LEG Immobilien SE

Investor Presentation • Sep 2, 2024

Disclaimer

While LEG Immobilien SE ("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 forwardlooking 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.

Company Presentation

Agenda

1 H1-2024
2 Who we are and what we stand for
3 ESG Agenda
4 Portfolio Overview
5 Management
6 Regulation \& Social Security in Germany
7 Investor \& Creditor Relations

Page
4-23
24-36
37-50
51-56
57-60
67-74

1 Highlights H1-2024

Financial Summary

LEG

H1-2024

Operating results		H1-2024	H1-2023	$+/-$ \%	Balance sheet		30.06.2024	31.12.2023	$+/-$ \%
Net cold rent	€m	427.9	414.3	$+3.3 \%$	Investment properties	€m	17,745.7	18,101.8	$-2.0 \%$
NOI (recurring)	€m	350.2	339.4	$+3.2 \%$	Cash and cash equivalents ${ }^{5}$	€m	355.9	405.5	$-12.2 \%$
EBITDA (adjusted)	€m	323.9	335.2	$-3.4 \%$	Equity	€m	7,260.2	7,488.2	$-3.0 \%$
FFO I	€m	217.9	226.0	$-3.6 \%$	Total financing liabilities	€m	9,328.8	9,375.8	$-0.5 \%$
AFFO	€m	109.7	118.6	$-7.5 \%$	Net debt ${ }^{4}$	€m	8,959.0	8,954.4	$+0.1 \%$
AFFO per share	€	1.48	1.60	$-7.5 \%$	LTV	\%	49.0	48.4	+60 bps
Operating cashflow	€	278.0	264.2	$+5.2 \%$	Average debt maturity	years	6.0	6.2	$-0.2 y$
NOI margin (recurring)	\%	81.8	81.9	-10 bps	Average debt interest cost	\%	1.66	1.58	+8 bps
EBITDA margin (adjusted)	\%	75.7	80.9	-520 bps	Equity ratio	\%	38.1	38.8	-70 bps
FFO I margin	\%	50.9	54.5	-360 bps	EPRA NTA, diluted	€m	9,129.2	9,379.9	$-2.7 \%$
AFFO margin	\%	25.6	28.6	-300 bps	EPRA NTA per share, diluted	€	122.59	126.57	$-3.1 \%$
Portfolio		30.06.2024	30.06.2023	$+/-$ \%
Residential units	number	165,823	166,890	$-0.6 \%$
In-place rent (I-f-I)	€/sqm	6.72	6.53	$+2.9 \%$
Investments (adj.) ${ }^{2}$	€/sqm	15.41	14.08	$+9.4 \%$
EPRA vacancy rate (I-f-I)	\%	2.5	2.6	-10 bps

30.06.2024	31.12.2023	$+/-$ \%
30.06.2024	31.12.2023	$+/-$ \%
30.06.2024	31.12.2023	$+/-$ \%

Guidance raise to €190 - 210m AFFO

Continued strong operations point to AFFO per share growth of $c .+10 \%{ }^{1}$

Financials

• AFFO-7.5\% to $€ 109.7 \mathrm{~m}$
• Operating cashflow $+5.2 \%$ to $€ 278.0 \mathrm{~m}$
• FFOI-3.6\% to $€ 217.9 \mathrm{~m}$
• Adj. EBITDA-Margin 75.7\%
• LTV 49.0\%/48.3\% pro-forma²
• Debt @ 1.66\% for $\varnothing 6.0 \mathrm{y}$
• NTA p.s. €122.59

Operations

• Net cold rent $+3.3 \%$
• I-f-I rental growth $+2.9 \%$, thereof freefinanced $+3.4 \%$
• I-f-I vacancy 2.5\% ( 10bps)

ESG

• Score of Sustainalytics ESG Risk Rating further improved to 5.1 and ranked no. 6 out of 1,030 real estate companies globally
• LEG was awarded a special prize for targeted learning and employee development (DW Future Prize of the Real Estate Industry)
• LEG ranked no. 1 in DAX 50 ESG for ESG achievements, no. 3 in STOXX Global ESG Social Leaders

Guidance increase to €190 - 210m (€180 - 200m)
Strong fundamentals allow also to lift investments to €34/sqm (€32/sqm)

Roughly €285m of disposals YTD

Recovery of the residential transaction market continues

Valuations bottoming out at around 5\% gross yield for LEG Minor devaluation of 1.6\% for H1-2024 - trough in sight

Free financed segment with 3.4\% (I-f-I) rent growth Free financed rents to grow by 3.8 - 4.0\% for FY24e

Early and decisive but neither drastic nor dilutive measures

LEG

taken

A broadly stable portfolio preserves current and future earnings base

1 Based on midpoint of new guidance range 2 Pro-forma as of today. Based on reported HTLTV and taking YTD disposals into account.

Attractive risk return profile of German residential

Above average organic growth at low volatility of LEG

CAGR I-f-I rent growth ${ }^{1}$

Volatility of I-f-I rent growth (standard dev.) ${ }^{1}$
2013-23

Growth per unit of volatility (CAGR / standard dev.)
2013-23

[^0]
[^0]: 11.-F-I growth based on company reporting since 2013 where available or since IPO/ first time reporting respectively.

