Deutsche Wohnen SE — Investor Presentation 2012

Jul 4, 2012

Deutsche Wohnen AG

» Expanding on our strategy Investor Presentation July 2012

» Management board

"Acquisition of BauBeCon allows Deutsche Wohnen to create value and achieve sustainable growth as one of the leading residential property companies in Germany"

Michael Zahn Chief Executive Officer

• 20 years of experience in real estate
• Significant experience in structuring and integrating portfolio and corporate acquisitions. Total transaction volume of 150,000 residential units successfully executed in the past 8 years
• Management Board member since 2007 and Chairman since 2008

Helmut Ullrich Chief Financial Officer

• 23 years of experience in real estate
• Long-standing track record in private and public real estate capital markets. Spent 17 years as Senior Executive with Deutsche Bank Group / RREEF
• Management Board member since 2007

Lars Wittan

Member of the Management Board

• 5 years of experience in real estate
• Expertise in Accounting, Tax, Risk, Controlling and Auditing. Previously, German Certified Public Accountant with Ernst & Young
• Management Board member since October 2011. Joined Deutsche Wohnen in 2007

» Recent rights offering overview

Offer structure	 At market rights offering launched 11 June 2012  43,842,858 new shares (7:3 – seven existing shares entitled their holder for three new shares)  Subscription price: EUR 10.50 (set on 19 June 2012)  Take up quota: 99.05%  Subsequent private placement of remaining 417,999 shares at EUR 12.30  Closing on 28 June 2012
Gross proceeds	 c. EUR 461.1m
Use of proceeds	 Net proceeds to be used for financing of the acquisition of BauBeCon and future acquisitions in German Metropolitan Areas » ~ 75% of the net proceeds for the BauBeCon portfolio, » Remainder of net proceeds to be used for identified further complementary acquisitions

» BauBeCon – excellent strategic fit for Deutsche Wohnen

Sizeable geographic overlap, portfolio expansion into new German Metropolitan Area (1)

Second largest listed German residential real estate company (1)

Transaction expected to be FFO accretive upon full integration of BauBeCon

• Adding ~ 23,400 residential units
• achieve additional exposure to new German Metropolitan Area Hanover, Braunschweig and Magdeburg
• More than 30% of BauBeCon units located in existing core regions of Deutsche Wohnen
• ~ 62% of the Deutsche Wohnen portfolio located in growth regions/agglomerations (Greater Berlin, Rhine-Main, Rhineland)
• ~ EUR 96m gross rental income in FY2011
• Sizeable portfolio of combined 73,260 residential units allows for increased operational flexibility
• Post acquisition, Berlin exposure to account for ~ 47% of Deutsche Wohnen portfolio, i.e. ~ 34,300 units
• Sizeable FFO contribution based on sustainable financing structure and cost saving potentials and a general reduction of administrative costs per unit
• Sustainable financing structure with c. EUR 702m of new mortgage debt at an average interest rate of 3.1–3.7%(2)

(2) Based on committed financing (subject to documentation) and a weighted average swap rate of c. 118bps per 31 May 2012 (will be fixed on draw down)

» BauBeCon – compelling key portfolio metrics

BauBeCon group 31 March 2012 (1)	Residential units	Share of total portfolio	In-place rent (2)	Vacancy		Fair value (3) Fair value (3)	Implied in place rent multiple	Implied in-place rental yield
	#	%	EUR/sqm	%	EUR m	EUR/sqm	x	%
Total core regions	19,099	81.5%	5.40	2.7%	1,096.0	892	13.7	7.3%
Hanover-Braunschweig-Magdeburg	9,044	38.6%	5.26	3.6%	466.9	786	12.4	8.0%
Greater Berlin	6,493	27.7%	5.62	0.6%	413.0	1,093	16.1	6.2%
Rhineland	845	3.6%	6.05	6.7%	63.4	939	13.7	7.3%
Rhine-Main	466	2.0%	6.07	3.9%	46.7	1,077	13.3	7.5%
Other	2,251	9.6%	4.98	2.6%	106.0	729	12.3	8.2%
Disposal regions	4,339	18.5%	4.76	6.1%	139.0	482	9.2	10.9%
Eastern states of Germany	2,672	11.4%	4.67	3.6%	78.2	479	9.2	10.9%
Western states of Germany	1,667	7.1%	4.90	9.3%	60.8	485	9.2	10.8%
Total	23,438	100.0%	5.29	3.3%	1,235.0	814	13.0	7.7%

