Deutsche Wohnen SE — Call Transcript 2014

May 14, 2014

Deutsche Wohnen AG

» Q1 2014 results Conference Call, 14 May 2014

2

» Highlights Q1-2014

» Highlights Q1-2014

Operations (y-o-y)	   	Very strong like for like rental growth Significantly increased NOI / sqm / month Value creation by strong privatisation business Successful institutional sales	Portfolio Core+ Core)1) +3.5% (Letting and EUR 4.33 sqm (+5.1%) value2) 52% gross margin above book value2) 10% gross margin above book
Financials (y-o-y)	   	EBITDA (adjusted) FFO (w/o disposals) FFO (w/o disposals) per share EPRA NAV per share	EUR 126.7m (+93%) EUR 59.1 (+91%) EUR 0.21 (+5%) EUR 14.22 (+1.6% vs. Dec. 13)
Integration of GSW	  	Well on track in regard to cost savings and Domination agreement will enable the group to Exchange ratio offer of 7 Deutsche Wohnen shares of EUR 1.40 per share (net)	synergies: EUR 10m P&L effect in 2014 expected enhance profitability and cashflow for 3 GSW shares or guaranteed dividend

1) Incl. pro forma GSW portfolio last 12 months 2) Based on closed units Q1-2014

» Portfolio development and operations

» Strong earnings and cash contributions from letting

	in EUR m	Q1-2014	Q1-2013	In-place rent:
	Current gross rental income	157.0	83.3	Q1-14: EUR 5.58 / sqm
	Non-recoverable expenses	(3.2)	(1.3)
Earnings from letting:	Rental loss	(2.5)	(1.1)	Maintenance1)
+ EUR	Maintenance	(17.2)	(8.4)	Q1-14: EUR 7.38 /sqm (Q1-13: EUR 6.48 /sqm)
60.8m	Others	(2.4)	(1.6)	additional EUR 7.9m for modernisation (EUR
	Earnings from Residential Property Management	131.7	70.9	3.39 /sqm in Q1-14)
	Personnel, general and administrative expenses	(10.6)	(6.8)	NOI increased by EUR
	Net Operating Income (NOI)	121.1	64.1	57.0m (89%) due to
	NOI margin	77.1%	77.0%	higher current gross rental income of EUR
	NOI in EUR / sqm / month	4.33	4.12	73.7m (full effect of 2013 acquisitions including
	in EUR m	Q1-2014	Q1-2013	GSW)
Cash flow	Net operating income (NOI)	121.1	64.1
+ 100.3%	Cash interest expenses	(46.0)	(26.6)	w/o EUR 1.1m for
	Cash flow from portfolio after cash interest expenses	75.1	37.5	nursing and assisted living
	Interest cover ratio	2.63	2.41
NOI-margin NOI in EUR / sqm / month	 Constant on y-o-y basis despite higher  + 5.1% due to changes in portfolio structure resulting from GSW acquisition among others	maintenance expenses
				1) extrapolated 12 months

» Overview of portfolio as at 31 March 2014

31/03/2014	Residential units	Share in terms of	Area 1)	In-place 2) rent	Vacancy	Fair Value 3)	Share in terms	Fair Value 4)	Multiple in-place	Yield	Multiple market	Yield
	#	units %	K sqm	EUR/sqm	%	EUR m	of Fair Value %	EUR/sqm	rent	%	rent	%
Total	148,797	100%	9,040	5.58	2.6	8,823	100%	947	14.3	7.0	12.8	7.8
Strategic core and growth regions	145,979	98%	8,860	5.60	2.4	8,712	98.7%	955	14.3	7.0	12.8	7.8
Letting portfolio	139,012	93%	8,398	5.60	2.2
Privatisation	6,967	5%	462	5.49	5.7
Core+	118,690	80%	7,139	5.68	2.2	7,334	83.1%	995	14.6	6.8	13.0	7.7
Letting portfolio	113,825	76%	6,818	5.69	2.0
Privatisation	4,865	3%	321	5.53	5.1
Core	27,289	18%	1,721	5.23	3.4	1,378	15.6%	784	12.8	7.8	11.8	8.5
Letting portfolio	25,187	17%	1,581	5.21	3.1
Privatisation	2,102	1%	140	5.38	7.1
Non-core	2,818	2%	180	4.91	11.2	112	1.3%	593	11.4	8.8	9.7	10.3
Disposal	584	0%	36	5.01	16.1
Other	2,234	2%	143	4.88	9.9

