DEMIRE Deutsche Mittelstand Real Estate AG

Interim / Quarterly Report • Nov 18, 2024

HIGHLIGHTS 9M 2024

KEY EARNINGS FIGURES

23.0

in EUR million
FFO I (after taxes,
before minority interests),
compared to EUR 27.8 million
in 9M 2023

50.6

in EUR million
RENTAL INCOME,
compared to EUR 59.9 million
in 9M 2023

[^0]

PORTFOLIO DEVELOPMENT

0.8

in EUR billion
PORTFOLIO VALUE,
compared to EUR 1.1 billion
as at year-end 2023

57.6

in EUR million
ANNUALISED
RENTAL INCOME,
compared to EUR 76.7 million
as at year-end 2023

$-3.2$

in $\%$
LIKE-FOR-LIKE DECREASE
of annualised contractual
rent compared to $-1.1 \%$ as
at 9M 2023

4.4

in years
WALT,
compared to 4.6 years
as at year-end 2023

14.7

in \%
EPRA VACANCY RATE ${ }^{1}$,
compared to 13.1\%
as at year-end 2023

[^0]: ${ }^{1}$ According to the definition of bond 2019/2024
${ }^{2}$ Excluding properties classified as a project
development

Key for navigating the interim report:

Reference to table of contents

Reference to another page in the interim report

Reference to websites

CONTENTS

FOREWORD BY THE EXECUTIVE BOARD	2	INTERIM CONSOLIDATED
		FINANCIAL STATEMENTS
DEMIRE AT A GLANCE	3	Consolidated statement of income
Key Group figures	4	Consolidated statement of
Portfolio highlights	5	comprehensive income
		Consolidated balance sheet
INTERIM GROUP MANAGEMENT REPORT	6	Consolidated statement of cash flows
Overview	7	Consolidated statement of
Economic report	10	changes in equity
Opportunities and risks	18	Notes to the consolidated
Subsequent events and		financial statements
related party transactions	18	39

$\equiv$

FOREWORD BY THE EXECUTIVE BOARD

Dear Shareholders, dear Readers,

DEMIRE AT A GLANCE
INTERIM GROUP MANAGEMENT REPORT

INTERIM CONSOLIDATED
FINANCIAL STATEMENTS

INPRINT
the year continues to be defined by a challenging economic environment with negative effects on the commercial real estate market. First of all, demand for rental space remained subdued, although DEMIRE was able to buck the trend by letting more space than in the previous year. Rent levels for the space let by us also remained stable for the most part or even increased slightly. Secondly, the European Central Bank's interest rate cuts have not yet led to a significant increase in revenues in the transaction markets for commercial real estate investments. While the mood and willingness to talk have improved, as we recently saw at Expo Real, the banks' continued reluctance to provide financing often still hinders real estate transactions. Nevertheless, in recent months we have succeeded in further streamlining our portfolio by selling several smaller assets that were not consistent with our strategy, meaning that we are currently in advanced sales negotiations for several properties.

In light of this market environment and taking into account the real estate sales that have taken place, DEMIRE has achieved solid results. Rental income fell by $15.4 \%$ to EUR 50.6 million in the first nine months of 2024, primarily due to the smaller portfolio base following sales. At the same time, funds from Operations I after taxes (FFO I) fell by $17.5 \%$ year-on-year to EUR 23.0 million, mainly due to a decline in rental income as a result of property sales.

In the third quarter, we strengthened our asset management team and organisational structure. We therefore see ourselves as well positioned to further increase our letting performance in the coming quarters and to gradually reduce the vacancy rate. Furthermore, we are focusing on the measures introduced to improve the sustainability of our company and portfolio. Among other things, we will be developing a climate protection transition plan for DEMIRE that will set out our planned development into a sustainable real estate company. We will also be implementing numerous targeted individual measures from this plan across the properties with the aim of gradually steering our portfolio towards sustainability.

After the first nine months, the Executive Board can confirm the forecast for the 2024 financial year: rental income will be between EUR 64.0 million and EUR 66.0 million (2023: EUR 78.5 million), and FFO I (after taxes, before minority interests) is expected to be significantly lower than in the previous year (2023: EUR 36.7 million).

We hope you find this report a stimulating read and look forward to your comments and ideas.

Frankfurt am Main, 6 November 2024

Frank Nickel (CEO)

Tim Brückner (CFO)

Ralf Bongers
(Executive Board Member for
Transactions)

DEMIRE AT A GLANCE

Key Group figures 4
Portfolio highlights

INTERIM GROUP MANAGEMENT REPORT

for the reporting period from
1 January to 30 September 2024

Overview	7
Economic report	10
Opportunities and risks	18
Subsequent events and
related party transactions	18

OVERVIEW

BUSINESS PERFORMANCE

DEMIRE's business performed well in the first nine months of 2024. In the reporting period, the insolvency of Mein Real in particular had a negative impact on the vacancy rate and the like-for-like development of the annualised contractual rent. Funds from operations fell, partly as a result of the property sales that took place. The letting performance more than doubled compared to the previous year despite the continued weakness of the letting markets. The Group's key figures, taking into account the property sales and against the backdrop of the weak economic environment, are also solid overall and in line with the company's planning and expectations. Deconsolidation of the Limes companies in July 2024 shrank the real estate portfolio by the properties in Essen, Kassel, Aschheim and Cologne (Max-Glomsda-Straße), thereby reducing rental income and indirectly FFO I.