Solid historic performance of BauBeCon portfolio before acquisition (1)

Vacancy (%) (4), (5) In-place rent (EUR/sqm/month) (4) Total maintenance (EUR/sqm/year)

(1) Based on information received from the seller. We were not able to verify the BauBeCon portfolio

and financial information to the same extent as information relating to the Deutsche Wohnen Group (2) Based on residential rent

(3) Split of enterprise value for 100% of BauBeCon Group (total consideration of EUR 1,131m plus existing debt

of EUR 85m plus other adjustments to purchase price of EUR 19m) by region

(4) As of 31 December (5) Based on potential rent

» BauBeCon – strategic fit of Deutsche Wohnen core regions and expansion into new German Metropolitan Area

Deutsche Wohnen incl.
BauBeCon		Share by		Share by
31 March 2012 (1)	Residential units	units	Fair value (2)	value
	#	%	EUR m	%
Total core regions	65,450	89.3%	3,930	93.8%
Greater Berlin	34,338	46.9%	2,046	48.8%
Rhine-Main incl. Frankfurt/Main	9,375	12.8%	721	17.2%
Hanover-Braunschweig-Magdeburg	9,044	12.3%	467	11.1%
Rhine Valley South	5,103	7.0%	282	6.7%
Rhine Valley North	3,160	4.3%	150	3.6%
Rhineland	2,005	2.7%	143	3.4%
Other	2,425	3.3%	121	2.9%
Disposal regions	7,810	10.7%	259	6.2%
Total	73,260	100.0%	4,189	100.0%

Combined portfolio to increase to 73,260 units

• More than 80% of the acquired portfolio is located in core regions
• Post acquisition, Berlin exposure to account for ~ 47% of Deutsche Wohnen portfolio, i.e. ~ 34,300 units

(1) Based on information received from the seller. We were not able to verify the BauBeCon portfolio and financial information to the same extent as information relating to the Deutsche Wohnen Group

(2) Fair value of Deutsche Wohnen total properties as of 31 March 2012 plus enterprise value for 100% of BauBeCon Group of EUR 1,235m (total consideration of EUR 1,131m plus existing debt of EUR 85m plus other adjustments to purchase price of EUR 19m) as of December 31, 2011 allocated to regions

» Integration plan for BauBeCon

Integration of BauBeCon into Deutsche Wohnen - Prelios contract will be terminated 31 May 2013

Central functions to be integrated into existing central organization in Berlin

• Accounting and rent collection
• Centralized purchasing
• Centralized service centre

4 new service points

Integration of c. 16,000 flats

9 existing service points Integration of c. 7,400 flats

• facility management
• rentals
• maintenance
• tenant assistance

» Sizeable synergy potential from cost savings and improved operational processes and performance of ~ EUR 10m p.a. FFO enhancement upon full integration of BauBeCon

» Largest listed player in the German residential market by freefloat market cap

Number of residential units (as of 31 March 2012)

» Deutsche Wohnen is now the largest German real estate company by freefloat market cap

(1) Pro forma including BauBeCon, as of 31 March 2012. Based on information received from the seller. We were not able to verify the BauBeCon portfolio and financial information to the same extent as information relating to the Deutsche Wohnen Group

(2) Freefloat according to Deutsche Börse definition per 18 June 2012 (Deutsche Wohnen: 94.25%, TAG: 100.00%, GSW 93.8%). For Gagfah 66% per annual report 2011 of the holding was used

increase

» FFO impact of the BauBeCon acquisition

Impact of change in BauBeCon's financing costs – sensitivity on swap rate with weighted average spread of 210bps p.a.