2 Portfolio \& Operating Performance

Roughly $€ 285 \mathrm{~m}$ and almost 2,900 units of disposals YTD

Majority to be transferred in the second half of the year

Portfolio development-Divestments

Number of units

| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3-4 |
| :--: | :--: | :--: | :--: | :--: | :--: | :--: | :--: | :--: | :--: | :--: | :--: |
| 22 | 22 | 22 | 22 | 23 | 23 | 23 | 23 | 24 | 24 | 24e |
| | -104 | -47 | -156 | | -434 | -232 | -165 | | -136 | |
| | | | | -434 | | | | -578 | -594 | |
| | | | | | | | | | | |
| | | | | | | | | | | -2,145 |
| Disposal proceeds | | | | | | | | | | |
| Net proceeds | | | | | | | | | €26m | €167m ${ }^{1}$ |

• From the start of our disposal programme in Q1-2022 until H1 2024 c.2,700 units transferred for c.€182m
• So far 2,145 units expected to be transferred in the course of the year with corresponding proceeds of c. $€ \mathbf{2 3 4 m}$
• More disposals in the pipeline

Signed disposals YTD (not yet transferred)

	Price €m	Units
Existing portfolio
Krefeld (NRW)	16	236
Warburg (NRW)	5	86
Hanover area (Lower Saxony)	61	766
Dortmund/ Essen (NRW) NEW	10	170
Recklinghausen (NRW) NEW	22	409
Other incl. commercial UPDATE	20	128
New built
Essen/ Duesseldorf (NRW)	63	211
Bremen (Bremen) NEW	37	139
Total	c. 234	2,145

• Signings reflect recovery of transaction markets
• Disposals at low end as well as high end of quality spectrum
• Rigorous price discipline continued - in total, disposals transacted above book values
• One disposal with a volume of c. $€ \mathbf{3 5 m}$ regarding a commercial complex (announced in Q4-23) did not close
• Buyers range from HNWIs, pension funds to smaller domestic and international institutionals

Portfolio transactions H1: 730 units transferred in H1

More transfers to come for H2 based on YTD signings

Number of units based on date of transfer of ownership ${ }^{1,2}$

Disposals

• Disposal incl. transfer of ownership for $\mathbf{7 3 0}$ units above book value at $€ 51 \mathrm{~m}$-translating into net proceeds of $€ 26 \mathrm{~m}$
• Signed disposals in H1 include two bigger block sales with around 400 units. Remainder consists of smaller tickets to maximise price and safeguard shareholder value
• Signed disposals make up for $\mathbf{2 , 1 4 5}$ / c $€ \mathbf{2 3 4 m}$ - to be transferred in the course of the year
• The additions to the portfolio ytd solely relate to conversions

[^0]
[^0]: 1 Residential units. 2 Note: The date of the transaction announcement and the transfer of ownership are usually several months apart. The number of units may therefore differ from other disclosures, depending on the data basis.

Rent growth guidance confirmed

Scale-up in H2-2024, previous year's reporting date marked by early implementation of rent increases

I-f-I rent development

€/sqm/month

I-f-I free financed rent development
€/sqm/month

• Fully on track for $\mathbf{3 . 2 \%}-\mathbf{3 . 4} \%$ I-f-I rent growth guidance
• Based on strong $\mathbf{3 . 8 \%}$ - 4.0\% I-f-I rent growth for the free financed units
• 2.9\% rent growth in H1-24 affected by last year's peak in rent increases in Q2 with a strong rent growth of $\mathbf{4 . 3 \%}$ due to earlier publication of rent tables
• Despite lower rent growth yoy as of H1-24, rent growth at year-end will be at least on the level of FY-23 excl. the cost-rent effect of $\mathbf{8 0}$ bps back then

Rental growth guidance confirmed

Free financed rent growth for FY-2024 expected to be 3.8 - 4.0\% (excl. new construction)

I-f-I rent development

€/sqm/month

Residential rent

Free financed rent

• Free-financed part increased by $\mathbf{3 . 4 \%}$ - slowdown vs. Q1 as Q2-2023 was marked by high rent increases - guidance unchanged
• New rent table example: Gütersloh (Westphalia) +13\% for typical LEG apartment
• No cost rent adjustment in 2024; next increase will be in 2026
• Tenant fluctuation stays at low level of $\mathbf{9 . 3} \%$ yoy

Capex and Maintenance

Moderate increase in first half - FY-2024 guidance raised to c.€34 per sqm

Value-added services with solid AFFO contribution

Higher investment into energy business will affect AFFO generation in H2

3
Financial Performance

Financial highlights H1-2024

Net cold rent growth offsets higher energy costs

Net cold rent
€m

EBITDA (adjusted)
€m

H1-2023

Net operating income (recurring)
€m

AFFO
€m

Net cold rent

• Growth mainly driven by $\mathbf{2 . 9 \%}$ I-f-I rent growth

Net operating income (recurring)

• Increase by $\mathbf{3 . 2 \%}$ mainly driven by higher net cold rent
• Margin of $\mathbf{8 1 . 8} \%$ virtually unchanged as costs, e.g. personnel expenses, increased in-line

EBITDA (adjusted) and AFFO

• Lower contribution from the green electricity production ( $€ 16.0 \mathrm{~m}$ ). Forward sale business at peak prices in 2022 for 2023
• Decline in AFFO by $\mathbf{7 . 5 \%}$ to $€ 109.7 \mathrm{~m}$ further driven by higher cash interest expenses $(-€ 4.9 \mathrm{~m})$

