3 rd HSBC (T)rinkaus (R)eal (E)state (C)onference February 27, 2008
Deutsche Wohnen: Highly focussed and with > 50,000 residential units clear no. 2 listed residential player in Germany The portfolio of currently approx. 51,600 residential units is located in the core areas Berlin and Frankfurt region > areas dedicated for further economic growth Integration of GEHAG GmbH and restructuring of the Group > well on track Cash flow is key: > Substantial FFO potential ahead 2
Integration: Status update February 2008 Structure + Organization 3 New corporate structure: Designed > implementation started Integration projects > On schedule IT-migration/SAP-implementation > Started - completion end of 2008 Financials Rental growth target 2007 > Achieved Staff and costs > Cut of 140 out of 490 jobs resulting in annual cost savings of approx. 10 million by 2009 Further improvement of cash result Assets + Business Model Clear business and product model Portfolio strategy finalized Attractive assets in regions with growth potential
Restructuring of the residential business division efficient organization and sustainable business model Efficient and lean organization three separate levels: management holding, value creating service companies and property companies Entire value chain fully reflected in structure AG R e s i d e n t i a l b u s i n e s s Deutsche Wohnen sales Deutsche Wohnen asset mgmt. GEHAG facility mgmt. Service companies GmbH s Assets GEHAG ESG Fortimo Rhein-Main Rhein-Pfalz 4
Financials 5
Preliminary rental figures illustrate positive rental development YTD (like for like) +2.9% +4.4% +3.6% 4.91 5.05 4.55 4.75 4.72 4.89 6 Deutsche Wohnen GEHAG Group Average net cold rent Dec 31, 2006 Average net cold rent Dec 31, 2007 Note Preliminary rental figures 2007; Deutsche Wohnen: Not considering portfolio acquisitions first half 2007; Data in /sqm
Re-letting with strong performance in 2007 1) : 4,600 new leases (9% of total residential property stock) +8% +17% +13% 5.05 5.52 4.75 5.57 4.89 5.54 Deutsche Wohnen GEHAG Group Average net cold rent Dec 31, 2007 Average rent new leases 7 Note 1) Preliminary rental figures 2007; Data in /sqm
Forecast - full year results 2007: Key figures P&L 2007E 1) Net cold rent EBITDA EBIT Profit after tax Actual Estimate (GEHAG 5 Months) 130 63 94 30 Pro forma Estimate (GEHAG 12 Months) 183 100 419 293 EBIT: Includes revaluation movements as of June 30, 2007 Profit after tax: EK 02 fully recognized FFO forecast full year 2007 pro forma: 11 MM / 0.42 per share 8 Note 1) Full year results 2007 will be published on March 27, 2008
Key balance sheet figures MM Investment properties Equity Financial debt (IFRS) Total assets Equity ratio LTV Financial debt 1) ( /sqm) 2007E 3,250 996 2,219 3,645 27% 68% 651 9 Note 1) Residential business; Excluding cable business and nursing homes
Long term debt Solid dept structure - 2.2 bn financial debt Thereof: 312 MM subsidized (13.6%) 90% hedged; in 2008 8.3MM (0.4% 1 ) renewal, in 2009 62MM renewal (2.7% 1 ) Average duration > 8 years 4.74% average interest rate p.a. Loan to value ratio: 68% 10 Note 1) in % of total debt as of Dec 31, 2007
Competitive cost structure on track Cost savings labour: Approx. 10 MM by 2009 490 cut of 140 jobs % 350 2007 2009 Additional cost savings G&A: > 3 MM by 2010 11 Note 1) Preliminary Group key figure
Substantial cash potential due to letting and restructuring measures Business plan 2007 2010: Development of gross rental income and improvement of cost structure Plus 0.50 per sqm total cost savings 0.92 per sqm % 0.42 per sqm Additional gross rent Additional earnings 12
Assets / Business model 13
Business model and portfolio strategy Current portfolio Portfolio after restructuring Future acquisitions DW will continue to acquire selected residential portfolios Focus on current DW core regions Berlin Greater Frankfurt/ Wiesbaden area Other metropolitan areas in Germany possible DWAG portfolio GEHAG portfolio 500 residential units 100 residential units 14