Swap rate weighted(4) (%)	1.00%	1.10%	Today(6) 1.18%	1.20%	1.30%	1.40%	1.50%	1.60%	1.70%
Total interest rate for new debt (%)	3.10%	3.20%	3.28%	3.30%	3.40%	3.50%	3.60%	3.70%	3.80%
Total interest expense(5) (EUR m)	24.3	25.0	25.5	25.7	26.4	27.1	27.8	28.5	29.2
Run-rate FFO contribution before
synergies and tax (EUR m)	33.2	32.5	31.9	31.8	31.1	30.4	29.7	29.0	28.3

(1) Figures are based on information provided by seller in absence of audited consolidated financial statements;

there are no consolidated financials for BauBeCon Group for FY2011

(2) Based on an EBITDA margin (excl. revaluations, disposals and one-off effects) in 2011 of 60%

(3) EUR 702m mortgage debt at average interest cost of 3.1-3.8% p.a. (depending on the prevailing swap rate, will be fixed on draw down) and EUR 85m of existing debt at ~3% p.a. before synergies 33.2 32.5 31.8 31.1 30.4 29.7 29.0 28.3

(4) Based on maturity of loans of 5 to 7 years and a hedging ratio of ~70% per share 0.23 0.22 0.22 0.21 0.21 0.20 0.20 0.19

(5) Including EUR 85m of existing debt at ~3% p.a. (6) Weighted underlying swap rate per 31 May 2012

total FFO upon full integration

⁹

»BauBeCon – transaction expected to be FFO accretive upon full integration

Expected FFO impact of BauBeCon on Deutsche Wohnen FFO on a run-rate

» BauBeCon as attractive transaction - already before achieving synergies

» Solid Deutsche Wohnen balance sheet after BauBeCon acquisition and capital increase

BauBeCon – transaction financing structure

	EUR m
Acquisition price (excl. acquisition costs)	1,235
Existing / subsidized loans	85
Other adjustments to acquisition price	19
Purchase consideration	1,131
New mortgage loans	702
Proceeds from capital increase	~325
Existing cash	~105

LTV bridge including BauBeCon

Acquisition will be financed conservatively and 100% of loans committed(1)

	Mortgage debt	Interest rate (incl. margin (2) and hedging)	Hedging ratio
	EUR m	bps	%
Bank 1	96.0	~ 350	76%
Bank 2	96.1	~ 320	80%
Bank 3	245.2	~ 320	70%
Bank 4	134.1	~ 350	65%
Bank 5	117.0	~ 310	70%
Acquisition line	14.0	~ 370	0%
Total	(3) 702.3	~ 330	70%

• The financing strategy for the BauBeCon portfolio is based on two pillars
• Long-term financing for those portfolios that are to be held in the long-term
• Flexible financing for portfolios, which are potentially sold by way of single unit disposals or block sales
• Weighted average maturity amounts to 5 to 7 years
• Weighted average hedging ratio of ~70%

(1) Subject to documentation

(3) Total commitments (subject to documentation) amount to EUR733.1m due to rolled debt amounts of BauBeCon Group that were available before the acquisition by Deutsche Wohnen

⁽²⁾ Excluding prior charges, based on current swap rate

» Continue growth strategy through sourcing and completing attractive acquisition opportunities

Selected identified portfolios of the current Deutsche Wohnen pipeline for further acquisitions

	Category	Approx. # of units	Approx. potential GAV (EUR m)	Metropolitan Area / current Deutsche Wohnen core region	Update on process / acquisition rationale
	Advanced due diligence, key commercial terms discussed, in final stage of negotiations
oday	Braunschweig/Dresden Leipzig-Erfurt	5,000	(1) 241	 / 	fully refurbished, historic buildings, focus on cash flow, under exclusivity
ne t peli	Berlin / Potsdam	1,500	(1) 83	 / 	portfolio with sizeable rent potential
Pi	Preliminary discussions and/or due diligence
	Berlin	5,000	(1) 242	 / 	fully refurbished, focus on cash flow
	Advanced due diligence, key commercial terms discussed, start of negotiations
ber 2011 ne per	Berlin	5,000	(1) 300–350	 / 	price disagreements/no longer in the market
m	Preliminary discussions and/or due diligence
peli ove Pi	Berlin	6,000	(1) 350–400	 / 	part of BauBeCon portfolio/acquired
N	Metropolitan Area in Western Germany	5,000	(1) 350–400	 / 	process not started, further delay expected

