13% (2020-2023)
• Ambition to double NCI until 2025

Deposit volume:

▪ Ø 2024: € >12 bn

Aareon ACCELERATE! to be continued

ACCELERATE! Aareon Targets

Fully on track to develop Aareon to a "Rule of 40" company by 2025

• VCP initiatives started in 2021, driving Go-To-Market excellence and operational excellence
• Appointment of SAP's Harry Thomsen as Dr. Manfred Alflen's successor, effective 1 April 2022

Highly attractive M&A platform

• Opportunity to further scale internationally based on execution of attractive M&A pipeline
• Aareal hunting line for M&A to be increased by € 100 mn to € 350 mn throughout the entire planning period and thus, retain full (strategic) flexibility and NII-synergies within the Group
• Option to tap institutionalized third-party debt markets to refinance hunting line in medium term

YE 2025 Adj. EBITDA:

• € ~135 mn plus € ~20 mn from companies already acquired in 2021
• Contribution from add. M&A on top

Achieve "Rule of 401)" performance

1) Rule of 40: Sum of Aareon's annual revenue growth and adj. EBITDA margin will at least reach 40%

Strong funding and capital position – key growth enablers

Funding and capital	Targets
Further enhancing Aareal's funding platform	€ ~1 bn Green Financing in 2022
▪ Sophisticated strategy to meet funding requirements from portfolio growth and ESF reform
▪ Expansion of green funding activities
▪ Further diversification of funding sources
▪ Continues optimization of our regulatory capital structure and funding costs
Maintaining Aareal's strong funding and capital position
▪ Strong and crisis resilient capital base
▪ Continues active portfolio management to optimise equity consumption
▪ Balance of growth investments and shareholders' remuneration in-line with existing dividend policy

Aareal Next Level Our KPIs and targets

	Our KPIs and targets
	2023	2024	2025
Aareal Bank Group
▪ Operating profit	€ ~300 mn1)	Up to € 350 mn
RoE post tax group2) ▪	~8%1)
▪ Dividend policy	50% base dividend plus potential supplementary dividend3)
Aareal Bank
▪ REF portfolio YE	€ ~32 bn	€ ~33 bn
CIR SPF4) ▪	<40%
Aareon
▪ Revenue	>10% CAGR (2020-2025)
			€ ~135 mn plus € ~20 mn closed M&A
▪ Adj. EBITDA	Contribution from additional future M&A on top
▪ Rule of 40			Achieve rule of 40

1) Excluding any potential acquisitions, and subject to the Covid-19 crisis being fully overcome by then

2) Based on 15% CET1 reference ratio (Basel IV, phase-in, revised IRBA)

59 3) Subject to ECB approval; Balanced growth investments and shareholders' remuneration in line with existing dividend policy

Regulation

SREP (CET 1) requirements

Demonstrating conservative and sustainable business model

• Capital ratios significant above SREP requirements
• P2R increase in 2022 (2.75%; 2021: 2.25%) due to Corona impacting especially commercial real estate markets
• P2R relief by using possibility of partially fulfilling requirements with AT1 and T2 capital
• Total capital requirement 2021 (Overall Capital Requirement (OCR)) amounts to 12.8% compared to 28.9% total capital ratio
• All ratios already include TRIM effects as well as prudential provisioning

Pillar 1 Requirement Pillar 2 Requirement Capital Conservation Buffer Countercyclical Buffer

AT1: ADI of Aareal Bank AG

Interest payments and ADI of Aareal Bank AG

Available Distributable Items (as of end of the relevant year)

	31.12.	31.12.	31.12.	31.12.	31.12.	31.12.
	2016	2017	2018	2019	2020	2021
€ mn
Net Retained Profit ▪ Net income ▪ Profit carried forward from previous year ▪ Net income attribution to revenue reserves	122 122 - -	147 147 - -	126 126 - -	120 120 - -	90 90 - -	30 90 66 -
+ Other revenue reserves after net income attribution	720	720	720	720	840	840
Total dividend potential before amount blocked1) =	842	870	846	840	930	936
./. Dividend amount blocked under section 268 (8) of the German Commercial Code	235	283	268	314	320	386
./. Dividend amount blocked under section 253 (6) of the German Commercial Code	28	35	42	40	43	36
= Available Distributable Items1)	579	552	536	486	566	515
+ Increase by aggregated amount of interest expenses relating to Distributions on Tier 1 Instruments1)	46	32	24	23	21	20
= Amount referred to in the relevant paragraphs of the terms and conditions of the respective Notes as being available to cover Interest Payments on the Notes and Distributions on other Tier 1 Instruments1)	625	584	560	509	587	535