Dynamic Core⁺regions comprise 80% of total units and 83% of total fair value

Attractive spread between multiples of in-place rent and market rent offering further potential for NAV-growth

Very successful ongoing disposal of non-core portfolio

1)		Only residential area
----	--	-----------------------	--

• 2) Contractually owed rents from rented apartments divided by rented area
• 3) Fair Value including residential, commercial and parking spaces 4) Fair Value divided by residential and commercial area

» Pro forma like for like overview of portfolio as at 31 March 2014

In-place rent (like-for-like) and vacancy (like-for-like)

Like-for-like 31/03/2014	Residential units #	In-place rent1) 31/03/2014	In-place rent1) 31/03/2013	in %	Vacancy 31/03/2014	Vacancy 31/03/2013
		EUR/sqm	EUR/sqm	y-o-y	in %	in %
Total	134,912	5.61	5.43	3.4%	2.6%	2.4%
Strategic core and growth regions (letting portfolio)	126,541	5.63	5.44	3.5%	2.2%	2.3%
Core+	103,532	5.72	5.50	4.0%	2.0%	2.1%
Greater Berlin	93,992	5.60	5.38	4.2%	2.0%	2.0%
Rhine-Main	8,090	7.04	6.87	2.5%	1.9%	2.5%
Rhineland	1,450	6.54	6.26	4.4%	3.4%	3.2%
Core	23,009	5.24	5.18	1.2%	3.1%	3.2%
Hanover / Brunswick / Magdeburg	10,025	5.20	5.15	1.0%	3.9%	4.3%
Rhine Valley South	4,648	5.56	5.44	2.2%	1.4%	1.6%
Rhine Valley North	2,798	5.18	5.11	1.4%	1.2%	1.5%
Central Germany	3,776	5.08	5.04	0.7%	3.3%	3.1%
Others	1,762	5.08	5.05	0.7%	6.2%	3.6%
Privatisation	5,554	5.50	5.43	1.2%	5.7%	2.1%
Non-core	2,817	4.91	4.90	0.1%	11.1%	7.5%

Strong rental growth in our strategic core and growth regions

Core⁺ regions with compelling rental growth (l-f-l) and a very low vacancy rate 'stars'

• Driven by new-letting rents and execution of Berlin rent index ('Mietspiegel')
• Core regions with moderate rental growth (l-f-l) and a low vacancy rate 'cash cows'

1) Contractually owed rent from rented apartments divided by rented area

5.69 5.57 7.04 6.50 In-place rent in EUR/sqm Rent potential » Dynamic rent potential in Core⁺ regions (letting portfolio) Note: incl. acquisition 1) Contractually owed rent from rented apartments divided by rented area 2) Contractually owed rents for newly concluded contracts for units not subject to rent control effective in 2014 respectively 3) Rent potential = New-letting rent compared to in-place rent 1) 3) New-letting rent in EUR/sqm2) 7.09 6.81 8.89 8.17 Core⁺ Greater Berlin Rhine-Main Rhineland 24.6% 22.3% 26.3% 25.7% New-letting contracts4) 2,340 1,979 301 60 Current tenant turnover: 7% annualised in Core⁺ Regions

9

4) Unrestricted units as at 31/03/2014

» Focused and sustainable investments in the portfolio

Maintenance and modernisation

		Q1-2014	Q1-2013
	EUR/sqm1) EUR m		EUR m	EUR/sqm1)
Maintenance	17.2	7.38	8.4	6.48
Modernisation	7.9	3.39	1.0	0.77
Total	25.1	10.76	9.4	7.25

We continue to target a high level for maintenance and modernisation on the basis of portfolio analysis to ensure our quality standards for a sustainable portfolio.