AFFO Bridge H1-2024

Lower contribution from green energy production results in AFFO decline

Portfolio valuation H1-2024

Valuation bottoming out - trough in sight

Valuation decline by markets ${ }^{1}$

Peak to trough $(\%)$

	Total
H1	FY	H2	H1	H2
24	23	23	22
$-1.6$
	-4.9	$-7.4$

High-growth

Higher-yielding

H1	FY	H2	H1	H2
24	23	23	23	22
$-1.8$
	$-5.1$	$-6.3$	$-5.0$

Higher-yielding

H1	FY	H2	H1	H2
24	23	23	23	22
$-1.8$
	$-4.3$	$-6.1$

$-13.7$

Highlights

• Devaluation of $\mathbf{- 1 . 6 \%}$ in H1-2024, pressure easing off; similar trend in all markets
• Residential transaction market with slight recovery in Q2-2024² (€3.3bn in H1-2024, $+25 \%$ yoy)
• Since peak in H1-2022 combined devaluation effect of c.16.8\%
• Average object-specific discount rate increased to 5.0\% (FY-2023 4.7\%), cap rate increased to 5.8\% (FY-2023 5.7\%)

Portfolio values H1-2024

Back at attractive levels of c.5\% gross yield, 4\% net yield

Market segment	Residential Units	GAV Residential Assets (€m)	GAV/ sqm (€)	Gross yield	In-Place Rent Multiple	GAV Commercial/ Other (€m)	Total GAV (€m)
High- Growth Markets	49,789	7,103	2,202	4.1\%	24.6x	295	7,398
Stable Markets	66,672	6,346	1,491	5.1\%	19.6x	246	6,592
Higher- Yielding Markets	49,362	3,323	1,122	6.3\%	15.9x	90	3,413
Total Portfolio	165,823	16,772	1,606	4.9\%	20.4x	631	17,403

Gross yields
8\%

[^0]
[^0]: 1 GAV of IAS 40 portfolio (including leasehold, land value and assets under construction) was $\$ 17.746 \mathrm{~m}$.

Financial Performance

Financial profile

2024 maturities completely refinanced - 2025 maturities covered on a pro-forma basis

Maturity Profile as of Sept. 20241

Average debt maturity
years

Sept.-2024
5.8

H1-2023
6.1

Average interest cost

\%

Sept.-2024		1.62
H1-2023		1.40

Loan-to-value

\%

H1-2024
49.0

Q4-2023
48.4

Highlights

• No maturities for 2024
• Newly issued $€ 500 \mathrm{~m}$ convertible bond (2024/ 2030), cash of $>\boldsymbol{3 5 0} \mathrm{m}^{2}$ and cash income from already signed disposals $>\boldsymbol{€ } 2 3 0 \mathrm{~m}$ lead to coverage of the 2025 maturities on a pro-forma basis
• Next financial liabilities to be addressed mature in 2026
• Undrawn RCFs in the amount of $€ 750 \mathrm{~m}$ as well as an unused CP program of $€ 600 \mathrm{~m}$
• Average debt maturity of 6.0 years with average interest cost of $1.66 \%$
• Average interest hedging rate c.94\%
• LTV at $\mathbf{4 9 . 0 \%}$ as of 30 June 2024 (pro-forma $48.3 \%)^{1}$
• Interest Coverage Ratio (ICR) at 4.3x

Guidance 2024: AFFO improvement to €190m - €210m

LEG

Investments increase to $34 € / \mathrm{sqm}$ to optimise operational results

Guidance 2024 ${ }^{1}$

AFFO		UPDATE	€190m-210m (before: $€ 180 \mathrm{~m}-200 \mathrm{~m}$ )
Adj. EBITDA margin			c.77\%
I-f-I rent growth			3.2\% - 3.4\%
Investments		UPDATE	c.34€/sqm (before: c.32€/sqm)
LTV			Medium-term target level max. 45\%
Dividend		100\% AFFO as well as a part of the net proceeds from disposals
Disposals		Not reflected ${ }^{1}$
Environment	2024-2027	Installation and commissioning of $\mathbf{2 , 0 0 0}$ air-to-air heat pumps in 2027 in LEG's portfolio and in third-party portfolios
	2024	4,000 tonnes $\mathrm{CO}_{2}$ reduction from modernisation projects and customer behaviour change
Social	2024-2027	Acceleration of the processing time of total LEG tenant complaints by $\mathbf{1 0 \%}$ by 31 December 2027 based on the averaged processing time of resolved complaint tickets from March 2024 and September 2024
	2024	Use of 100 LEG staff hours to design, organise or implement intercultural projects until 31 December 2024
Governance	2024	85\% of TSP employees, 99\% of employees in staff holding LEG group companies have completed the "IT Security" training until 31 December 2024

Who we are and what we stand for

Affordable housing in Germany

Made in NRW - Rolled out to Germany

Affordable housing in Germany

Made in NRW

German residential pure play

Pure Play:
Residential + Germany
Focus on affordable living segment
Focus NRW (c. 80\% of assets), no. 1 in NRW

Market cap c. $€ 6.5 \mathrm{bn}^{1}$.
$100 \%$ tradeable shares

Lean

balance sheet

One asset class
No goodwill
NTA: $€ 122.59$
Equity ratio: $38.1 \%$
GAV/m² € 1,606
No hidden financing structures
$\varnothing$ financing cost $1.66 \%$,
$\varnothing$ maturity 6.0 years
Investment grade rating

Social responsibility

500,000 tenants/ 166,000 apartments

Average rent per unit
c. $€ 420$ per month/ $€ 6.73$ per sqm
c. $19 \%$ social housing (rent-restricted)

Consolidation of platform

Avoiding complexity
Acquisitions stopped - Shifting to net seller - but flexible to "switch back on"

