Deutsche Wohnen SE — Investor Presentation 2021

Nov 12, 2021

Deutsche Wohnen SE

9M 2021 results Conference Call 12 November 2021

Agenda

01	Review and Highlights
02	Portfolio
03	Financials and Outlook
04	Appendix

Review and Highlights

deutsche-wohnen.com 9M 2021 Berlin, Hufeisensiedlung, UNESCO World Heritage

Over the past decade we have developed strongly

Source: Bloomberg as of 26th October 2021, Company Information 1 As reported historically; 2 Based on 366.2m undiluted shares; 3 EPRA NAV 30 Sep 2021 refers to EPRA NTA definition

We have built a valuable portfolio...

German-wide presence

Berlin as key market

Continuous improvement of portfolio quality

• 33% of residential units are reasonably energy efficient (below 100 kWh/sqm)
• 1,000 roof-based photovoltaic systems are planed for our portfolio (investment of approx. EUR 50m)
• Annual investments in maintenance and refurbishment increased from EUR 45.6m to EUR 365.4m

-

2010

EUR 2.7bn fair value

1 Pro forma signed but not yet closed disposals

Active portfolio recycling (Around 50k units sold in the last 10 years¹ )

9M 2021

• to 155,408 owned residential units
• to 9,343 thousand sqm of area
• to EUR 26.1bn fair value

TBD

Tbc MA Zahl 2010

...and created added value for all our stakeholders

Putting our tenants first

Approx. 90% of our tenants are very satisfied or satisfied with their flats

Rent development in line with local rent levels

Providing socially integrative solutions

EUR 30m hardship fund

Voluntary hardship scheme for modernization and rent rises

Ensuring Employment

From around 340 employees1) in 2010 to 1,500 in 2020

Employee satisfaction remains very high at 84%

Focusing on sustainability

Clearly defined path to become climate neutral by 2040

EUR 1bn Green Bond issued for investments in sustainable buildings and energy efficiency

Accelerating sustainable construction

Pipeline with ca. 18,000 apartments

EUR 585m annual procurement expenses for quality of portfolio (thereof 62% in Berlin)

Offering an attractive return for shareholders

From EUR 0.20 Dividend per Share (2010) to EUR 1.03 (2020)

deutsche-wohnen.com 9M 2021 Highlights Portfolio ▪ Streamlining of portfolio almost completed ▪ Revaluation of EUR 1.5bn ytd as transaction market continues to develop strongly ▪ Sale of ~11,000 units to State of Berlin to be closed in near future ▪ Nursing properties further focused on metropolitan areas, seven units to be developed in Hamburg New construction ▪ QUARTERBACK bundles all construction activities in a single platform ▪ Extended construction pipeline and quick realisation of projects ▪ Total investment volume of EUR 5.8bn for c. 12,500 units in Deutsche Wohnen pipeline Outlook ▪ FFO I guidance for 2021 confirmed ▪ Lars Urbansky continues to be Member of the Executive Board for five years Transaction ▪ Successful business combination with Vonovia: Closing took place on 2 November ▪ Vonovia is now the majority shareholder of Deutsche Wohnen with 87.7% shares ▪ Combined forces to invest in modern housing solutions and climate-friendly construction Capital structure ▪ LTV at ~35%, pro forma for signed disposals and remaining conversion of bonds into equity below 30% ▪ ICR above 6x

7

Portfolio focused on Germany's top 8 cities

Strategic cluster	Residential units (#)	% of total (measured by	In-place rent (EUR/sqm/month)	Fair value (EUR/sqm)	Multiple in-place rent	Multiple re-letting rent	Vacancy (in %)
30/09/2021		fair value)			(x)	(x)
Core+	144,141	96%	7.24	2,930	33.6	29.1	1.6%
Core	10,399	4%	6.25	1,727	23.1	21.7	1.8%
Non-core	177	0.1%	6.12	1,225	16.9	18.9	3.4%
Total	154,717	100%	7.17	2,843	32.9	28.7	1.6%
Thereof Greater Berlin	113,615	76%	7.13	3,016	34.9	30.1	1.1%

▪ Reversionary potential at 26% for Berlin

Total value uplift of EUR 1.5bn ytd

▪ Transaction volume stable compared to 2020, despite excluded Vonovia acquisition of Deutsche Wohnen