• Pipeline of bolt-on acquisitions of units in core regions to strengthen the overall quality of the Deutsche Wohnen portfolio
• Selective attractive opportunities, which allow for potential FFO and/or EPRA NAV accretion
• Current pipeline with incremental FFO yield before tax of approximately 7.5-8.5% based on assumed financing at 60-65% LTV and 3.9% interest p.a.

(1) According to preliminary Deutsche Wohnen estimates based on experience from previous transactions

» Summary of key investment highlights

• Strong portfolio acquisition capabilities and track record, with BauBeCon as milestone acquisition in Deutsche Wohnen's growth strategy
• BauBeCon as a perfect strategic fit and accretive transaction
• Expansion of quality residential portfolio focused on attractive German Metropolitan Areas
• Proven asset and portfolio management track record as basis for continuous operations performance improvement
• Highly experienced management team with longstanding real estate experience and a proven platform integration excellence
• Solid balance sheet and proven ability to access financing short-term to support strategic acquisitions
• Continue growth strategy through realizing of smaller accretive acquisition opportunities in core regions

» Appendix

Portfolio information BauBeCon

» 82% of BauBeCon is focussed on core regions

BauBeCon Group portfolio 31 March 2012 (1)	Residential units	Share of total portfolio
	#	%
Total core regions	19,099	81.5%
Hanover-Braunschweig-Magdeburg	9,044	38.6%
Greater Berlin	6,493	27.7%
Rhineland	845	3.6%
Frankfurt/Rhine-Main	466	2.0%
Other	2,251	9.6%
Disposal regions	4,339	18.5%
Eastern states of Germany	2,672	11.4%
Western states of Germany	1,667	7.1%
Total	23,438	100.0%

• ~ 30% of BauBeCon portfolio (~ 6,500 units) is located in Greater Berlin
• substantially deepens the market presence
• 4 th UNESCO World heritage colony in Berlin acquired
• Expansion into new Metropolitan Areas
• In particular Hanover/Braunschweig/Magdeburg (~ 9,000 units)
• More than 20,000 residential units are outside rent restrictions, representing 85.8% of the total BauBeCon portfolio (versus share in current Deutsche Wohnen portfolio: 80.0%)
• Greater Berlin 97.4%, from 2013 on 100.0%
• Attractive building age clusters
• 45% the portfolio consists of old buildings ("Altbau"), thereof 97% located in Berlin and Eastern Germany
• 90% of these have been fully refurbished, 8% have been partially refurbished in the last 15 years
• Portfolio in good technical condition
• Property lot size characteristics (i.e., concentration of units on individual properties) allow for efficient management
• No immediate portfolio streamlining required
• Majority of units allocated to disposal regions relates to well maintained properties in Eastern Germany with strong cash flow profile
• Realize full value potential by way of active asset management over time

⁽¹⁾ We were not able to verify BauBeCon portfolio and financial information to the same extent as information relating to the Deutsche Wohnen Group

» German residential real estate – BauBeCon strengthening existing core market Berlin

(1) We were not able to verify BauBeCon portfolio and financial information to the same extent as information relating to the Deutsche Wohnen Group