DEMIRE's key indicators improved in the first nine months of 2024 as follows:

• Rental income decreased to EUR 50.6 million (previous year: EUR 59.9 million).
• Profit from rental income amounted to EUR 34.4 million, compared to EUR 43.4 million in the same period of the previous year.
• Funds from operations (FFO I, after taxes, before minority interests) decreased by $17.5 \%$ to EUR 23.0 million.
• The letting performance increased significantly to around $60,310 \mathrm{~m}^{2}$ compared to $27,240 \mathrm{~m}^{2}$ in the same period of the previous year.
• The like-for-like development in annualised contractual rents was $-3.2 \%$ compared to 30 September 2023. The slight decline is due in particular to the increase in vacancies in Darmstadt and as a result of the insolvency of Mein Real in Querfurt. The indexation of existing rental agreements continued to have the opposite effect.
• The EPRA vacancy rate ${ }^{1}$ rose to $14.7 \%$ (30 June 2024: 15.5\%, 31 December 2023: $13.1 \%$ ), while the WALT decreased slightly to 4.4 years ( 31 December 2023: 4.6 years).
• The NAV per share (undiluted) decreased, mainly due to the valuation of a real estate sub-portfolio in the middle of the year, to EUR 2.98 compared to EUR 3.24 at the end of 2023.
• The net loan-to-value ratio ${ }^{2}$ (net LTV) fell significantly to $52.3 \%$ (31 December 2023: 57.7\%), while liquidity increased to EUR 164.5 million as at the reporting date (31 December 2023: EUR 132.3 million).
• The average nominal financing costs are 1.89\% p.a. (31 December 2023: $1.74 \%$ p.a.).

PERFORMANCE IN LINE WITH FORECAST FOR THE 2024 FINANCIAL YEAR Given the development in the first nine months of 2024, the Executive Board can confirm the forecast for the 2024 financial year: rental income will be between EUR 64.0 million and EUR 66.0 million (2023: EUR 78.5 million), and for FFO I (after taxes, before minority interests) a significantly lower amount is expected compared to 2023 (2023: EUR 36.7 million).

PROPERTY PORTFOLIO

Between the end of the previous year and the reporting date, the property portfolio decreased to 54 properties ( 31 December 2023: 59 properties). The lettable area of the buildings in the portfolio is around $613,000 \mathrm{~m}^{2}$ ( 31 December 2023: 858,400 $\mathrm{m}^{2}$ ) and the total market value is approximately EUR 0.8 billion ( 31 December 2023: approximately EUR 1.1 billion). An external property valuation of a sub-portfolio was last performed on 30 June 2024.

The EPRA Vacancy Rate ${ }^{1}$ increased as at the reporting date of 30 September 2024 to $14.7 \%$, following $13.1 \%$ on 31 December 2023. The increase is mainly due to the additional vacancy of the commercial property in Darmstadt, as well as the space following the insolvency of Mein Real in Querfurt. WALT was 4.4 years as at 30 September 2024, compared to 4.6 years as at year-end 2023. In the period under review, DEMIRE achieved a rental performance of $60,310 \mathrm{~m}^{2}$ (9M 2023: 27,240 $\mathrm{m}^{2}$ ). $68 \%$ of the letting performance was attributable to new lettings and $32 \%$ to followon lettings. The letting performance was driven, among other things, by new lettings of over $4,680 \mathrm{~m}^{2}$ in Leipzig, over $4,060 \mathrm{~m}^{2}$ in Essen and over $3,430 \mathrm{~m}^{2}$ in Bad Vlibel, as well as extensions of over $23,260 \mathrm{~m}^{2}$ in Bonn, over $6,020 \mathrm{~m}^{2}$ in Schwerin and over $3,660 \mathrm{~m}^{2}$ in Freiburg.

PROPERTY PORTFOLIO

Between the end of the previous year and the reporting date, the property portfolio decreased to 54 properties ( 31 December 2023: 59 properties). The lettable area of the buildings in the portfolio is around $613,000 \mathrm{~m}^{2}$ ( 31 December 2023: 858,400 $\mathrm{m}^{2}$ ) and the total market value is approximately EUR 0.8 billion ( 31 December 2023: approximately EUR 1.1 billion). An external property valuation of a sub-portfolio was last performed on 30 June 2024.

