LEG Immobilien SE

Investor Presentation • Nov 9, 2018

CAPTURE CHANCES DRIVE INNOVATION

LEG Immobilien AG 9 November 2018

9M-2018 Results

Disclaimer

While the company has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature and is intended to provide an introduction to, and an overview of the Company's business. Any opinions expressed in this presentation are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information contained in this presentation. Where this presentation quotes any information or statistics from any external sources, you should not interpret that the Company has adopted or endorsed such information or statistics as being accurate.

This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realised from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation, and supply and demand. The Company has based these forward-looking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and the Company does not undertake any duty to update the information and forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.

This presentation does not constitute an offer or invitation to purchase or sell any shares in the Company and neither this presentation or anything in it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever.

Agenda

HIGHLIGHTS 9M-2018 I.

• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• BUSINESS UPDATE AND OUTLOOK IV.
• APPENDIX V.

Highlights 9M-2018

Overall company development

• Portfolio valuation	Year-end valuation expected to result in c. 4% uplift (390-410m value change)
• Disposal program	Started marketing process shows strong investor demand
• Financing	Financing for acquisition of 3,788 units secured at favourable terms (10 yrs, 1.65%)

Attractive rent momentum ongoing

 In-place rent, l-f-l	€5.62/sqm (+2.7%; free financed units +3.4%); FY-2018 target c.3.0%
 EPRA-Vacancy, l-f-l	3.7% (-40 bps YOY)
 Maintenance/Capex	€20.4/sqm (+53.4% YOY)

Financials: On track for FY growth targets; Higher maintenance expenses

 Net cold rent	€417.0m (+4.7% YOY from €398.4m)
 Adjusted EBITDA	€305.9m (+4.9% YOY from €291.5m)
	 Adj. EBITDA pre-maintenance (+5.9% YOY)
 FFO I	€242.2m (+7.0% YOY from €226.3m), €3.83 per share (+7.0% YOY from €3.58)
	 FFO I pre-maintenance (+7.9% YOY)
 EPRA-NAV (excl. goodwill)	€90.21 per share (up from €83.81 in Q4; +7.6% YTD / +11.3% incl. DPS of €3.04)

Agenda

• HIGHLIGHTS 9M-2018 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• BUSINESS UPDATE AND OUTLOOK IV.
• APPENDIX V.

Portfolio Overview

Positive rent development across all submarkets

	Total Portfolio
--	-----------------	--

	30.09.2018	 (YOY)
# of units	130,170	+1.1%
In-place rent (sqm), l-f-l	€5.62	+2.7%
EPRA-Vacancy, l-f-l	3.7%	-40 bps

Strong results on the basis of tailor-made management strategies

High-Growth Markets

	30.09.2018	 (YOY)
# of units	41,368	+1.6%
In-place rent (sqm), l-f-l	€6.28	+2.7%
EPRA-Vacancy, l-f-l	2.4%	-40 bps

Stable Markets

	30.09.2018	 (YOY)
# of units	47,555	+1.2%
In-place rent (sqm), l-f-l	€5.30	+2.5%
EPRA-Vacancy, l-f-l	3.3%	-50 bps

	Higher-Yielding Markets
	30.09.2018	 (YOY)
# of units	39,397	0.7%
In-place rent (sqm), l-f-l	€5.22	+2.8%
EPRA-Vacancy, l-f-l	6.1%	-30 bps

Accelerating rent growth ahead Rent Development

Capex & Maintenance Rising value enhancing investments ongoing and ahead

*on a sqm basis

• HIGHLIGHTS 9M-2018 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.

FINANCIAL PERFORMANCE III.

• BUSINESS UPDATE AND OUTLOOK IV.
• APPENDIX V.

Financial Highlights 9M-2018 Margin expansion story is set to continue

9M-2017 9M-2018

9M-2017 9M-2018

Income Statement

9M-2018

€ million	9M-2018	9M-2017	 Higher rental income
Net rental and lease income	315.2	302.9	(+€18.6m YOY/+4.7%)  Higher maintenance expenses (+€5.7m YOY) and one-time
Net income from the disposal of investment property	-0.7	-1.0	costs (+€3.4m)
Net income from the valuation of investment property	383.5	481.1
Net income from the disposal of real estate inventory	-1.5	-2.2	 Portfolio revaluation resulted in 4.1% appraisal gain (H1-
Net income from other services	3.8	5.0	2018)  Recurring admin. costs nearly
Administrative and other expenses	-31.7	-28.5	stable (€24.7m/+€0.4m YOY), despite wage inflation and
Other income	0.6	0.6	rising costs for compliance etc.
Operating earnings	669.2	757.9	 Net income from fair value measurement of derivatives
Net finance costs	-117.9	-148.5	-€49.2m; thereof -€49.6m from convertibles
Earnings before income taxes	551.3	609.4	(9M-2017: -€63.2m)  Lower cash interests (€58.8m; -€1.7m YOY) despite rising
Income tax expenses	-143.6	-151.4	debt volume
Consolidated net profit	407.7	458.0	 Cash taxes (-€4.9m)