▪ 5.6% capital growth on a l-f-l basis, including capitalized investments 5.9%

Total like-for-like development 1.2%

Like-for-like 30/09/2021	Residential units (#)	In-place rent 30/09/2021 (EUR/sqm/month)	In-place rent 30/09/2020 (EUR/sqm/month)	Change (y-o-y)	Vacancy 30/09/2021 (in%)	Vacancy 30/09/2020 (in%)	Change (y-o-y)
Core+	143,332	7.23	7.15	1.2%	1.6%	1.5%	0.1 pp
Core	10,360	6.25	6.18	1.2%	1.8%	2.1%	(0.3) pp
Total	153,869	7.16	7.08	1.2%	1.6%	1.6%	0.0 pp
Thereof Greater Berlin	113,228	7.13	7.05	1.1%	1.1%	1.1%	(0.0) pp

• Like-for-like rental growth at 1.2% for total portfolio
• Rental growth only from re-lettings
• Tenant churn stable at c. 7% in total portfolio and c. 6.5% in Berlin

Ongoing investments into the portfolio and new construction

		9M 2021	9M 2020
	EUR m	EUR/ sqm1	EUR m	EUR/ sqm1
Maintenance (expensed through p&l)	67.1	9.20	72.6	9.47
Refurbishment (capitalized on balance sheet)	151.0	20.71	178.2	23.26
Subtotal	218.1	29.91	250.8	32.73
New construction	259.12		50.93
Total	480.1		301.7

1 Annualized figure, based on quarterly average area; 2 Including proportionate purchase prices for landplots (excluding share deals) 3 Excluding ISARIA acquisition

Financials and Outlook

Stable letting business

in EUR m	9M 2021	9M 2020
Income from rents (rental income)	634.2	634.5
Income relating to utility/ancillary costs	268.7	295.0
Income from rental business	902.9	929.5
Expenses relating to utility/ancillary costs	(263.2)	(288.0)
Rental loss	(7.9)	(8.5)
Maintenance	(67.1)	(72.6)
Others	(3.9)	(6.5)
Earnings from Residential Property Management	560.8	553.9
Personnel, general and administrative expenses	(41.4)	(40.2)
Net Operating Income (NOI)	519.4	513.7
NOI margin in%	81.9	81.0
NOI in EUR/sqm/month	5.93	5.59

Including rental claims of EUR 29.5m due to the invalidity of the Berlin rent freeze. Rental loss increase mainly due to rise in impairment losses relating to payment claims in conjunction with the invalidity of the Berlin rent freeze

▪ NOI margin remains stable despite c. 5% lower asset base as a result of disposals in 2020

Updated: AF

Checked

Disposal business continues to perform well

Disposals	Privatization			Institutional sales		Total
with closing in	9M 2021	9M 2020	9M 2021	9M 2020	9M 2021	9M 2020
No. of units	174	182	1,086	1,403	1,260	1,585
Proceeds (EUR m)	44.5	38.1	152.8	348.2	197.3	386.3
Book value (EUR m)1	33.6	29.2	129.3	303.3	162.9	332.5
Price in EUR per sqm (residential)	3,683	2,893	2,047	1,818	n/a	n/a
m)1 Earnings (EUR	8.5	5.0	22.0	40.3	30.5	45.3
Gross margin	32%	31%	18%	15%	21%	16%
Cash flow impact (EUR m)	41.1	33.2	134.4	326.0	175.5	359.2

▪ Average privatization price in Berlin continues to increase, in 9M average reached c. EUR 4,200 per sqm

▪ Disposals of 10,700 units to municipal housing companies and 3,145 units disposal in Rhineland-Palatinate not included, yet

Note: Table only considers disposals that had already transfer of titles; 1 Earnings from Disposals are reported before disposal induced valuation gains

Major portfolio disposals signed in 2021

		Residential	Nursing
Region	Rhineland-Palatinate	Berlin	Across Germany (5 locations)
No. of units	3,142	10,900	5 nursing facilities / 730 units1
Signing	Q2/Q3 2021	Q3 2021	Q3 2021
Disposal price	EUR 437m	EUR 1.65 bn	EUR 70m
Disposal price per unit	c. EUR 2,109 per sqm	c. EUR 2,185 per sqm	c. EUR 100k per unit
Gross margin	48%	At book values	At book values
Rental impact p.a.	c. EUR (16)m	c. EUR (60)m	c. EUR (4)m
Transfer of titles	Q4 2021	Q4 2021 / Q1 2022	Q4 2021

▪ Opportunistic portfolio streamlining continued in 2021

1 Units are referring to beds as well as assited living units

Updated: SJ 27.10.