Run-off new construction
Cash neutrality focus

Focus on cash while exploiting growth opportunities

A resilient business model

Leading in a market with structural supply/demand imbalance

• Large demand/supply gap with 750 k units missing already today
• Further widening supply/demand imbalance as new developments will tumble to <100k units by 2025e
• LEG strongly positioned as no. 1 in NRW and no. 2 in Germany - fully rented out

Focus on organic cash generation

• AFFO as internal and external KPI
• AFFO as basis for dividend policy in a higher interest rate environment
• Full flexibility remains to increase share of debt-financed investments if market conditions ease

Resilient business model to provide stable operating cash flows

• Crisis proven business model during GFC and Corona crisis
• Pure Play at a lean balance sheet
• Higher refinancing costs to be broadly compensated by rent increases

Structural growth drivers to support top line growth

• Market rent growth supported by demand situation to support structural mid-term growth
• Growth from subsidised units in 2026 and transition of $>16 k$ units into free-financed units in 2028
• Ongoing modernisation and decarbonisation investments allow for additional rent adjustments

Leading in sustainability and provider of decarbonisation solutions

• Top ratings by MSCI, Sustainalytics - decarbonisation path approved by SBTi
• On track for climate neutrality by 2045
• Solution provider via own JV's (Renowate - serial refurbishment, termios - smart thermostats, dekarbo - air-to-air heat pumps)

LEG's strategy is based on strong building blocks

Resilient business model

LEG not materially affected during the GFC and COVID-19

LEG well positioned

• Non-cyclical business model
• LEG's attractive rent level of $\mathbf{€ 6 . 7 3} / \mathbf{s q m}$ is key to provide affordable living to our tenants
• C. 19\% of units subsidised
• German social system provides several strong layers of social security

Resilience of German residential during the last economic crises

Subsidised units account for around 19\% of the portfolio

Reversionary potential amounts to $55 \%$ on average

Rent potential subsidised units

• Until 2028, around 19,000 units will come off rent restriction
• Units show significant upside to market rents
• The economic upside can theoretically be realised the year after restrictions expire subject to general legal and other restrictions ${ }^{4}$

Around 60\% of units to come off restriction until 2028

[^0]
[^0]: 1 Average rent value that could theoretically be achieved, not implying that an adjustment of the in-place rent to the market rent is feasible, as stringent legal and contractual restrictions regarding rent increases exist.
245 years $=2024-2028,6-10$ years $=2029-2033,+10$ years $=2034 \mathrm{ff} \quad 3$ Rent upside is defined as the difference between LEG in-place rent and market. 4 For example rent increase cap of $10 \%$ (tense markets) or $20 \%$ for three years.

LEG's investment track record in nominal and real terms

INvestments into the standing portfolio

Nominal (adjusted) investments

€/sqm

Inflation adjusted (2013 based) investments
€/sqm

New construction - finishing the last projects - small in volume LEG

Small size of projects and investment volume, cash potential from built to sell

Completions

number of units per year
Development on own land
Acquisitions (3rd party developer)
396
0
2024e
Investment volume per year
€m

Remaining completions until 2025

396 units

Remaining investment volume until 2025
€53m

German residential market

A highly fragmented market - dominated by private owners

Professional owners $34 \%$
$66 \%$ Private owners

Demand - supply imbalance will persist

New supply continues to erode while population will remain at high level

German population at highest level ever in 2023 in million

New apartments completed

No. of building permissions for apartments continues to drop

in $\%$ vs previous year month

German new development: Studies point to significant reduction LEG

Direction seems to be clear - momentum not yet, but risks that supply drastically breaks down

Die Immobiliense/tschaft
, The crisis is deeper than building permission figures and completion figures show so far. Residential construction activities still benefits from projects which have been started before the interest rate reversal. Based on building permissions which have been dropped by roughly a quarter and considering completion times, the number of new built homes will decline to 150.000 units per year [by 2025] ${ }^{40}$

Residential completions ${ }^{5}$ by European countries 2022 to 2026

[^0]
[^0]: 1 Source Bulwiengesa New Development Monitor 2 Source: ZIA - https://zie.deutschland.de/fruehjahrsgutachten/ 3 Completed residential units in new buildings as wells in existing residential and non-residential buildings. Source: Ro/ EUROCONSTROCT https://www.ifo.de/publicatoren/2024/aufsatz-zeitschrift/europaeische-boukonjuristur-verliert-2024-water-dynamik

German residential: Lowest transaction volume since 2010

Family offices and US capital already back in the market with above long-term participation rate

Investment volume

German residential
€bn

• Transaction volume $€ 5.2 b n$
• Lowest volume since 2010
• $-72 \%$ vs. long-term average

Investors by group

$\%$
Investment / Asset Manager
24.4

• High interest from family offices with 19\% (vs. 4\% for 10-year average)
• Investment funds and property companies constraint by higher financing costs

Investors by geography
$\%$

• High share of local capital with $\mathbf{6 8 \%}$
• Return of US investors with $24 \%$ (vs. 6\% for 10-year average)