FFO Calculation

9M-2018

€ million	9M-2018	9M-2017
Net cold rent	417.0	398.4	 +€18.6m/+4.7%
Profit from operating expenses	-3.3	-3.1	
Maintenance (externally-procured services)	-37.6	-35.0	Higher maintenance expenses (volumes + cost inflation)
Staff costs	-45.2	-40.0	 Growth in staff costs mainly due to additional FTE's for
Allowances on rent receivables	-4.1	-5.4	crafts services and enhanced
Other	-7.0	-7.5	capex program
Non-recurring project costs (rental and lease)	4.7	1.3	 Allowances on receivables decreased to very low level
Recurring net rental and lease income	324.5	308.7
Recurring net income from other services	5.6	6.7	 NRI pre-maintenance increased by +€21.4m YOY
Staff costs	-19.6	-16.2	(+6.0%)
Non-staff operating costs	-10.9	-11.9
Non-recurring project costs (admin.)	5.8	3.8	 Admin. costs nearly flat (YOY) despite wage inflation
Recurring administrative expenses	-24.7	-24.3	and additional regulatory
Other income and expenses	0.5	0.4	requirements
Adjusted EBITDA	305.9	291.5	 EBITDA pre maintenance
Cash interest expenses and income	-58.8	-60.5	increased by +€20.1m YOY (+5.9%)
Cash income taxes from rental and lease	-4.1	-3.0
FFO I (including non-controlling interests)	243.0	228.0	 Lower interest costs (average over term of 9M-2018: 1.75%
Non-controlling interests	-0.8	-1.7	vs. 1.88% in 9M-2017)
FFO I (excluding non-controlling interests)	242.2	226.3
FFO II (including disposal of investment property)	240.6	225.2
Capex-adjusted FFO I (AFFO)	121.9	163.6

FFO Bridge 9M-2018

Cash Effective Interest Expense 9M-2018

€ million	9M-2018	9M-2017
Reported interest expense	72.0	88.8	 One-off refinancing effect of €4.9m in FY-2017 from
Interest expense related to loan amortisation	-9.2	-17.4	refinancing of subsidised loans (loan amortisation)
Prepayment penalties / breakage costs	-0.2	-7.5	 Release of swaps and fixed
Interest costs related to valuation of assets/liabilities	-0.6	-0.7	interest loans (refinancing); total refinancing costs €11.7m in FY-2017
Leasing related interest expense	-0.7	-0.8
Interest expenses related to changes in pension provisions	-1.8	-1.8
Other interest expenses	-0.2	0.4
Cash effective interest expense (gross)	59.5	61.0
Cash effective interest income	0.7	0.5	 Interest coverage improved
Cash effective interest expense (net)	58.8	60.5	further (5.2x up from 4.8x YOY)

EPRA-Net Asset Value

Positive outlook for further yield compression; services as hidden gem

Attractive rental yield of 5.7% (thereof free financed portfolio: 5.9%) and low value per sqm (€1,151) leaves upside for capital growth

Value of services business not included in NAV

Scenario: additional value approx. €4.60-€6.90 per share (discount rate of 4.0%-6.0%)3)

2) Actual number of shares outstanding 63.19m 1) And goodwill resulting from deferred taxes on EPRA-adjustments 3) Assumption: expected 2019 FFO, growth rate of 0%

Portfolio

Sound property fundamentals basis for value growth

Balance Sheet

Strong balance sheet

	gewohnt gut

€ million	30.09.2018	31.12.2017
Investment property	9,998.5	9,460.7	 Revaluation €383.5 m
Prepayment for investment property	208.2	-	 Net additions €36.7m  Capex €117.6m
Other non-current assets	175.6	172.3
Non-current assets	10,382.3	9,633.0
Receivables and other assets	100.3	63.7
Cash and cash equivalents	185.3	285.4	 Cash flow from operating
Current assets	285.6	349.1	activities €211.0m
Assets held for sale	20.9	30.9	 Investing activities - €362.2m
Total Assets	10,688.8	10,013.0	 Financing activities
Equity	4,341.5	4,112.4	€51.1m
Non-current financing liabilities	3,918.2	3,821.4
Other non-current liabilities	1,301.6	1,158.8	 Loan proceeds €150.2m
Non-current liabilities	5,219.8	4,980.2	and proceeds from commercial paper €150m
Current financing liabilities	635.7	478.2	 Repayment of loans
Other current liabilities	491.8	442.2	-€52.2m
Current liabilities	1,127.5	920.4
Total Equity and Liabilities	10,688.8	10,013.0