Checked werden

Nursing business proves resilient

Operations (in EUR m)	9M 2021	9M 2020
Total income	188.0	177.0
Total expenses	(171.4)	(162.6)
EBITDA operations	16.6	14.4
EBITDA margin	8.8%	8.1%
Lease expenses	21.8	19.7
EBITDAR	38.4	34.1
EBITDAR margin	20.4%	19.3%
Assets (in EUR m)	9M 2021	9M 2020
Lease income	47.7	49.8
Total expenses	(2.6)	(2.2)
EBITDA assets	45.1	47.6
Operations & Assets (in EUR m)	9M 2021	9M 2020
Total EBITDA	61.7	62.0

in EUR m	9M 2021	9M 2020
Nursing & Assisted Living	157.2	156.9
Other	30.8	20.1
The increase in other income includes compensation of EUR 12.4m from nursing care funds to cover loss of income and additional expenses as a result of the COVID-19 pandemic
in EUR m	9M 2021	9M 2020
Staff	(112.7)	(110.1)
Rent/lease (inter-company)	(21.8)	(19.7)
Other	(36.9)	(32.8)
Decrease in EBITDA due to clean up disposal of 13 nursing facilities in 2020

▪ Nursing & Assisted living is expected to contribute around EUR 70m to group EBITDA in 2021 translating into RoCE of ~6%

Updated: SJ 27.10.

Checked

Adjusted EBITDA excl. disposals stable yoy

in EUR m	9M 2021	9M 2020
Earnings from Residential Property Management	560.8	553.9
Earnings from Disposals	0.8	(1.6)
Earnings from Nursing and Assisted Living	61.7	62.0
Corporate expenses	(84.4)	(78.4)
Other operating expenses/income	(53.7)	(27.9)
EBITDA	485.2	508.0
One-offs	60.4	34.9
Valuation gains due to disposals	29.7	46.9
Adj. EBITDA (incl. Disposals)	575.3	589.8
Earnings from Disposals	(0.8)	1.6
Valuation gains due to Disposals	(29.7)	(46.9)
Corporate expenses for Disposals	2.6	2.4
Adj. EBITDA (excl. Disposals)	547.4	546.9

▪ One-offs increased mainly due to expenses related to the Vonovia takeover

1 Cost ratio defined as corporate expenses divided by gross rental income and lease revenues, whereas corporate expenses are excluding corporate expenses for disposals; 2 Defined as EBITDA (adjusted) excluding disposals divided by rental and lease income

Updated: SJ 27.10.

Checked

FFO I at previous year's level despite disposals

in EUR m	9M 2021	9M 2020
EBITDA (adjusted)	575.3	589.8
Earnings from Disposals (incl. valuation gains)	(0.8)	1.6
Valuation gains due to disposals	(29.7)	(46.9)
Corporate Expenses for Disposals	2.6	2.4
Long-term remuneration compensation (share based)	(0.2)	(0.2)
Finance lease broadband cable network	2.3	2.3
At equity valuation	1.0	2.1
1 Interest expense/income (recurring)	(98.3)	(100.1)1
Income taxes	(23.0)	(23.1)
Minorities	(7.0)	(7.2)
FFO I	422.2	420.7
Earnings from Disposals (incl. valuation gains)	0.8	(1.6)
Corporate expenses for Disposals	(2.6)	(2.4)
At equity valuation	(12.2)	0.0
Income taxes related to Disposals	(9.6)	(14.4)
Valuation gains due to Disposals	29.7	46.9
FFO II	428.3	449.2
FFO I per share in EUR (diluted)	1.122	1.201,2
FFO II per share in EUR (diluted)	1.132	1.291,2