The EPRA Vacancy Rate ${ }^{1}$ increased as at the reporting date of 30 September 2024 to $14.7 \%$, following $13.1 \%$ on 31 December 2023. The increase is mainly due to the additional vacancy of the commercial property in Darmstadt, as well as the space following the insolvency of Mein Real in Querfurt. WALT was 4.4 years as at 30 September 2024, compared to 4.6 years as at year-end 2023. In the period under review, DEMIRE achieved a rental performance of $60,310 \mathrm{~m}^{2}$ (9M 2023: 27,240 $\mathrm{m}^{2}$ ). $68 \%$ of the letting performance was attributable to new lettings and $32 \%$ to followon lettings. The letting performance was driven, among other things, by new lettings of over $4,680 \mathrm{~m}^{2}$ in Leipzig, over $4,060 \mathrm{~m}^{2}$ in Essen and over $3,430 \mathrm{~m}^{2}$ in Bad Vlibel, as well as extensions of over $23,260 \mathrm{~m}^{2}$ in Bonn, over $6,020 \mathrm{~m}^{2}$ in Schwerin and over $3,660 \mathrm{~m}^{2}$ in Freiburg.

No.	Tenant	Type of use	Contractual rents p.a. ${ }^{1}$ in EUR million	in \% of total
1	GMG/Ot. Telekom	Office	6.8	11.9
2	IHOTEX	Retail	5.4	9.4
	Bima Bundesanstalt für Immobilienaufgaben
3		Office	3.2	5.6
4	Roomers	Hotel	2.1	3.7
5	Sparkasse Südholstein	Office	1.8	3.2
	GALERIA Karstadt	Retail	1.7	3.0
6	Kaufhof		1.4	2.4
7	comdirect bank AG	Office	1.4	2.4
8	BWI GmbH	Office	1.3	2.2
9	CFH Penta
9	Rostock GmbH	Hotel	1.2	2.1
10	Stadt Freiburg	Office	1.2	2.0
Total			26.2	45.5
Other			31.4	54.5
Total			57.6	100.0

[^0]
[^0]: ${ }^{1}$ Based on annualised contractual rents, excluding ancillary costs

ㄷ

FOREWORD BY THE EXECUTIVE BOARD

DEMIRE AT A GLANCE

INTERIM GROUP MANAGEMENT REPORT

Overview

Economic report
Opportunities and risks Subsequent events and related party transactions

INTERIM CONSOLIDATED
FINANCIAL STATEMENTS

IMPRINT

ECONOMIC REPORT

Results of operations, net assets and financial position

RESULTS OF OPERATIONS

In the first nine months of 2024, the DEMIRE Group generated rental income totalling EUR 50.6 million (previous year: EUR 59.9 million). Rental income fell, mainly due to a smaller portfolio base following sales. This was offset by rent indexations. The result from the rental of real estate also fell, as a result of the real estate sales in previous quarters, by $20.6 \%$ to EUR 34.4 million (previous year: EUR 43.4 million).

The result from the sale of property in the first nine months of 2024 was EUR -5.2 million (previous year: EUR - 12.9 million), primarily due to the sale of LogPark in Leipzig. The result from fair value adjustments of investment properties amounted to EUR - 17.9 million (previous year: EUR - 59.7 million), largely due to a mid-year market-related devaluation of a sub-portfolio. The adjustment to the assets held for sale was EUR - 8.7 million (previous year: EUR - 25.3 million).

Impairments on financial and other receivables increased significantly and amounted to EUR 1.5 million in the first nine months of 2024 (previous year EUR 0.5 million). This is mainly due to write-offs of interest receivables from loans granted to the now deconsolidated LIMES companies.

General administrative expenses in the first nine months of 2024 increased to EUR 9.1 million (previous year: EUR 8.6 million). Earnings before interest and taxes (EBIT) were in the negative range at EUR - 13.8 million (previous year EUR -64.6 million), mainly due to the revaluation of a part of the property portfolio in the middle of the year.

The financial result includes a $-4.6 \%$ decline in financial expenses to EUR - 12.3 million (previous year: EUR - 12.9 million). Financial income fell by EUR 13.5 million compared to the same period of the previous year, when the repurchase of the bond below par made a substantial contribution, to EUR 6.4 million. The average nominal interest on borrowed capital was $1.89 \%$ p.a. (previous year: $1.74 \%$ p.a.). Minority interests in earnings increased to EUR 3.3 million (previous year: EUR 0.9 million), in particular due to the lower property devaluations and reduced the financial result by the same amount. Consequently, the financial result in the first nine months of 2024 amounted to EUR - 9.1 million, compared to EUR 7.1 million in the same period of the previous year.

Earnings before taxes (EBT) fell to EUR - 22.9 million in the reporting period, compared to EUR - 57.5 million in the previous year.

Current income taxes decreased to EUR 3.6 million (previous year: EUR 9.0 million). Last year, the bond buyback at below par resulted in higher expenses with a corresponding taxable gain.

The negative result of the valuation of a sub-portfolio led to a positive contribution from deferred taxes in the amount of EUR 4.8 million (previous year: EUR 16.9 million).

The profit for the first nine months of 2024 was EUR - 21.6 million, compared to EUR - 49.5 million in the same period of the previous year.

FOREWORD BY THE EXECUTIVE
BOARD
DEMIRE AT A GLANCE
INTERIM GROUP MANAGEMENT
REPORT
Overview
Economic report
Opportunities and risks
Subsequent events and
related party transactions
INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
IMPRINT

NET ASSETS

As at 30 September 2024, the total assets decreased by EUR 152.6 million to EUR 1,174.9 million compared to year-end 2023. This resulted primarily from property sales and the deconsolidation of the LIMES portfolio. The value of investment property as at 30 September 2024 was EUR 755.2 million, a decrease of EUR 192.0 million compared to 31 December 2023. The main driver of the reduction was the deconsolidation of the LIMES companies due to the insolvency applications and the reclassification of properties as assets held for sale.