3
ESG Agenda 2025 - A Joint Journey

• We are committed to climate targets
• $10 \% \mathrm{CO}{2}$ reduction from 2022 until 2025 and 4,000 tons $\mathrm{CO}{2}$ reduction from modernisation projects in 2023 and 2024
• Committed to Climate Act 2030 and to climate neutrality by 2045
• We intend to invest up to $€ 500 \mathrm{~m}$ into energetic modernisation from 2020 until 2024
• Key drivers for our energetic transition until 2045 are:
• Tenants engagement needed to contribute up to $5 \%$ to the overall improvement
• Energy transition to shift towards green district heating and green electricity, driving $65 \%-70 \%$ of the overall improvement
• Refurbishments to achieve $>30 \%$ of energy reduction, contributing $25 \%-30 \%$ to the overall improvement
• Affordable living segment and responsibility for our client base remains core to our DNA
• Improvement of customer satisfaction index (CSI) from 56\% to 70\% in the period 2022 - 2025 (was 60\% in August 2023)
• Further building on the strong partnership with local communities, leading to a preferred partner status
• LEG is a highly valued employer underlined again by a strong Trust Index of 73\% in 2022 (was 66\% in 2020)
• Sustainalytics rating of 6.7 (negligible risk range)
• One-third of our fully independent supervisory board is represented by women since the AGM 2022
• Management remuneration since 2023 linked to the target that virtually all employees participated in compliance/IT-security training
• Compliance management system certified by the Institute for Corporate Governance in the German Real Estate Industry

Our ESG mission statement

Among the best in class

Reflecting LEG's strong sustainability commitment

Strong commitment to high ethical standards

Codes and policies binding for employees and other stakeholders

Commitment to respect human rights as defined by the UN Guiding Principles on Business and Human Rights and signing of the UN Global Compact in 2021. The principles of this compact and internationally recognised agreements such as the UN Universal Declaration of Human Rights and the eight fundamental Conventions of the International Labour Organization (ILO) are the cornerstones of LEG's corporate culture.

Carbon Balance Sheet 2023

$27.3 \mathrm{CO}_{2} \mathrm{ekg} / \mathrm{sqm}$ on a market based and climate adjusted basis

Carbon balance sheet

• Bottom-up approach
• BAFA-factors in line with GHG-protocol
• Scope 1 and scope 2
• $27.3 \mathrm{CO}_{2} \mathrm{ekg} / \mathrm{sqm}$ based on heating energy

Heat energy by source ( $100 \%$ of portfolio)

Gas
District heating
Heating oil
Electricity for heating
Coal (local heating)
Other
$68.4 \%$
27.9\%

2.3\%

0.7\%
$0.7 \%$
$0.1 \%$

• Based on actual consumption 2022 ( $61 \%$ actuals, $37 \%$ energy performance certificates (EPC), $2 \%$ estimates)
• Extrapolated for 2023
• Limited assurance by Deloitte

Reflecting our roots

Energy efficiency of our portfolio of $144 \mathrm{kWh} / \mathrm{sqm}$ is a function of corporate DNA \& history:

• Providing affordable housing in post-war Germany

LEG portfolio by construction years vs. LEG market

Distribution by energy efficiency classes LEG

$A+$	$A$	$B$	$C$	$D$	$E$	$F$	$G$	$H$
0	25	50	75	100	125	150	175	200

On track for our target towards climate neutrality

LEG

Nudging initiative pays-off and leads to strong and cost-effective contribution

• LEG fully committed to German Climate Change Act to achieve climate neutrality by 2045
• Aligned with strategy via STI/ LTIcomponent of compensation scheme
• $\mathrm{CO}_{2}$ reduction in 2023 by $2 \%$ to 32.6 kg (location based) and by $4 \%$ to 27.3 kg (market based)
• Key driver:
• 8,728: $\mathrm{CO}_{2}$ savings of which
• 6,011t from nudging-effects
• 2,717t from energetic refurbishments
• 2023 and 2024 STI component: 4,000 tons $\mathrm{CO}_{2}$ reduction from modernisation projects and customer behavior change
• 2023-26 LTI component envisages a 10\% efficiency improvement for investments undertaken

Transition roadmap towards climate neutrality

Energy transition and energetic refurbishment are the main drivers to reach the targets

Refurbishment

• At least 30\% efficiency improvement
• Insulation of the building shell, incl. windows and doors
• Contribution of $25 \%$ - 30\%

Smart meter/ Tenant engagement

• Digitisation of heating system via smart metering
• Education and incentivisation of tenants
• Contribution of up to 5\%

Energy transition

• Shift from fossil energy mix to green district heating
• Shift towards green electricity along Germany's path
• Contribution of $65 \%-70 \%$

LEG positions itself as first mover solutions provider

Digitisation and smart technology to push change

Serial refurbishment

• Insulation of the building shell, incl. windows and doors
• At least 30\% efficiency improvement
• Additional 15\% subsidies from BEG

Smart technology/ Tenant engagement

• Hydraulic optimisation by digitising radiators
• $30 \%$ reduction in carbon emissions expected
• Avoidance of $€ 30 \mathrm{~m}$ regulatory compliance costs

Energy transition

• Widespread adoption of Air2Air heat pumps
• Increasing energy efficiency standard, e.g., from G to C
  

termios.pro | Accelerating LEG's energy transformation by installation of smart heating thermostats

Background

• Regulatory requirement for hydraulic balancing
• Optimisation of thermostats substantial lever for energy and $\mathrm{CO}_{2}$ savings
• Conventional (manual) hydraulic balancing slow and with factual infeasibility
• Solution for smart thermostat specifically designed to meet professional residential operators' needs
  

Significance for LEG portfolio

Outlook

• Finalisation of product development for smart thermostat that meets hydraulic balancing requirements
• Timely product launch to capture high expected demand due to mandatory hydraulic balancing requirement starting fall 2023
• Rapid scale-up and commercialisation due to joint venture set-up and partner capabilities

LEG's biomass plant

Providing us with a competitive advantage - not reflected due to current framework