1 Change in calcuation, interest income derived from loans granted to QUARTERBACK are no longer included in FFO 2 Weighted avg. Number of shares outstanding, excluding own shares per 9m 2021 at 346.71m undiluted, 377.55m; per 9M 2020 349.22m shares diluted = undiluted; 3 FFO I margin defined as FFO I divided by rental and lease income

EPRA NTA at EUR 53.32 per share

in EUR m	30-Sep-2021 EPRA NTA	31-Dec-2020 EPRA NTA	EPRA NTA per share (diluted) in EUR
Equity (before non-controlling interests)	15,025.0	13,400.21
Dilution from Convertible Bonds	1,587.2	0.0
Diluted NAV	16,612.2	13,400.21)	46.46	+12%	51.93	+3%
Revaluation of trading properties	62.2	43.9
Diluted NAV at Fair Value	16,674.4	13,444.11
Deferred taxes (net)	4,820.7	4,711.8
Fair values of derivative financial instruments	29.0	54.7
Goodwill as per the IFRS balance sheet	(319.6)	(319.7)	31-Dec-2019		31-Dec-2020
Intangibles as per the IFRS balance sheet	(34.6)	(38.0)
NAV	21,169.9	17,852.91
Fully diluted number of shares	397.00	343.77
NAV per share in EUR (diluted)	53.32	51.931

▪ EPRA NTA per share impacted by dilutive effect from sale of treasury shares and conversion of convertible bonds

1 Prior year figures changed

Diversified and robust capital structure

Rating	▪ S&P: BBB+ (stable outlook) / SACP a- ▪ Moody's: A3 (negative outlook)
Ø maturity	▪ ~ 7.0 years1
% secured bank debt	▪ 54%
% unsecured debt	▪ 46%
Ø interest cost	▪ ~ 1.25% (~ 91% hedged)
LTV target range	▪ 35–40%

1 As of 30 September 2021; based on contractual maturities

▪ LTV at 35.4%

• Pro-forma LTV post disposals and conversion of the convertible bonds is expected to be well below 30%
• As of today more than 99% of the convertible bonds 2017/2024 and 2017/2026 are converted into equity; a clean-up call was initiated with an early redemption date in December 2021
• ICR (adjusted EBITDA excl. disposals/net cash interest) ~6.2x

Appendix

Update on Berlin residential market

2,296 2,647 2,986 3,119 3,267 3,727 2016 2017 2018 2019 2020 9M 2021 for multi-family-homes (EUR/sqm) 9% 5% 1% –3% 8% 12% 12% 10% 7% 10% 15% 13% 5% 5% 14%

Development of asking prices

▪ Slight increase due to court decision against ▪ Price growth for multi family continues

▪ Strong price growth for condominiums

Berlin rent freeze

Current level of rents and prices in top German cities

▪ Relative to other German cities Berlin continues to screen attractive

Like-for-like development by regions

Like-for-like 30/09/2021	Residential units (#)	In-place rent1 30/09/2021 (EUR/sqm)	In-place rent1 30/09/2020 (EUR/sqm)	Change (y-o-y)	Vacancy 30/09/2021 (in %)	Vacancy 30/09/2020 (in %)	Change (y-o-y)
Core+	143,332	7.23	7.15	1.2%	1.6%	1.5%	0.1pp
Greater Berlin	113,228	7.13	7.05	1.1%	1.1%	1.1%	0.0pp
Dresden/Leipzig	10,477	6.46	6.30	2.5%	3.2%	3.5%	(0.3)pp
Frankfurt	9,412	9.03	8.91	1.4%	3.4%	2.6%	0.8pp
Hanover/Brunswick	5,909	6.53	6.44	1.3%	3.0%	2.5%	0.5pp
Cologne/Dusseldorf	2,696	9.29	9.20	1.0%	3.4%	4.2%	(0.8)pp
Other Core+	1,610	9.21	9.14	0.8%	0.6%	1.5%	(0.9)pp
Core	10,360	6.25	6.18	1.2%	1.8%	2.1%	(0.3)pp
Non-Core	177	6.12	6.03	1.5%	3.4%	2.2%	1.2pp
Total	153,869	7.16	7.08	1.2%	1.6%	1.6%	0.0pp