Group equity as at 30 September 2024 totalled EUR 308.1 million, compared with EUR 333.3 million as at 31 December 2023. The main reason for the decline was the negative result for the period. The equity ratio came to 26.2\% (31 December 2023: $25.1 \%)$. It should be noted that non-controlling minority interests reported in the Group's borrowed capital of around EUR 73.0 million (31 December 2023: EUR 72.0 million) are carried as non-current liabilities and not as equity in accordance with IFRS, solely as a result of the legal form of Fair Value REIT's fund participations as partnerships. The corresponding adjusted Group equity totalled approximately EUR 381.1 million (31 December 2023: EUR 405.3 million).

Total liabilities as at 30 September 2024 amounted to EUR 866.8 million. These decreased by EUR 127.4 million compared to 31 December 2023. The main reasons for this were the deconsolidation of the LIMES companies, including their loans, and the repayment of the loan for LogPark Leipzig in connection with the sale of the property.

FOREWORD BY THE EXECUTIVE BOARD

DEMIRE AT A GLANCE

INTERIM GROUP MANAGEMENT REPORT

Overview

Economic report
Opportunities and risks Subsequent events and related party transactions

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

INPRINT

FINANCIAL POSITION

Cash flow from operating activities in the first nine months of 2024 amounted to EUR 28.5 million (previous year: EUR 40.1 million).

Cash flow from investing activities amounted to EUR 84.3 million in the reporting period, compared to EUR 67.8 million in the previous year. The difference compared to the previous period is mainly due to proceeds from the sale of properties.

Cash flow from financing activities came to EUR -68.3 million, compared to EUR -32.9 million in the same period of the previous year. The change was driven, on the one hand, by the repayment of liabilities and, on the other, by costs incurred in refinancing the 2019/24 bond.

Cash and cash equivalents amounted to EUR 164.5 million on 30 September 2024 (31 December 2023: EUR 132.3 million).

CONSOLIDATED STATEMENT OF CASH FLOWS

(selected information in EUR thousand)	$\begin{gathered} 01 / 01 / 2024 \ -30 / 09 / 2024 \end{gathered}$	$\begin{gathered} 01 / 01 / 2023 \ -30 / 09 / 2023 \end{gathered}$	Change
Cash flow from operating activities ${ }^{1}$	28,483	40,053	$-11,570$
Cash flow from investing activities	84,330	67,817	16,512
Cash flow from financing activities ${ }^{1}$	$-68,293$	$-32,938$	$-35,355$
Net change in cash and cash equivalents	44,520	74,932	$-30,412$
Cash and cash equivalents at the end of the period	164,509	132,347	32,162

The prior-year figures have been adjusted due to a change in presentation in the reporting period (for further details, please refer to section A.1, "Changes in presentation of prior-year figures").

Funds from operations (FFO)

Funds from operations I (after taxes, before minority interests), the key operating performance indicator, decreased by $17.5 \%$ in the first nine months of 2024 to EUR 23.0 million, compared to EUR 27.8 million in the same period of the prior year. On a diluted basis, FFO I (after taxes, before minority interests) per share came to EUR 0.22 , compared to EUR 0.26 in the same period of the previous year.

	NET LOAN-TO VALUE (NET LTV)
in EUR thousand	30/09/2024	31/12/3023
Financial liabilities and lease liabilities	693,450	816,992
Cash and cash equivalents	164,509	119,989
Net financial debt	528,941	697,003
Total assets	1,174,941	1,327,531
Intangible assets	0	0
Cash and cash equivalents	$-164,509$	$-119,989$
Total assets less intangible assets and cash and cash equivalents	1,010,432	1,207,542
Net LTV (in \%)	52.3	57.7

Covenants for the 2019/24 corporate bond

Within the scope of issuing the 2019/24 corporate bond, DEMIRE undertook to comply with and regularly report on various covenants. The definition of the covenants to be reported on is listed in the offering prospectus for the 2019/24 corporate bond.

BOND COVENANTS 30/09/2024

	NET LTV	NET SECURED LTV	ICR
Covenant	max. $60 \%$	max. $40 \%$	min. 2.00
Value	$52.3 \%$	$0.0 \%$	5.55

As at 30 September 2024, DEMIRE had complied with all covenants of the 2019/24 corporate bond. The bond terms and conditions after extension provide for a net LTV of max. $70 \%$ and an ICR of min. 1.50 as new covenants. In addition, the planning for 2024 and beyond assumes that the covenants of the extended bond can be complied with at all times in the future.

FOREWORD BY THE EXECUTIVE BOARD

Opportunities and risks

For information on the opportunities and risks of future business performance, please refer to the disclosures made in the opportunities and risks report included within the $\bigcirc$ consolidated financial statements as at 31 December 2023.