Externally done portfolio revaluation 1) - significant rental increase in second half 2007 58% of the total asset basis is of superior quality (see red dotted line below) Jun 30, 2007: approx. 6% gross rental yield Dec 31,2007: Rent of 4.92 /sqm 2) approx. 6.2% gross rental yield Fair Value million Fair Value /sqm Rent (Valuation Date) /sqm Rent Multiplier On Current Rent Multiplier on Rent New Leases Cluster Group DW 1) GEHAG Group DW 2) GEHAG Group DW 1) GEHAG Group DW 3) GEHAG Group DW 1) GEHAG Total 3,097 1,398 1,699 954 911 992 4.79 4.98 4.62 16.6 15.2 17.9 15.1 14.9 14.7 AA 435 274 161 1,414 1,339 1,563 5.73 6.03 5.16 20.6 18.5 25.2 18.5 17.7 19.6 AB 531 400 130 1.195 1.165 1.297 5.50 5.71 4.83 18.1 17.0 22.4 16.3 16.0 17.1 AC 49 33 16 925 886 1,019 4,76 4,77 4,74 16.2 15.5 17.9 15.1 14.9 15.1 BA 777 175 602 1,081 895 1,151 4.94 4.87 4.97 18.2 15.3 19.3 15.9 14.6 15.9 BB 913 359 554 855 773 918 4.51 4.57 4.47 15.8 14.1 17.1 14.2 13.4 14.3 BC 98 46 52 647 538 789 4.23 4.14 4.34 12.7 10.8 15.1 11.7 10.3 12.1 CA 116 30 85 771 686 807 4.26 4.44 4.19 15.1 12.9 16.1 13.6 12.7 13.6 CB 139 75 63 577 535 637 4.21 4.20 4.23 11.4 10.6 12.5 10.7 10.4 10.3 CC 39 5 35 349 255 366 3.75 3.14 3.87 7.8 6.8 7.9 7.7 7.6 6.6 15 Note 1) Evaluator: Catella; Valuation date: Jun 30, 2007; 2) Preliminary rental key figure; 3) Excluding North Hesse and Offenbach portfolio
Ongoing upswing of Berlin's housing market Berlin s housing market is highly dynamic. Transaction volume and prices have increased significantly Residential construction activity continues to remain at a fairly low level. The replacement rate will not increase beyond 0.5% over the next few years This will lead to a growing excess of demand for apartments in better market segments (medium/good location and good property quality; basic locations, smaller apartments and good property quality) The housing market will develop differently depending on micro location, quality of the property, and size of the apartments Substantial upside potential for rents and privatization prices GEHAG Portfolio / Map of Berlin Spandau 89 Household growth 2000-2004 (%) >8 4-8 0-4 Total (4)-0 <(4) Reinickendorf 2,199 Charlottenburg- Wilmersdorf 3,979 Steglitz-Zehlendorf 5,877 Mitte 592 Pankow 1,497 FH-Kreuzberg 94 Lichtenberg 386 Tempelhof- Schöneberg 1,737 Neukölln 8,062 GEHAG flats (%) 23.4 12.4 48.7 84.6 8.6 6.8 Marzahn- Hellersdorf 0 Treptow-Köpenick 987 16 Source: BBT Group (Berlin )
Frankfurt s housing market Frankfurt s housing market offers clear growth potentials Market trading volumes and prices remain stable or increasing moderately Perceptible trend back to the city : Inner-city locations become attractive for seniors households and households without children Residentials suitable for smaller households are demanded High demand from families for well-priced properties 450 400 350 300 250 200 Frankfurt: Number of households / residential portfolios Households Residential portfolios 1997 2000 2003 2006 2009 2012 2015 17 Source: BBT Group (Berlin)
Summary: Investment rationale 18
Investment rationale Attractive assets and clear business model NAV of 39 /share Deutsche Wohnen is currently traded at a discount of approx. 40% Ongoing execution of Integration and business plan Cost cutting: already 2.6 MM locked in New lean and efficient structure and organisation Substantial improvement of cash result until 2010 Rental growth of 3-4% per annum Vacancy rate down by 2% points Labor cost cutting 30%, resp. 10 MM (plus cut in G&A by 3 MM) Financed for next 8 years; 90% hedged Cash flow increase potential without external growth 19
3 rd HSBC (T)rinkaus (R)eal (E)state (C)onference February 27, 2008