1) Based on the quarterly average area; extrapolated 12 months

» NAV contribution by strong disposal business

Closed in EUR m	Q1-2014	Q1-2013
Sales proceeds	86.4	32.1
Cost of sales	(3.0)	(2.0)
Net sales proceeds	83.4	30.1
Carrying amounts of assets sold	(67.6)	(24.6)
Earnings from Disposals	15.8	5.5

Free cash flow from sales activities of ca. EUR 45m (520 closed privatisation units and 982 closed units institutional sales)

» Signed units for privatisation business & non-core disposals

Signed with expected closing in 20141)	Units	Transaction volume	Fair value	Gross Margin
	#	EUR m	EUR m	EUR m	%2)
Privatisation	1,082	92.7	62.4	30.3	49%
Institutional sales	1,525	59.0	51.9	7.1	14%
Thereof non-core properties	1,244	40.7	37.1	3.6	10%
In total	2,607	151.7	114.3	37.4	33%

• Ongoing and successful focus on disposals in none-core regions
• 71% of privatisation business from condominium sales in Berlin

Berlin: Papageienviertel Hanover: Bemerode/Kronsberg Berlin: Hufeisensiedlung Berlin: Steglitz

1) Incl. overhang 2013

2) (Transaction volume divided by Fair Value)-1

» Nursing and Assisted Living − increasing FFO contribution

in EUR m	Q1-2014	Q1-2013	31/03/2014	Facilities	Places
Income			Greater Berlin	12	1,442
Nursing	13.7	11.8	Saxony	7	475
Living	1.5	0.5	Others	2	257
Other	1.6	1.0	In total	21	2,174
Total income	16.8	13.3
Costs				Average Occupancy
Nursing and corporate expenses	(4.4)	(3.4)
Staff expenses	(8.2)	(6.8)
Total costs	(12.6)	(10.2)
Earnings from Nursing and Assisted Living	4.2	3.1	96.9	96.0
Cash interest expenses	(1.1)	(0.8)
FFO contribution	3.1	2.3	31/03/2013	31/03/2014

18 of 21 facilities are owned by Deutsche Wohnen with Fair Value of the properties of EUR 144.9m

Slight decrease in average occupancy to 96.0% mainly due to last years` acquisitions with upside potential

» Financials

» Adjusted EBITDA increased by ~ EUR 61m / + 93% (y-o-y)

in EUR m	Q1-2014	Q1-2013
Earnings from Residential Property Management	131.7	70.9
Earnings from Disposals	15.8	5.5
Earnings from Nursing and Assisted Living	4.2	3.1
Segment contribution margin	151.7	79.5
Corporate expenses	(22.8)	(11.8)
Other operating expenses/income	(4.4)	(2.0)
EBITDA	124.5	65.7
Restructuring & Reorganisation expenses	2.2	0.0
EBITDA (adjusted)	126.7	65.7

Increased by ~ EUR 61m mainly attributable to an increase of earnings from letting ~ EUR 61m and from disposals ~ EUR10 m Adj. EBITDA

» Adjusted EBT increased by ~ 113% (y-o-y)

in EUR m	Q1-2014	Q1-2013
EBITDA (adjusted)	126.7	65.7
Depreciation	(1.6)	(1.3)
Financial result (net)	2) (52.0)	3) (30.1)
EBT (adjusted)	73.1	34.3
Restructuring & Reorganization	(2.2)	0.0
Valuation SWAP and Convertible Bond	(16.7)	(0.2)
EBT	54.2	34.1
Current taxes	(3.3)	(2.6)
Deferred taxes	(5.4)	(5.3)
Profit	45.5	26.2
1) Earnings per share	0.16	0.17

in EUR m	Q1-2014	Q1-2013
Interest expenses	(47.1)	(27.4)
Non-cash interest expenses	(5.2)	(2.9)
	(52.3)	(30.3)
Interest income	0.3	0.2
Financial result (net)	(52.0)	(30.1)