The 2019/2024 bond maturing in October 2024 is, at the time of publishing this report, in the final phase being extended to the end of 2027. As a result, risks arising from the bond and the extension have largely already been significantly reduced. A potential risk has been added due to the extension of financing of around EUR 35 million that expires on 30 November 2024, which has not yet been concluded, despite promising talks with the financing bank.

The opportunities and risks are reviewed continuously and in a structured process. From today's perspective, no risks that could endanger the Company have been identified.

Subsequent events and related party transactions

Information on transactions with related parties and events after the balance sheet date can be found in $\square$ Section G. 1 and $\square$ Section G. 6 of the notes.

Frankfurt am Main, 6 November 2024
DEMIRE Deutsche Mittelstand Real Estate AG

Frank Nickel (CEO)

Tim Brückner (CFO)

Ralf Bongers
(Executive Board Member for Transactions)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of income ..... 20
Consolidated statement of comprehensive income ..... 21
Consolidated balance sheet ..... 22
Consolidated statement of cash flows ..... 24
Consolidated statement of changes in equity ..... 26
Notes to the consolidated financial statements ..... 27

$\equiv$
FOREWORD BY
THE EXECUTIVE BOARD

DEMIRE AT A GLANCE
INTERIM GROUP MANAGEMENT REPORT

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of income

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of cash flows

Consolidated statement of changes in equity

Notes to the consolidated financial statements

IMPRINT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the reporting period from 1 January to 30 September 2024

A. General information

1. Basis of preparation

DEMIRE Deutsche Mittelstand Real Estate AG (hereafter "DEMIRE AG") is recorded in the commercial register in Frankfurt am Main, Germany, the location of the Company's headquarters, under the number HRB 89041. The Company's registered office is located in Frankfurt am Main, Germany, and the Company's business address is Robert-Bosch-Straße 11, Langen, Germany.

The Company's shares are listed in the Prime Standard segment of the Frankfurt Stock Exchange.

The subject of these condensed interim consolidated financial statements as at 30 September 2024 is DEMIRE AG and its subsidiaries (hereafter "DEMIRE").

DEMIRE AG itself has not carried out any investments in real estate or real estate projects to date. Investments are generally processed through real estate companies. Interests in these property companies are held by DEMIRE AG either directly or indirectly (through intermediate holding companies). DEMIRE focuses on the German commercial real estate market, where it is an active investor and portfolio manager. DEMIRE itself carries out the acquisition, management and leasing of commercial properties. Value appreciation is to be achieved through active real estate management. This may also include the targeted sale of properties when they are no longer a strategic fit or have exhausted their potential for value appreciation.

The condensed interim consolidated financial statements for the period from 1 January to 30 September 2024 were prepared in accordance with the requirements of IAS 34 Interim Financial Reporting (hereafter IAS 34). This report has not been audited or subjected to audit review, and for this reason does not contain an auditor's opinion.

The condensed interim consolidated financial statements of DEMIRE AG were prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB), as adopted by the European Union (EU), applying Section 315e of the German Commercial Code (HGB). All International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) and interpretations of the IFRS Interpretations Committee (IFRS IC) - formerly the International Financial Reporting Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC) - that were mandatory for the 2024 financial year have been taken into consideration. Furthermore, all disclosure and explanation requirements under German law above and beyond the provisions of the IASB have been fulfilled.

Under IAS 34, the condensed interim consolidated financial statements are intended to be an update of the most recent annual financial statements. They therefore do not contain all of the information and disclosures required for consolidated financial statements but rather concentrate on new activities, events and circumstances, so as not to repeat information that has already been reported. The condensed interim consolidated financial statements of DEMIRE AG as at 30 September 2024 should therefore be viewed in conjunction with the $\Theta$ consolidated financial statements as at 31 December 2023.

The euro (EUR) is the reporting currency of DEMIRE AG's condensed interim consolidated financial statements. Unless otherwise stated, all amounts are expressed in thousands of euros (EUR thousand). For computational reasons, rounding differences of $\pm$ one unit (EUR, \%, etc.) may occur in the information presented in these financial statements. The consolidated statement of income has been prepared according to the cost-of-sales method.

$\equiv$
FOREWORD BY
THE EXECUTIVE BOARD

DEMIRE AT A GLANCE
INTERIM GROUP MANAGEMENT REPORT

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of income

Consolidated statement of comprehensive income Consolidated balance sheet Consolidated statement of cash flows Consolidated statement of changes in equity Notes to the consolidated financial statements

IMPRINT

Adjustment of the previous year's figures

In the consolidated statement of income, the item "Impairment of trade receivables" has been incorporated into "Profit/loss from the rental of real estate" and "Impairment of financial and other receivables" has been incorporated into "Earnings before interest and taxes".

The previous year's presentation of the item "General administrative expenses" in the statement of income has been reduced by legal and consultancy fees in the amount of EUR 331 thousand (9M 2024: EUR 292 thousand) and by general administrative expenses associated with consultancy services in the area of asset management in the amount of EUR 571 thousand (9M 2024: EUR 578 thousand), as these are now presented under the item "Operating expenses to generate rental income".