» German residential real estate – new core region

	Hanover - Braunschweig - Magdeburg
Region	 The region comprises four major cities with a total of 1.2 million inhabitants (approx. 903k households) with Hanover and Magdeburg being the state capitals
PPI (2011)	 101.1
GDP per capita (2010)	 Approximately €34,675 for Hanover and approximately €34,496 for Braunschweig (above the German average of €30,566). The GDP per capita for Magdeburg was €27,677
Households	 Stable development (+2.7% since 2000; -0.5% until 2020)
Unemployment (2010)	 9.2%
Employers	 Various industrial companies: Volkswagen AG, MAN SE, Continental AG as well as several automotive suppliers and some of the biggest biodiesel and oil producers are located in Magdeburg
	 Regional service companies: NORD/LB, AWD, HDI Versicherungen, Talanx and TUI
	 Also the Hanover Fair is one of the leading fair locations in Germany

» Appendix

Financial information

» Deutsche Wohnen performance since November 2011 capital increase until start of recent rights offering

EUR 179m net proceeds raised at EUR 9.10(1) per share in November 2011

FFO per share and NAV per share already compensating dilution on basis of operational performance despite capital increase in November 2011

» Profit and loss statement

EUR m	2009	2010	2011	Q1/2012
Earnings from Residential Property Management	151.0	150.9	157.4	44.1
Earnings from Disposals	9.7	12.7	10.6	3.8
Earnings from Nursing and Assisted Living	9.1	8.9	9.2	2.6
Segment profit/loss	169.8	172.5	177.2	50.5
Corporate expenses	-34.6	-31.8	-32.9	-7.7
Other operating expenses/income	-1.7	-4.6	-2.3	0.3
EBITDA (adjusted)	133.51)	136.1	142.0	43.1
Depreciation	-2.8	-3.0	-3.0	-0.7
Financial result (net)	-112.1	-99.4	-93.0	-22.8
EBT adjusted	18.6	33.7	46.0	19.6
Restructuring	-7.8	0.0	0.0	0.0
Valuation investment properties	0.0	42.7	40.0	0.0
Valuation SWAP	-1.2	-0.2	-0.2	-0.1
Prepayment penalty	-6.2	-23.6	0.0	0.0
Special distribution of DB 14	0.0	0.0	0.0	0.0
EBT as reported	3.4	57.1	85.8	19.5
Taxes	-16.6	-33.3	-35.2	-5.1
Result from discontinued business areas	0.0	0.0	0.0	0.0
Profit/loss	-13.3	23.8	50.6	14.4
Interest expenses	-97.8	-86.3	-81.6	-20.5
Non-cash interest expenses	-15.3	-13.9	-12.1	-2.7
	-113.1	-100.2	-93.7	-23.2
Interest income	0.9	0.8	0.7	0.4
Financial result (net)	-112.1	-99.4	-93.0	-22.8

Taxes in EUR m	2009	2010	2011	Q1/2012
Current income taxes	-1.8	-4.8	-3.0	-0.8
Non-cash taxes due to capital increase	-3.7	0.0	-2.4	0.0
Deferred taxes	-11.1	-28.5	-29.8	-4.3
Total taxes	-16.6	-33.3	-35.2	-5.1

Non-cash interest expenses in EUR m	2011	Q1/2012
Mainly accruals on:
		-1.7
Liabilities from EK 02 taxes	-2.3	-0.5
DB 14	-0.6	0.0
		-0.5
		-2.7
	Low interest bearing liabilities Employee benefit liability Total	-7.2 -2.0 -12.1

1) Adjusted for restructuring- and reorganizational costs

» Balance sheet

EUR m	31/12/2010	31/12/2011	31/03/2012
Investment properties	2,821.0	2,928.8	2,981.0
Other non current assets	29.7	21.8	21.4
Deferred tax assets	78.7	63.0	61.0
Non current assets	2,929.4	3,013.6	3,063.4
Land and building held for sale	15.2	63.5	56.1
Trade receivables	6.7	14.0	8.8
Other current assets	40.9	43.4	43.6
Cash and cash equivalents	46.0	167.8	166.5
Current assets	108.8	288.7	275.0
Total assets	3,038.2	3,302.3	3,338.4

Assets Liabilities

EUR m	31/12/2010	31/12/2011	31/03/2012
Total equity	889.9	1,083.4	1,093.1
Financial liabilities	1,784.5	1,834.7	1,854.3
Tax liabilities	63.9	58.6	60.5
Deferred tax liabilities	92.0	96.2	96.3
Derivatives	70.3	95.0	100.2
Other liabilities	137.6	134.4	134.0
Total equity and liabilities	3,038.2	3,302.3	3,338.4