Non-cash interest expenses (in EUR m)	Q1-2014	Q1-2013
Low interest bearing liablities	(4.3)	(1.8)
Liabilities from EK 02 taxes	(0.4)	(0.5)
Employee benefit liability	(0.5)	(0.5)
DB 14	0.0	(0.1)
Total	(5.2)	(2.9)

1)Based on weighted average shares outstanding (Q1-14: 286.2m; Q1-13: 158.1m) 2) Adjusted for Valuation of SWAP and Convertible Bond (EUR 16.7m)

3) Adjusted for Valuation SWAP (EUR -0.2m)

» Recurring FFO per share performance +5 % (y-o-y)

in EUR m	Q1-2014	Q1-2013
Profit	45.5	26.2
Earnings from Disposals	(15.8)	(5.5)
Depreciation	1.6	1.3
Valuation SWAP and Convertible Bond	16.7	0.2
Non-cash financial expenses	5.2	2.9
Deferred taxes	5.4	5.3
Tax benefit from capital increase	0.0	0.5
FFO attributable to non-controlling interest	(1.7)	0.0
Restructuring & Reorganization expenses	2.2	0.0
FFO (w/o disposals)	59.1	30.9
Earnings from Disposals	15.32)	5.5
FFO (incl. disposals)	74.4	36.4
1) FFO (w/o disposals) per share	0.21	0.20
1) FFO (incl. disposals) per share	0.26	0.23

Accretive FFO (w/o disposals) per share development: +5% (y-o-y)

1) Based on weighted average shares outstanding (Q1-14: 286.2m; Q1-13: 158.1m)

2) Adjusted for minority contribution

» Balance sheet – Assets

in EUR m	31/03/2014	31/12/2013
Investment properties	8,907.8	8,937.1
Other non-current assets	551.4	552.2
Derivatives	0.2	2.7
Deferred tax assets	282.9	280.5
Non current assets	9,742.3	9,772.5
Land and buildings held for sale	91.6	97.1
Trade receivables	22.3	29.8
Other current assets	57.8	77.3
Cash and cash equivalents	180.1	196.4
Current assets	351.8	400.6
Total assets	10,094.1	10,173.1

» Balance sheet – Equity and Liabilities

in EUR m	31/03/2014	31/12/2013
Total equity	3,977.8	3,944.3
Financial liabilities	5,032.1	5,154.6
Convertible	256.4	250.2
Tax liabilities	68.5	62.6
Deferred tax liabilities	355.4	353.1
Derivatives	181.6	159.3
Other liabilities	222.3	249.0
Total equity and liabilities	10,094.1	10,173.1

Equity in EUR m	31/03/2014
+ Profit	45.5
- Cash flow hedge	11.3
- Pensions	0.7

Equity ratio

Stable at 39% on y-o-y basis

» EPRA NAV per share up by 1.6%

in EUR m	31/03/2014	31/12/2013	in EUR m	31/03/2014	31/12/2013
Equity (before non-controlling interests)	3,810.1	3,777.8	EPRA NAV per share in EUR (undiluted)	14.22	13.99
Fair value adjustment of convertible bond	6.0	(2.2)	Adjusted NAV per share in EUR (undiluted)	12.50	12.27
Fair values of derivative financial instruments	181.4	156.5	Shares outstanding in m	286.22	286.22
Deferred taxes (net)	72.5	72.6
EPRA NAV (undiluted)	4,070.0	4,004.7
Goodwill	(491.6)	(491.6)
Adjusted NAV (undiluted)	3,578.4	3,513.1

EPRA NAV	
per share	Increased by 1.6% to EUR 14.22 as at 31 March 2014
Adjusted	
NAV	Reflects (i.e. deducts) the goodwill from GSW transaction

» Outlook

» Q & A

» Appendix

» LTV at 56.5%; low average interest rate ~ 3.36%

	Financial liabilities in EUR m
	Mark-to-market	5,288.5
Debt structure	LTV (%)	56.5%
	Nominal value	5,379.0
	LTV (%)	57.5%
	 Avg. interest rate incl. Convertible	bond: ~ 3.36%
	 Avg. mandatory redemptions	p.a.: ~ 1.6%
Debt service	 Avg. weighted maturity:	~ 7.9 years
	 Interest rate fixed or hedged:	~ 91%