In addition, the previous year's "Impairment of trade receivables" item has been reduced by EUR 1,077 thousand (9M 2024: EUR 1,725 thousand). The previous year's "Impairment of financial and other receivables" item only includes impairments for loans in the amount of EUR 527 thousand (9M 2024: EUR 1,528 thousand). Impairment of trade accounts receivable is now recognised as part of the result from the rental of real estate.

These condensed interim consolidated financial statements of DEMIRE AG were approved for publication by a resolution of the Executive Board on 6 November 2024.

B. Scope and principles of consolidation

In the reporting period 2024, there was a change in the scope of consolidation.

The Executive Board and the management of the Limes subsidiaries were in very promising negotiations for a long time regarding the extension of the loan agreement between the four Limes subsidiaries (DEMIRE Aschheim Max-Planckstraße GmbH, DEMIRE Essen Hatzper Str. Theodor-Althoff-Str. GmbH, DEMIRE Kassel

Kölnische Str. Mauerstr. Spohrstr. GmbH and DEMIRE Köln Max-Glomsda-Straße 4 GmbH ) and DZ HYP AG for an outstanding loan amount of approximately EUR 83 million, which expired on 30 June 2024. However, the offers that had been exchanged in the past could not be accepted due to the outcome of the negotiations with the bondholders, resulting in the insolvency of the Limes subsidiaries at the end of 30 June 2024. After further unsuccessful negotiations, the management was forced to file for insolvency for these four companies on 22 July 2024. Since then, these companies have been under their own management. As a result, these companies are no longer controlled in accordance with IAS 10.21 and were deconsolidated in the third quarter of 2024. This resulted in a deconsolidation loss of EUR 6,137 thousand which was recorded under other operating expenses. The remaining investments in the amount of EUR 9,128 thousand in the four subsidiaries and the loans granted to them were remeasured at fair value in the amount of EUR 53,431 thousand.

In addition, DEMIRE GP 15 S.å r.l. was founded on 25 September 2024 and was added to the scope of consolidation.

C. Accounting policies

The accounting policies applied to these interim consolidated financial statements are the same as those applied to the consolidated financial statements as at 31 December 2023. There were no material changes in estimates compared to those in the $\bigcirc$ consolidated financial statements as at 31 December 2023.

The first-time application of amendments to IAS 1 and 7, IFRS 7 and 16 have no effect on the consolidated financial statements of DEMIRE.

D. Notes to the consolidated statement of income

1. Earnings before interest and taxes

In EUR thousand	$\begin{gathered} 01 / 01 / 2024 \ 30 / 09 / 2024 \end{gathered}$	$\begin{gathered} 01 / 01 / 2023 \ -30 / 09 / 2023 \end{gathered}$
Net rent	50,637	59,885
Income from utility and service charges	13,925	17,979
Rental revenue from real estate	64,562	77,864
Allocable operating expenses to generate rental income	$-20,848$	$-25,236$
Non-allocable operating expenses to generate rental income ${ }^{1}$	$-7,576$	$-8,187$
Impairment of receivables ${ }^{1}$	$-1,726$	$-1,077$
Operating expenses to generate rental income	$-30,150$	$-34,500$
Profit/loss from the rental of real estate	34,412	43,364

described above. Non-allocable operating expenses of EUR -7,576 thousand (9M 2023: EUR - 8,187 thousand) declined compared to the previous period despite higher maintenance expenses of EUR - 3,885 thousand (9M 2023: EUR - 3,619 thousand), in particular due to the disposal of real estate as described above.

Of the operating expenses, an amount of EUR -20,848 thousand (9M 2023: EUR - 25,236 thousand) is generally allocable and can be charged to tenants. The decline is due in particular to the disposal of properties sold in the previous period. The decrease in non-allocable expenses is also shown in the decrease in income from the allocation of utility and service charges.

Impairments on receivables amounted to EUR - 1,726 thousand in the reporting period (9M 2023: EUR - 1,077 thousand). The higher impairments in the reporting period resulted from impairments on receivables from various tenants. A large proportion of the impairments in the reporting period in the amount of EUR 346 thousand relate to the tenant Galeria Karstadt Kaufhof, which was again subject to insolvency proceedings. On top of this, impairment losses of around EUR - 236 thousand are attributable to two tenants in Rostock who are also subject to insolvency proceedings. The remaining impairments on receivables in the amount of EUR - 1,144 thousand are distributed among different tenants in DEMIRE's entire property portfolio and predominantly result from the flat-rate individual value adjustments made on the basis of the age structure of the receivables.

At EUR 34,412 thousand (9M 2023: EUR 43,364 thousand), the result from the rental of real estate was lower year-on-year, due in particular to the disposal of the properties sold in Ulm, Apolda and Bad Oeynhausen in the previous period and the disposal of the Leipzig LogPark property at Am alten Flughafen sold in the first quarter of the current financial year due to an increased vacancy rate (particularly in the properties in Celle, Bergstraße and Querfurt) and the deconsolidation of the Limes portfolio (consisting of the properties in Essen, Theodor-Althoff-Str. 39-47, Kassel, Kölnische Str. 6/Mauerstr. 11/Spohrstr. 2/4, Cologne, Max-Glomsda-Str. 4 and Aschheim, Max-Planck-Str. 3). Rental income decreased by EUR 9,248 thousand to EUR 50,637 thousand (9M 2023: EUR 59,885 thousand) due to the effects

Impairments of receivables in the previous period resulted mainly from the former tenant HC Bowling in Stralsund in the amount of EUR 244 thousand, which is currently subject to insolvency proceedings. The remaining impairments on receivables in the amount of EUR - 833 thousand are distributed among different tenants in DEMIRE's entire property portfolio and result from the flat-rate individual value adjustments made on the basis of the age structure of the receivables.