LTV

Strong credit profile leaves headroom for growth investments

€ million	30.09.2018	31.12.2017
Financial liabilities	4,553.9	4,299.6
Cash & cash equivalents	185,3	285.4
Net Debt	4,368.6	4,014.2
Investment properties	9,998.5	9,460.7
Properties held for sale	20.9	30.9
Prepayments for investment properties	208.2	-
Business combinations	-	2.0
Property values	10,227.6	9,493.6
Loan to Value (LTV) in %	42.7	42.3
Pro-forma LTV post conversion in %	40.0	39.4

Financing Structure – 30 September 2018

LT financing secures future earnings growth

*Including commercial paper

1) Commercial paper

2) €300 m convertible bond with investor put option 2019

3) Corporate bond (€500 m)

4) €400 m convertible bond

Key Facts		Maturities
Average debt maturity	7.5 years (7.1 years*)
Interest costs	Ø 1.73% (1.63%*)
Hedging ratio	91.9% (87.0%*)
Rating	Baa1 (Moody's)

1-2 years	0.1% (5.4%*)
3-5 years	18.1% (17.2%*)
6-8 years	51.1% (48.4%*)
≥ 9 years	30.6% (29.0%*)

• HIGHLIGHTS 9M-2018 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.

BUSINESS UPDATE AND OUTLOOK IV.

APPENDIX V.

Business Update

Transaction prices suggest further value upside

Year-end portfolio valuation expected to result in approx. 4% uplift (390-410m value change)

• Especially strong momentum in B-Cities (e.g. Dortmund or Mönchengladbach)
• Capital growth driven by further tightening of discount rates and positive outlook for sustained rent growth
• No short term impact from regulatory changes
• Expected year-end valuation remains below currently observed transaction prices

Disposal program: Positive first feedback from initiated marketing process

• Potential volume: 1,000-2,000 units; Kick-off of marketing process in Q4
• Strong investor interest, first price indications received
• Portfolios mainly consist of non-core assets and properties in peripheral areas (with sub-critical mass)

Financing: Acquisition financings and refinancings confirm LEG's strong credit positioning

• Financing of Vivawest sub-portfolio and early refinancing (total volume c. EUR 480m) at average cost of debt of 1.65% for 10.2 years
• Smaller positive FFO contribution expected
• Some 27% of financing volume is unsecured and 73% secured mortgage financing
• Recent widening of spreads in corporate bond market: LEG benefits from its focus on mortgage financing as core of the financing strategy

Business Update

Outlook for 2018 - 2020

	2018	2019	2020
KPI
FFO I	€315m - €323m	€338m - €344m	€356m - €364m
FFO I per share	€4.99 - €5.11	€5.35 - €5.44	€5.63 - €5.76
L-F-L rent growth	~3.0%	prev. 3.0-3.2% ~3.5%	3.2-3.4%
L-F-L vacancy	slightly decreasing	slightly decreasing
EBITDA margin	prev. >72% ~73%	prev. ~73% ~74%	~74%
Investments	~30€/sqm	prev. ~30-32€/sqm €~30	~31-33€/sqm
Dividend	70 % of FFO I	70 % of FFO I	70 % of FFO I

Comment on changes in the outlook:

• Rent growth is slightly dampened as response to the increased regulatory headwinds
• EBITDA margin acquisition related one-time costs in 2019 (c. €4m) and higher maintenance costs (cost inflation)

Steady Expansion of Leading FFO-Profitability

EBITDA Margin

• HIGHLIGHTS 9M-2018 I.
• PORTFOLIO AND OPERATING PERFORMANCE II.
• FINANCIAL PERFORMANCE III.
• BUSINESS UPDATE AND OUTLOOK IV.

APPENDIX V.

Generating Appealing Shareholder Returns

Attractive NRW Market

Positive demographics with stabilising net immigration

Cities entering upswing mode

2015 2016 2017 2018-2020 Net immigration to Germany NRW ~0.42 m 6) ~25% ~1.0 m 1) (approx. +80% yoy) Sources: 0.5 m 2) 1.2 m 3)

• 1) Interview with director of Federal Agency of Migration and Refugees (Aug 2016)
• 2) Federal Statistical Office, press release 13 Mar 2018
• 3) Deutsche Bundesbank, Monthly Report June 2018
• 4) Federal Statistical Office, press release 2 Nov 2017