Updated: KZ 19.10

Checked

Fair Values across regions

Regions	Residential units (#)	FV 30/09/2021 (EUR m)	FV 30/09/2021 (EUR/sqm)	Multiple in-place rent 30/09/2021	Multiple re-letting rent 30/09/2021	Multiple spread
Core+	144,141	26,413	2,930	33.6	29.1	4.5
Greater Berlin	113,615	21,049	3,016	34.9	30.1	4.8
Dresden/Leipzig	10,804	1,900	2,429	31.2	28.1	3.0
Frankfurt	9,415	1,883	3,192	30.0	25.9	4.1
Hanover/Brunswick	5,909	716	1,802	22.6	20.2	2.4
Cologne/Dusseldorf	2,787	593	3,584	32.8	27.4	5.3
Other Core+	1,611	274	2,735	24.8	23.4	1.4
Core	10,399	1,183	1,727	23.1	21.7	1.4
Non-Core	177	14	1,225	16.9	18.9	(2.0)
Total	154,717	27,610	2,843	32.9	28.7	4.2

Deutsche Wohnen's residential portfolio is best-in-class

The Berlin portfolio at a glance

Updated: KZ 19.10

Checked

Portfolio structure – characteristics meeting strong demand

deutsche-wohnen.com 9M 2021

Bridge from adjusted EBITDA to profit

in EUR m	9M 2021	9M 2020
EBITDA (adjusted)	575.3	589.8
Depreciation	(29.1)	(29.2)
At equity valuation	(16.5)	32.12
Financial result (net)	(113.4)	3 (126.0)
EBT (adjusted)	416.3	466.72,3
Valuation properties	1,484.2	171.7
Valuation gains due to Disposals	(29.7)	(46.9)
One-offs	(52.4)	(33.5)
Valuation SWAP and convertible bonds	(347.2)	(102.1)
EBT	1,471.2	455.92
Current taxes	(44.8)	(37.5)
Deferred taxes	(585.8)	(80.5)
Profit	840.6	337.92
Profit attributable to the shareholders of the parent company	802.3	330.22
per share1 Earnings	2.31	0.952

in EUR m	9M 2021	9M 2020
Interest expenses	(110.2)	(106.9)
In % of gross rents	17.4	16.8
Interest expenses capitalized	11.0	6.0
Non-cash interest expenses	(16.8)	(27.9)
Interest income	2.6	2.83
2 Financial result (net)	(113.4)	(126.0)3

Valuation result stems from disposals (signed and closed) above recent book values

One-offs in 9M 2021 impacted by transaction cost in context of Vonovia takeover offer

deutsche-wohnen.com 9M 2021 1 Based on weighted average shares outstanding excluding own shares (2021: 346.71m ; 2020: 349.22m); 2 Change in QUATERBACK purchase price allocation 3 Change in calculation: interest income derived from loans granted to QUARTERBACK are no longer included in ordinary financial result

Summary balance sheet

	Assets	Equity and	Liabilities
in EUR m	30/09/2021	31/12/2020
Investment properties	27,861.5	28,069.5
Other non-current assets	970,4	988.2
Derivatives	1.6	2.3
Deferred tax assets	0.0	0.0
Non current assets	28,833.5	29,060.0
Land and buildings held for sale	462.9	472.2
Trade receivables	63.6	35.9
Other current assets	3,396.5	654.5
Cash and cash equivalents	748.0	583.3
Current assets	4,671.0	1,745.9
Total assets	33,504.5	30,805.9

in EUR m	30/09/2021	31/12/2020
Total equity	15,498.0	13,841.3
Financial liabilities	6,308.8	6,525.1
Convertibles	1,619.1	1,768.7
Bonds	4,055.8	3,129.6
Tax liabilities	62.1	60.5
Deferred tax liabilities	4,998.3	4,412.0
Derivatives	30.7	57.3
Other liabilities	931.7	1,011.4
Total liabilities	18,006.5	16,964.6
Total equity and liabilities	33,504.5	30,805.9

Disclaimer

Highlights | Market and Portfolio | Financials and Outlook | Appendix

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 SE 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 SE

Mecklenburgische Straße 57 14197 Berlin

Phone +49 30 89786-5413 Fax +49 30 89786-5419

© 2021 Deutsche Wohnen Gruppe