Significant components of the financial income result from the granting of loans to the joint venture JV Theodor-Heuss-Allee GmbH in the amount of EUR 792 thousand (9M 2023: EUR 782 thousand) and its shareholder RFR 5 Immobilien GmbH in the amount of EUR 2,306 thousand (9M 2023: EUR 2,417 thousand) as well as interest from fixed-term deposits totalling EUR 2,768 thousand (9M 2023: EUR 923 thousand) and profit from the buyback of the corporate bond at a price below the nominal value in the amount of EUR 62 thousand (9M 2023: EUR 15,683 thousand).

Financial expenses recorded a year-on-year decrease of EUR 588 thousand, due primarily to the early repayment of a loan in the course of the disposal of the logistics park in Leipzig.

Minority interests totalling EUR -3,225 (9M 2023: EUR -882 thousand) relate to the share of profits of minority shareholders in Fair Value REIT-AG's subsidiaries, which are recognised as liabilities in accordance with IAS 32. The year-on-year decline in minority interests is primarily the result of pro rata valuation losses on the properties in the first half of 2023.

3. Earnings per share

in EUR thousand	$01 / 01 / 2024$	$01 / 01 / 2023$
	$30 / 09 / 2024$	$20 / 09 / 2023$
Net profit/loss for the period (in EUR thousand)	-21,637	-49,530
Profit/loss for the period less non-controlling interests	-22,432	-47,030
Number of shares (in thousands)
Number of shares outstanding as at the reporting date	105,513	105,513
Weighted average number of shares outstanding	105,513	105,513
Impact of conversion of convertible bonds and
exercise under the 2015 Stock Option Programme	510	510
Weighted average number of shares (diluted)	106,023	106,023
Earnings per share (in EUR)
Basic earnings per share	-0.21	-0.45
Diluted earnings per share	-0.21	-0.44

As at 30 September 2024, the Company had potential ordinary shares outstanding from the 2015 Stock Option Programme entitling the owners to subscribe to 510,000 shares.

E. Notes to the consolidated balance sheet

1. Investment property and non-current assets held for sale

Investment property is accounted for at fair value. This developed as follows during the interim reporting period:

The additional cap

The reclassification of properties held for sale relates to several properties for which it is assumed (in accordance with IFRS 5) that a sale will be completed within one year.

The decrease of EUR 67,275 thousand in the item "Properties held for sale" is primarily due to the disposal of logistics park Leipzig.

2. Equity

Subscribed capital amounted to EUR 107,777 thousand (31 December 2023: EUR 107,777 thousand). This was EUR 105,513 thousand after the deduction of treasury shares ( 31 December 2023: EUR 105,513 thousand).

3. Financial liabilities

Financial liabilities consisted of the following:

FINANCIAL LIABILITIES

in EUR thousand	30/09/2024	31/12/2023
2019/2024 corporate bond	498,664	497,564
Other financial liabilities	169,087	293,505
Total	667,751	791,069

The segmentation of the data in the financial statements is based on the internal alignment according to strategic business segments pursuant to IFRS 8. The segment information presented represents the information to be reported to the Executive Board.

The DEMIRE Group is divided into the two reportable business segments Core Portfolio and Fair Value REIT.

The joint venture JV Theodor-Heuss-Allee GmbH, Frankfurt am Main, accounted for using the equity method, and the fully consolidated company Cielo BVO GmbH, Frankfurt am Main, were allocated to the Core Portfolio operating segment due to their similar commercial characteristics.

No customer accounted for $10 \%$ or more of total revenue in the reporting period.

3. Risk report

Please refer to the disclosures made in the opportunities and risks report included within the $\bigcirc$ consolidated financial statements as at 31 December 2023 for information on the opportunities and risks of future business performance.

The 2019/2024 bond maturing in October 2024 is, at the time of publishing this report, in the final phase being extended to the end of 2027. As a result, risks arising from the bond and the extension have largely already been significantly reduced. A potential risk has been added due to the extension of financing of around EUR 35 million that expires on 30 November 2024, which has not yet been concluded, despite promising talks with the financing bank.

The opportunities and risks are reviewed continuously and in a structured process. From today's perspective, no risks that could endanger the Company have been identified.

For a general overview of the risks, please refer to the $\square$ report on risks and opportunities.

4. Further explanations

As at the reporting date, there were no financial obligations stemming from purchase agreements for properties and real estate companies which are not yet due.