6) Federal Statistical Office, press release 15 Oct 2018

Key facts

• Federal Agency of Migration and Refugees collected data that net immigration of foreigners to Germany amounted to about 0.25 million in H1-2017, thereof 0.12 million non-EU nationals 3)
• Deutsche Bundesbank forecasts 1.2 million additional immigrants (net) for 2018-20203)
• End of 2016, 1.6 million people seeking protection (incl. asylum seekers) were registered in Germany (+113% vs 2014), the majority living in NRW (27%) 4)
• Stabilising net immigration expected for the years to come with decreasing share of refugees (c. -70% asylum seekers 2017 YOY; c. 0.1 million of refugees (net) in 2017 estimated)5)
• Immigration is driving overall population growth, triggering additional growth in net new households
• Additional pressure on affordable housing segment
• Outperformance of German economy attracts qualified new immigration
• Liquid labour market and affordable living as pull-factors for NRW

⁵⁾ Bundesamt für Migration und Flüchtlinge, March 2018 and Federal Statistical Office, April 2018

LEG – Adj. EBITDA Margin

Leading profitability despite short term distortion from restricted units

Adj. EBITDA margin	FY-2017			FY-2016
	€m	margin %	€m	margin %
As reported	385.7	72.1	355.7	69.5
Gap restricted vs. unrestricted rents1)	30.1	73.6	26.3	71.0

1) €/sqm: €4.74 vs. €5.81 in 2017, €4.67 vs. €5.56 in 2016

	EBITDA as reported distorted by restricted units (compensation for lower rents included in interest result below the EBITDA line)
	Scenario analysis: closing gap between restricted vs. unrestricted rents; Adjusted EBITDA margin approx. 150 bps higher

Rent revisionary potential

Refinancing of subsidised loans lifting value

Rent Potential Subsidised Units

• In the following 10 years more than 25,000 units will come off rent restriction
• Units show significant upside to market rents
• Subject to general legal and other restrictions, the economic upside can theoretically be realised the year after restrictions expire

145 745 827 124 38 175 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029ff # Units Number of Units Coming Off Restriction and Rent Upside c. 8,100 1,734 2,729 1,494 17,760

Spread to Market Rent (in €/sqm/month)

	≤ 5 years2)	10 years2) 6 –	≥ 10 years2)
In-place rent	€4.67	€4.81	€4.88
Market rent1)	€6.23	€6.50	€5.89
Upside potential3)	33%	35%	21%
Upside potential p.a.3)	€8.8m	€15.1m	€13.3m

Source: LEG as of 9M-2018

1) Employed by CBRE as indicator of an average rent value that could theoretically be achieved, not implying that an adjustment of the in-place rent to the market rent is feasible, as stringent legal and contractual restrictions regarding rent increases exist.

2) ≤5 years = 2019-2023; 6-10 years = 2024-2028; ≥10 years = 2029ff.

3) Rent upside is defined as the difference between LEG in-place rent as of 9M-2018 and market rent (defined in footnote 1) as of FY-2017.

LEG Share Information

Basic data Well-balanced shareholder structure

• Prime Standard, Frankfurt Stock Exchange
• Total no. of shares: 63,188,185
• Ticker symbol: LEG
• ISIN: DE000LEG1110
• Indices: MDAX, FTSE EPRA/NAREIT, GPR 250, Stoxx Europe 600
• Weighting (30.09.2018): MDAX 2.58%; EPRA 2.82%
• Rating: Baa1 (stable) by Moody's

Date	Report/Event
08.05.2018	Quarterly Statement Q1 as of 31 March 2018
17.05.2018	Annual General Meeting, Düsseldorf
10.08.2018	Quarterly Report Q2 as of 30 June 2018
09.11.2018	Quarterly Statement Q3 as of 30 September 2018
13.11.2018	Exane BNP Paribas Roadshow, Paris
14.11.2018	Morgan Stanley Roadshow, London
15.11.2018	Kempen Roadshow, Amsterdam
21.11.2018	Equinet Roadshow, Düsseldorf
23.11.2018	Jefferies Roadshow, Zurich
27.11.2018	UBS Global Real Estate Conference, London
03.12.2018	Berenberg European Corporate Conference, London/Surrey

Contact

Investor Relations

Burkhard Sawazki

Head of Investor Relations & Strategic Business Analysis Tel: +49 (0) 211 4568-204 burkhard.sawazki@leg.ag

Karin Widenmann

Manager Investor Relations & Strategic Business Analysis Tel: +49 (0) 211 4568-458 karin.widenmann@leg.ag

Benedikt Kupka

Manager Investor Relations & Strategic Business Analysis Tel: +49 (0) 211 4568-286 benedikt.kupka@leg.ag

40476 Düsseldorf, Germany E-Mail: ir@leg.ag

LEG Immobilien AG Phone: +49 (0) 211 4568-400 Hans-Boeckler-Str. 38 Fax: +49 (0) 211 4568-22 204

Thank you for your interest.