This represents savings of $57.5 \mathrm{kt} \mathrm{CO}_{2}$ and potentially carbon neutral electricity for 45,000 LEG units, i.e. around $1 / 3$ of our portfolio

LEG Study: Energetic refurbishment superior over new construction approach under $\mathrm{CO}_{2}$ lifecycle perspective

$\mathrm{CO}_{2}$ lifecycle footprint ${ }^{1}$

$\left(\mathrm{t} \mathrm{CO}_{2}\right.$ equivalent $)$

Total energy consumption in Giga Joule

Joint study between renown Wuppertal Institute and LEG Key findings:

• Lifecycle perspective favors refurbishment over new construction
• Total $\mathrm{CO}_{2}$ footprint for a refurbished building $>50 \%$ smaller than for a new building
• Break-even in total energy consumption perspective only after $>40$ years, if heat energy will remain on gas forever
• After shift to heat pump or district heating, refurbishment will remain the superior strategy
• Exit from gas likely to be accelerated (independence from Russia)

Affordable living and focus on customer satisfaction

Attractive rents overall - especially for tenants in our rent-restricted units

Providing an affordable home

• Social responsibility for our 500,000 customers
• Providing a home at affordable prices
• 166,000 units at $€ 6.73 / \mathrm{sqm} /$ month on average (c. $€ 420$ per month per unit)
• Rent increases for rentrestricted units only every 3 years by inflation factor
  $19 \%$ of units rent-restricted
  
  rent-restricted
  ■ free-financed

Attractive rent levels

€/sqm/month (Q1-2024)

free-financed
rent-restricted

Increase CSI to 70\% by 2025

Trust Index 73\% - Among the best employers in NRW

Target is to keep our strong employee recognition

Trust Index ${ }^{\circledR}$

Based on Median

4 Portfolio Overview

LEG's portfolio comprises of c.166,000 units

Well balanced portfolio with significant exposure also in target markets outside NRW

Well-balanced portfolio

By Market

Units
High Growth Markets
Stable Markets
Higher Yielding Markets

Gross Asset Value

High Growth Markets
Stable Markets
Higher Yielding Markets

Rental Income

High Growth Markets
Stable Markets
Higher Yielding Markets

35\%

39\%

Higher Yielding Markets

26\%

Restricted vs. unrestricted

Units

Free financed
Subsidised

Gross Asset Value
$81 \%$

Free financed
Subsidised

Rental Income

Free financed
Subsidised

Portfolio structure

LO24

Construction Years

Building Types ${ }^{1}$

Medium sized
Low Rise
High Rise

Free Financed / Rent Restricted Units

Free financed units
Rent restricted units

Apartment Size

$<40$ sqm	$5 \%$
40-60 sqm	$42 \%$
61-70 sqm	$21 \%$
71-90 sqm	$27 \%$
$>90$ sqm	$5 \%$

Market clustering based on LEG's methodology

Key indicator

Rental level ${ }^{1}$

1. Vacancy level ${ }^{2}$

Socio demographic ranking ${ }^{3}$

Future attractiveness ${ }^{4}$

Scoring based on local districts ${ }^{5}$

Relative comparison of rental levels

Relative comparison of vacancy levels
c. 30 indicators like demographics, labour market, wealth etc.
$>20$ indicators from demographics, economy, education, family friendliness

LEG Scoring

High-growth markets

Stable

markets

Higher-yielding markets

North-Rhine Westphalia (NRW)

Demographics and social aspects

• Key metropolitan area in Germany, and one of the largest areas in Europe ( 17.9 m inhabitants in 2020, which corresponds to $22 \%$ of Germany's population ${ }^{1}$ )
• Highest population density ${ }^{2 / 3}$ - key advantage for efficient property management
• Low home ownership of approx. $44 \%{ }^{4}$ in NRW in 2018 ( $47 \%{ }^{4}$ in Germany) provides for consistent demand. Germany has the second lowest home ownership ratio of all OECDmember countries
• High demand for affordable living product Approx. $40 \%$ of households with income of less than $€ 2,000^{4}$ per month in 2019
  

Economics

• Germany's economic powerhouse generating approx. $21 \%$ of German GDP
• NRW's GDP is larger than the GDP of Sweden, Poland or Belgium
• About one third of the largest companies in Germany are based in NRW
• Most start-up foundations in Germany
• Centrally located in Europe, excellent infrastructure and a key transport hub (with multiple airports, dense railway system, motorway network and waterways)
• Robust labour market with decreasing rate of unemployment ( $-40 \%$ since 2006)

5 Management

Management Team

Lars von Lackum
CEO
14,000 shares in LEG ${ }^{1}$

• Investor Relations \& Strategy
• Legal / Internal Audit, HR \& Committees
• Corporate Communications \& Public Affairs
• Acquisition
• Project development
• IT
• Sustainability ESG

With LEG since 2019

Dr. Kathrin Köhling
CFO
4,111 in LEG ${ }^{1}$

• Risk management and Internal Control System
• Corporate finance \& treasury
• Portfolio management
• Accounting and taxes
• Organisation, processes \& data management

With LEG since 2019

Dr. Volker Wiegel
COO
6,500 shares in LEG ${ }^{1}$

• Asset and property management; incl.
• Commercial property management
• District and neighbourhood management
• Real estate management
• Inventory modernisation
• Central purchasing
• Claims management
• Rental management
• Operating cost management
• Central customer service
• Construction project management
• Service companies