Definitions and contacts

Definitions

= New Business	New business = Newly acquired business + renewals
Common Equity = Tier 1 ratio	CET 1 Risk weighted assets
= Pre tax RoE	Operating profit/income ./. loss attributable to non-controlling interests ./. AT1 coupon Average IFRS equity excl. non-controlling interests, AT1 and dividends
= CIR	Admin expenses (excl. bank levy, et al.) Net income
= Net income	net interest income + net commission income + net result on hedge accounting + net trading income + results from non-trading assets + results from investments accounted for at equity + results from investment properties + net other operating income
Net stable funding = ratio	Available stable funding Required stable funding
Liquidity coverage = ratio	Total stock of high quality liquid assets Net cash outflows under stress
= Earnings per share	operating profit ./. income taxes ./. income/loss attributable to non controlling interests ./. net AT1 coupon Number of ordinary shares
= Yield on Debt	NOI x 100 (Net operating income, 12-months forward looking) Outstanding incl. prior/pari-passu loans (without developments)
= CREF-portfolio	Commercial real estate finance portfolio excl. private client business and WIB's public sector loans
= REF-portfolio	Real estate finance portfolio incl. private client business and WIB's public sector loans
= NPL-ratio	NPL-exposure acc. CRR (excl. exposure in cure period) Total REF Portfolio

Contacts

Jürgen Junginger

Managing Director Investor Relations Phone: +49 611 348 2636 juergen.junginger@aareal-bank.com

Sebastian Götzken

Director Investor Relations Phone: +49 611 348 3337 sebastian.goetzken@aareal-bank.com

Carsten Schäfer

Director Investor Relations Phone: +49 611 348 3616 carsten.schaefer@aareal-bank.com

Karin Desczka

Manager Investor Relations Phone: +49 611 348 3009 karin.desczka@aareal-bank.com

Julia Taeschner

Group Sustainability Officer Director Investor Relations Phone: +49 611 348 3424 julia.taeschner@aareal-bank.com

Daniela Thyssen

Manager Sustainability Management Phone: +49 611 348 3554 daniela.thyssen@aareal-bank.com

Leonie Eichhorn

Sustainability Management Phone: +49 611 348 3433 leonie.eichhorn@aareal-bank.com

Robin Weyrich

Sustainability Management Phone: +49 611 348 2335 robin.weyrich@aareal-bank.com

Disclaimer

© 2022 Aareal Bank AG. All rights reserved.

This document has been prepared by Aareal Bank AG, exclusively for the purposes of a corporate presentation by Aareal Bank AG.

This presentation may contain forward-looking statements. Forward looking statements are statements that are not historical facts; they include statements about Aareal Bank AG's beliefs and expectations and the assumptions underlying them; and they are subject to known and unknown risks and uncertainties, most of them being difficult to predict and generally beyond Aareal Bank AG's control. This could lead to material differences between the actual future results, performance and/or events and those expressed or implied by such statements.

This presentation refers to the voluntary public takeover offer published by Atlantic BidCo GmbH on 26 April 2022. These references are provided for general information purposes only and do not constitute an offer to enter into a contract for the provision of advisory services or an offer to purchase securities. Any decision by investors to sell their Aareal Bank shares should be based on the public tender offer documentation published by Atlantic BidCo GmbH.

Information from Atlantic BidCo GmbH or other third parties is considered to be reliable but has merely been compiled without having been verified. Therefore, Aareal Bank AG does not assume any responsibility for the accuracy of the third-party data.

The securities of Aareal Bank AG are not registered in the United States of America and may not be offered or sold except under an exemption from, or pursuant to, registration under the United States Securities Act of 1933, as amended. Therefore, Aareal Bank AG does not give any warranty, and makes no representation as to the completeness or correctness of any information or opinion contained herein. Aareal Bank AG accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this presentation.

Aareal Bank AG assumes no obligation to update any forward-looking statement or any other information contained herein.

Thank you.