» Fund from Operations (FFO)

EUR m, except per share data	2009	2010	2011	Q1/2012
Profit / loss	-13.3	23.8	50.6	14.4
Earnings from Disposals	-9.7	-12.7	-10.6	-3.8
Depreciation and amortisation	2.8	3.0	3.0	0.7
Valuation SWAP	1.2	0.2	0.2	0.1
Non-cash financial expenses	15.3	13.9	12.1	2.7
Deferred taxes	11.1	28.5	29.8	4.3
Restructuring	7.8	0.0	0.0	0.0
Fair value adjustments of investment properties	0.0	-47.2	-40.0	0.0
Prepayment penalties	6.2	23.6	0.0	0.0
Tax benefit form capital increase costs	3.7	0.0	2.4	0.0
FFO (w/o disposals)	25.1	33.1	47.5	18.4
Earnings from Disposals	9.7	12.7	10.6	3.8
FFO (incl. disposals)	34.8	45.8	58.1	22.2

» Valuation of portfolio (Deutsche Wohnen standalone)

	31/03/2012
	Fair value	Fair value	Multiple	Multiple
			in-place rent	market rent
	EUR m	EUR/sqm	(x)	(x)
Core regions	2,853	980	14.4	12.7
Greater Berlin	1,633	966	14.5	12.7
Frankfurt/Main	370	1,421	16.9	14.7
Rhine-Main	305	1,006	13.9	12.1
Rhine Valley South	282	853	13.5	12.4
Rhine Valley North	230	831	12.9	11.9
Other	34	671	11.2	9.8
Disposal regions	101	544	10.6	9.4
Adjustment portfolio	34	438	9.9	8.3
Other disposal holdings	67	620	11.0	10.1
Total	2,954	954	14.2	12.6

Data incl. acquired privatisation holdings in Berlin with transfer of risk and rewards as at 1 June 2011

» Well managed portfolio with further growth potential

			Share of total
Residential	Units	Area	portfolio	In-place rent(1)	New-letting rent(2)	Vacancy
	Number	k sqm	%	EUR/sqm	EUR/sqm	%
Total	49,822	3,025		5.60	6.78	2.3%
Core regions	46,889	2,842	94%	5.65	6.90	2.0%
Letting portfolio	42,641	2,566	86%	5.66	6.89	1.6%
Privatisation	4,248	276	8%	5.59		6.3%
Regions in detail
Greater Berlin	27,845	1,662	56%	5.47		1.5%
Letting portfolio	25,212	1,495	51%	5.50	6.60	1.0%
Privatisation	2,633	167	5%	5.21		5.7%
Frankfurt/Main	4,076	247	8%	7.04		1.5%
Letting portfolio	3,505	205	7%	7.16	8.65	0.7%
Privatisation	571	41	1%	6.38		5.9%
Rhine-Main	4,833	289	10%	6.26		4.3%
Letting portfolio	4,357	259	9%	6.21	7.67	(3) 3.9%
Privatisation	476	31	1%	6.70		7.5%
Rhine Valley South	5,103	319	10%	5.33		2.5%
Letting portfolio	4,741	296	9%	5.32	6.22	1.9%
Privatisation	362	23	1%	5.44		9.3%
Rhine Valley North	4,320	276	9%	5.36		2.3%
Letting portfolio	4,114	262	8%	5.35	6.45	2.0%
Privatisation	206	14	1%	5.60		6.7%
Others (only letting portfolio)	712	48	1%	5.07		4.7%
Disposal regions	2,933	183	6%	4.69	4.94	8.4%
Adjustment portfolio	1,220	76	3%	4.40		13.6%
Other disposal holdings	1,713	107	3%	4.87		5.2%

(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 2012

(3) Without vacancy due to current capex measures: 1.8%

» 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.

Deutsche Wohnen AG

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