With LEG since 2013

Supervisory board - 100\% independent members

$1 / 3$ of female members since AGM 2022

Michael
Zimmer
Chairman
since 2013
4,100 shares in LEG!
Entrepreneurial career in the real estate sector (e.g. founder of Corpus Sireo Immobilien, later sold to Swiss Life) since 1990

Christoph Beumer
Member
since 2024
...
Professional background as managing partner at KPMG and auditor with special focus on the real estate sector

Dr. Sylvia Eichelberg
Member since 2021
...
CEO of Gothaer Health Insurance and previously in different roles with AXA and ERGO insurance

Dr. Claus Nolting
Member
since 2016
...
Professional background as a lawyer. Different positions in the banking and private equity sector (e.g. CEO of Hypovereinsbank, Cerberus, Lone Star)

Dr. Katrin Suder

Mernber

since 2022

500 shares in LEG

Independent consultant with focus on diversity. Previously State Secretary in the German Ministry of Defence and various roles at McKinsey (Partner, Head of the Berlin office and Director \& Head of "Public sector").

Martin

Wiesmann
Member
since 2020
1,400 shares in LEG!
Professional background in investment banking with Deutsche Bank and J.P. Morgan, amongst various roles Vice-Chairman IB Europe with JPM

Affordability of living

LEG

Increase of LEG rents vs. income growth in $\%$

LEG rents vs. income (illustrative examples)

Source: LEG, ALDI Nord, Rewe; Verdi, IG Metall, destatis, Federal Ministry for Labor and Social Affairs, DGB regarding citizen benefit example (https://www.dgb.de/themen/11rcor+eff171378-cbfb-11ea-af64-001a4af60123).

Heat Planning Act (WPG) as basis for the individual building plan (GEO)

Heat Planning Act

(Wärmeplanungsgesetz WPG)

• Municipalities and cities have to provide their individual plans on how to transition their heat infrastructure into a climate neutral grid
• Major cities need to provide their plans until June 2026, smaller communities until June 2028
• Local utility companies, grid operator and manufacturing companies to provide data in respect to energy source and consumption
• Basis for individual heat energy transition planning on private owner level, landlord level and public buildings

Energy Act for Buildings

(Gebäudeenergiegesetz GEG)

• Renewable energy obligation (REO): New heating systems must cover at least $\mathbf{6 5 \%}$ of heat energy demand of the building with renewable energies
• Target is to achieve a national climate neutral heat supply by 2045
• New buildings: REO as of 1 January 2024, transition periods for new buildings outside new construction areas
• Existing buildings: transition periods for defect heating systems: 3 years (general), 10 years (connecting to a heating grid), 13 years (centralisation of decentralised heating systems)
• Permitted technologies: Connection to the heating network, electric heat pumps, direct electricity heating such as air-to-air heat pumps, hybrid heating, heating based on solar thermal energy, "H2-Ready" gas heating or when using green gases, biomass heating (mandatory from 2029)
• Duty for external consultation on heating system replacement from 2024

Subsidies eligible for LEG

Final drafting of the BEG (Bundesförderung für effiziente Gebäude), i.e. state subsidies for efficient buildings

Single measures

Heating systems ${ }^{1}$

$30 \%$ general subsidies
$5 \%$ efficiency bonus
Subsidies for multifamily houses are staggered and capped
€30,000 for the first unit
€15,000 each for the 2nd to 6th unit
€8,000 each for the 7th residential unit and above

Other energetic measures ${ }^{1}$

$15 \%$ general subsidies
$5 \%$ individual refurbishment plan
Capped at $€ 30,000$ per unit and calendar year

Systemic measures

Holistic refurbishment approach to reach a building efficiency standard, e.g. EH 70, EH 55
Tick the box exercise to get to subsidies, e.g.

EH 55:	$15 \%$
EH 40:	$20 \%$
EE-Standard:	$5 \%$
WPB $^{2}$ :	$10 \%$
Serial refurbishment:	$15 \%$

Max. total $45 \%$

Rent regulation in Germany

From-tense markets

-110,000 units

Rent increase

• Max. 20\% within 3 years
• Max. increase to local reference rent ${ }^{1}$
  

Modernisation levy

• Annual rent can be increased by $\mathbf{8 \%}$ of modernisation costs
• Limit: $€ \mathbf{3}$ per sqm (rent/sqm/month $>€ \mathbf{7}$ ) or $€ \mathbf{2}$ per sqm (rent/sqm/month $<€ \mathbf{7}$ ) over $\mathbf{6}$ years

No regulations

Rent restricted units

$19 \%$ of LEG's units ( 31,000 units)

Cost rent adjustment

• Every third year (i.e. last was in 2023, next will be in 2026)
• After full repayment of the underlying subsidised loan, the residential unit gets out of rent restriction and regular code applies
• In the case of early repayment, rent restriction continues for another 10 years (tenant protection); then regular code for free-financed units applies

A well-developed social security system ensures a fair standard of living in Germany

Principles of solidarity

7 Investor \& Credit Relations

LEG

Sufficient bond covenants headroom

Unsecured financing covenants

Covenant	Threshold	H1-2024
Consolidated Adjusted EBITDA / Net Cash Interest	$\geq 1.8 \times$	$4.3 \times{ }^{1}$
Unencumbered Assets / Unsecured Financial Indebtedness	$\geq 125 \%$	$164.0 \%$
Net Financial Indebtedness / Total Assets	$\leq 60 \%$	$47.7 \%$
Secured Financial Indebtedness / Total Assets	$\leq 45 \%$	$18.8 \%$

Ratings (Moody's)