Significant potential from due refinancing available in order to enhance FFO profile through a decrease of existing interest rate levels

1) Convertible Bond

» Details on regions of portfolio as at 31 March 2014

31/03/2014	Residential Share in terms					Commercial	Parking
	units	of units	Area	In-place rent 1 )	Vacancy	units	spaces
	#	in %	k sqm	EUR/sqm	in %	#	#
Total	148,797	100%	9,040	5.58	2.6%	2,098	31,408
Strategic core and growth regions	145,979	98%	8,860	5.60	2.4%	2,063	30,447
Letting portfolio	139,012	93%	8,398	5.60	2.2%	1,953	27,873
Privatisation	6,967	5%	462	5.49	5,7%	110	2,574
Core +	118,690	80%	7,139	5.68	2.2%	1,845	20,504
Letting portfolio	113,825	76%	6,818	5.69	2.0%	1,737	18,502
Privatisation	4,865	3%	321	5.53	5.1%	108	2,002
Greater Berlin	107,853	72%	6,479	5.56	2.1%	1,631	14,851
Letting portfolio	104,066	70%	6,235	5.57	2.0%	1,587	14,122
Privatisation	3,787	3%	244	5.25	3.9%	44	729
Rhine-Main	9,018	6%	542	6.97	2.6%	168	4,892
Letting portfolio	8,090	5%	479	7.04	1.9%	121	4,014
Privatisation	928	1%	63	6.35	8.4%	47	878
Rhineland	1,819	1%	119	6.54	3.9%	37	732
Letting portfolio	1,669	1%	104	6.50	3.4%	29	366
Privatisation	150	0%	15	6.84	7.1%	8	366
Core	27,289	18%	1,721	5.23	3.4%	218	9,943
Letting portfolio	25,187	17%	1,581	5.21	3.1%	216	9,371
Privatisation	2,102	1%	140	5.38	7.1%	2	572
Hanover/Brunswick/Magdeburg	11,039	7%	708	5.25	4.1%	111	2,776
Letting portfolio	10,210	7%	654	5.20	3.9%	110	2,499
Privatisation	829	1%	54	5.85	6.9%	1	277
Rhine Valley South	4,853	3%	303	5.56	1.8%	41	3,341
Letting portfolio	4,650	3%	290	5.56	1.4%	41	3,186
Privatisation	203	0%	13	5.64	10.0%	0	155
Rhine Valley North	2,949	2%	191	5.20	1.7%	3	2,116
Letting portfolio	2,845	2%	184	5.19	1.4%	3	2,007
Privatisation	104	0%	7	5.53	10.1%	0	109
Central Germany	5,720	4%	343	4.98	3.0%	55	1,152
Letting portfolio	5,720	4%	343	4.98	3.0%	55	1,152
Privatisation	0	0%	0	0	0.0%	0	0
Others	2,728	2%	176	5.03	6.2%	8	558
Letting portfolio	1,762	1%	110	5.08	6.2%	7	527
Privatisation	966	1%	66	4.94	6.2%	1	31
Non-Core	2,818	2%	180	4.91	11.2%	35	961
Disposals	584	0%	36	5.01	16.1%	22	236
Other	2,234	2%	143	4.88	9.9%	13	725

1) Contractually owed rents from rented apartments divided by rented area

» Disclaimer

This presentation contains forward-looking statements including assumptions, opinions and views of Deutsche Wohnen or quoted from third party sources. Various known and unknown risks, uncertainties and other factors could cause actual results, financial positions, the development or the performance of Deutsche Wohnen to differ materially from the estimations expressed or implied herein. Deutsche Wohnen does not guarantee that the assumptions underlying such forward-looking statements are free from errors nor do they accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and accordingly, none of Deutsche Wohnen AG or any of its affiliates (including subsidiary undertakings) or any of such person's officers, directors or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. Deutsche Wohnen does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation.

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