Contractual obligations for modification and expansion measures as well as maintenance and modernisation obligations for the properties totalled EUR 14,394 thousand as at 30 September 2024 (9M 2023: EUR 135,305 thousand). These obligations are fixed in terms of their scope. The significant decline results from the deconsolidation of the Limes portfolio, and in this case in particular from the elimination of the contractual obligations for the property in Essen.

Purchase order commitments for maintenance and modernisation, as well as modification and expansion measures, totalled EUR 4,974 thousand as at the interim reporting date (9M 2023: EUR 9,182 thousand).

As at 30 September 2024, unused credit lines in the amount of EUR 2,500 thousand (31 December 2023: EUR 6,000 thousand) were available.

5. Governing bodies and employees

In accordance with DEMIRE AG's Articles of Association, the Executive Board is responsible for managing business activities.

The members of the Executive Board during the interim reporting period were:
Prof. Dr Alexander Goepfert (CEO from 1 January 2023 to 3 April 2024)
Mr Frank Nickel (CEO since 3 April 2024)
Mr Tim Brückner (Chief Financial Officer since 1 February 2019)
Mr Ralf Bongers (Executive Board member since 1 April 2023)
For the interim reporting period, the Executive Board of DEMIRE AG received perfor-mance-related remuneration of EUR 322 thousand (9M 2023: EUR 408 thousand), non-performance-related remuneration of EUR 680 thousand (9M 2023: EUR 714 thousand) and share-based payments of EUR 43 thousand (9M 2023: EUR - 40 thousand).

No loans or advances were granted to the members of the Executive Board, nor were any contingent liabilities in favour of the members of the Executive Board entered into.

FOREWORD BY

THE EXECUTIVE BOARD

DEMIRE AT A GLANCE

INTERIM GROUP MANAGEMENT REPORT

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of income Consolidated statement of comprehensive income Consolidated balance sheet Consolidated statement of cash flows Consolidated statement of changes in equity Notes to the consolidated financial statements

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6. Events after the interim reporting date of 30 September 2024

As part of a comprehensive transaction, DEMIRE is extending its 2019/2024 bond to the end of 2027 with revised conditions. On 22 October 2024, 10\% (EUR 49.9 million) of the current outstanding total nominal amount of EUR 499 million was redeemed at par. Subsequently, as part of a tender offer, bonds with an outstanding total nominal amount of EUR 4.59 million were repurchased and cancelled below par at $61 \%$.

Since 25 October 2024, bonds promised as part of a backstop agreement with individual bondholders have been repurchased and cancelled below par at $76.25 \%$. It is expected that the settlement will be finalised in the next few days after publication of this report and that the new bond terms and conditions will then come into force. The total nominal amount of the extended bond is expected to be between EUR 252 million and EUR 254 million.

For the bond buyback, the Company is using its available liquidity. In addition, the Company's largest shareholder has agreed to grant DEMIRE a shareholder loan of up to EUR 100 million to support this. The majority of the shareholder loan is expected to be utilised.

As part of the refinancing of the 19/24 corporate bond, an ownership structure was determined that made it necessary to found a series of Luxembourg companies to hold significant portions of the DEMIRE portfolio as interim holdings. After the reporting date, the following companies were founded: DEMIRE GP 16 S.à r.l, DEMIRE GP 17 S.à r.l., DEMIRE GP 18 S.à r.l., DEMIRE GP 19 S.à r.l., DEMIRE GP 20 S.à r.l., DEMIRE Holding 15 SCSp, DEMIRE Holding 16 SCSp, DEMIRE Holding 17 SCSp, DEMIRE Holding 18 SCSp, DEMIRE Holding 19 SCSp and DEMIRE Holding 20 SCSp. The shares held by these Luxembourg holding companies were pledged to the bondholders.

Frankfurt am Main, 6 November 2024
DEMIRE Deutsche Mittelstand Real Estate AG

Frank Nickel
(CEO)

Tim Brückner
(CFO)

Ralf Bongers
(Executive Board Member for Transactions)

Declaration by the executive directors

As members of the Executive Board of DEMIRE Deutsche Mittelstand Real Estate AG, we hereby affirm that, to the best of our knowledge, the consolidated financial statements give a true and fair view of the Group's net assets, financial position and results of operations in accordance with the applicable accounting principles and that the Group management report gives a true and fair view of the development and performance of the business, including the business results and the position of the Group, together with a description of the principal opportunities and risks associated with the Group's expected development.

Frankfurt am Main, 6 November 2024

DEMIRE Deutsche Mittelstand Real Estate AG

Frank Nickel (CEO)
Tim Brückner (CFO)
Ralf Bongers
(Executive Board Member for Transactions)

IMPRINT

COMPANY CONTACT DETAILS

DEMIRE Deutsche Mittelstand Real Estate AG
Robert-Bosch-Straße 11
D-63225 Langen
Germany
T+49 (0) 6103-372 49-0
F+49 (0) 6103-372 49-11
ir@demire.ag
(9) www.demire.ag

DEMIRE

PUBLISHER
The Executive Board of
DEMIRE Deutsche Mittelstand Real Estate AG

CONCEPT AND LAYOUT
Berichtsmanufaktur GmbH, Hamburg

PUBLICATION DATE
7 November 2024