Type	Rating	Outlook
Long Term Rating	Baa2	Stable
Short Term Rating	P-2	Stable

Financing mix

Fixed interest
Derivatives
Variable interest
$87.2 \%$
$\square$ $7.2 \%$
$\square$ $5.6 \%$

Key financial ratios

	H1-2024	H1-2023
Net debt / adj. EBITDA ${ }^{2}$	$13.7 x$	$14.0 x$
LTV	$49.0 \%$	$46.6 \%$
Secured Debt / Total Debt	$39.5 \%$	$37.2 \%$
Unencumbered Assets / Total Assets	$41.2 \%$	$39.8 \%$
Equity ratio	$38.1 \%$	$40.2 \%$

[^0]
[^0]: 1 Based on the adjusted EBITDA definition effective until business year 2022. Based on the adjusted EBITDA definition effective since business year 2023, i.e. excluding maintenance (externally-procured services) and own work capitalized, KPI is 4.9x.
2 Average net debt last four quarters / adjusted EBITDA LTM

Capital market financing

Corporate bonds

Maturity	Issue Size	Maturity Date	Coupon	Issue Price	ISIN	WKN
2019/2027	$€ 500 \mathrm{~m}$	28 Nov 2027	0.875\% p.a.	99.356\%	DE000A254P51	A254P5
2019/2034	$€ 300 \mathrm{~m}$	28 Nov 2034	1.625\% p.a.	98.649\%	DE000A254P69	A254P6
2021/2033	$€ 600 \mathrm{~m}$	30 Mar 2033	0.875\% p.a.	99.232\%	DE000A3H3JU7	A3H3JU
2021/2031	$€ 700 \mathrm{~m}^{1}$	30 Jun 2031	0.750\% p.a.	99.502\%	DE000A3E5VK1	A3E5VK
2021/2032	$€ 500 \mathrm{~m}$	19 Nov 2032	1.000\% p.a.	98.642\%	DE000A3MQMD2	A3MQMD
2022/2026	$€ 500 \mathrm{~m}$	17 Jan 2026	0.375\% p.a.	99.435\%	DE000A3MQNN9	A3MQNN
2022/2029	$€ 600 \mathrm{~m}^{2}$	17 Jan 2029	0.875\% p.a.	99.045\%	DE000A3MQNP4	A3MQNP
2022/2034	$€ 500 \mathrm{~m}$	17 Jan 2034	1.500\% p.a.	99.175\%	DE000A3MQNQ2	A3MQNQ

Financial
Covenants

Adj. EBITDA/ net cash interest $\geq 1.8 x$
Unencumbered assets/ unsecured financial debt $\geq 125 \%$
Net financial debt/ total assets $\leq 60 \%$
Secured financial debt/ total assets $\leq 45 \%$

Capital market financing

LOG

Convertible bonds

	2017/2025	2020/2028	2024/2030
Issue Size	$€ 400 \mathrm{~m}$	€550m	€500m
Term / Maturity Date	8 years/	8 years/	6 years/
	1 September 2025	30 June 2028	4 September 2030
Coupon	0.875\% p.a.	0.400\% p.a.	1.000\% p.a.
	(semi-annual payment:	(semi-annual payment:	(semi-annual payment:
	1 March, 1 September)	15 January, 15 July)	4 March, 4 September)
# of shares	3,531,959	3,580,370	4,256,231
Redemption Price	100.00\%	100.00\%	106.34\%
Initial Conversion Price	€118.4692	€155.2500	€117.4748 (effective: €124.9227)
Adjusted Conversion Price ${ }^{1}$	€113.2516 (since 2 June 2022)	€153.6154 (since 7 June 2022)	No adjustment so far
Issuer Call	From 22 September 2022, if LEG share price $>130 \%$ of the then applicable conversion price	From 5 August 2025, if LEG share price $>130 \%$ of the then applicable conversion price	From 25 September 2028, if LEG share price $>130 \%$ of the then applicable conversion price
ISIN	DE000A2GSDH2	DE000A289T23	DE000A3L21D1
WKN	A2GSDH	A289T2	A3L21D

[^0]
[^0]: 1 Dividend protection: The conversion price will not be adjusted until the dividend exceeds $€ 2.63$ (2017/2025 convertible) and $€ 3.562$ (2020/2028 convertible). Full dividend protection of the 2024/2030 convertible.

LEG share information

Basic data

Market segment
Stock Exchange
Total no. of shares
Ticker symbol
ISIN
Indices

Shareholder structure ${ }^{1}$

BlackRock

MFS
Other free float
$11.3 \%$
$10.0 \%$
$78.7 \%$

Share of $07.08 .2024$; indexed; in \%; 01.02.2013 = 100)

1 Shareholdings according to latest voting rights notifications

Share price and market capitalisation since IPO

Financial calendar

For our detailed financial calendar, please visit https://ir.leg-se.com/en/investor-relations/financial-calendar

Investor Relations Team

Frank Kopfinger, CFA
Head of Investor Relations \& Strategy
Tel: +49 (0) 2114568 - 550
E-Mail: frank.kopfinger@leg-se.com

Karin Widenmann

Senior Manager Investor Relations
Tel: +49 (0) 2114568 - 458
E-Mail: karin.widenmann@leg-se.com

For questions please use ir@leg-se.com

Elke Franzmeier

Corporate Access \& Events
Tel: +49 (0) 2114568 - 159
E-Mail: elke.franzmeier@leg-se.com

Gordon Schönell, CIIA
Senior Manager Investor Relations
Tel: +49 (0) 2114568 - 286
E-Mail: gordon.schoenell@leg-se.com