Deutsche Wohnen AG» Investor Presentation September 21 1
» Agenda 1 2 3 4 Introduction to Deutsche Wohnen Portfolio Overview and Operations Financial Highlights Guidance and Strategic Objectives 2
» 1 Introduction to Deutsche Wohnen 3
» A Major German Residential Platform Deutsche Wohnen Business Overview A focused residential property company listed in the German Prime Standard Focus on Berlin and Rhine-Main areas Market capitalisation of EUR approx. 575 million Second-largest listed German residential real estate company, part of SDAX index Management of residential property portfolio comprising 48,3 units (June 21) and selective value-enhancing disposal activities Deutsche Wohnen Corporate Structure Deutsche Wohnen Accounting/Tax Legal Personnel Communication IR Portfolio Management Asset and Property Management Sales and Acquisition Nursing and Assisted Living Central Functions (1) Central Service Center Berlin Regional Service Points Single Unit Privatization Institutional Block Sales Acquisitions Residential Properties Non-Core Business Note 1. Management of rents and receivables, projects, large scale maintenance and facility management 4
» Strong Financial Performance through the Crisis Performance Highlights Despite the disposal of 1,573 units in 29, rental income was kept stable on 28 levels due to Rent increases Reduction of vacancies Restructuring and reorganization completed Significant reductions in personnel and administrative costs of approx. EUR 11 million Strengthening of balance sheet through EUR 25 million equity raise and significant repayments of debt since 27 Significant reduction of LTV Significant reduction of interest expenses Result of restructuring 52% FFO CAGR H1 8 H1 1 14% reduction in LTV since H1 9 Stable Current Gross Rental Income despite Disposals Current Gross Rental Income (EUR million) 1 8 6 4 2 96.9 1.9 96.2 17.8 95.8 H1 8 H1 9 H1 1 FFO (EUR million) Reduction of Net Debt, LTV in Target Corridor 25.3 Net Debt (EUR million) LTV (%) (1) 2,2 2,1 2, 1,9 1,8 1,7 1,6 2,196 67.2% 2,46 69.9% 6.% 1,699 H1 8 H1 9 H1 1 28 24 2 16 12 8 4 8% 75% 7% 65% 6% 55% 5% Note 1. LTV: Loan to value ratio; defined as net financial liabilities divided by the sum of investment properties, non-current assets held for sale and land and buildings held for sale 5
» Restructuring and Integration Successfully Completed Impact of Restructuring Process Restructuring phase completed in Q2 29 Administration and Personnel Expenses reduced... EUR million 27 14.4 3.8 Achieving sustainable operational savings of EUR 11 million p.a. 28 14.5 24.4 Corporate expenses (2) per residential unit currently amount to EUR 376 Standardized and competitive labor conditions without collective agreements and limitations from privatization contracts 29 12.9 21.7 1 2 3 4 5 Cost of Materials Personnel Costs (excl. Caretakers) Corporate Expenses per Unit (1,2) Creation of a standardized and integrated platform Unification of IT systems through implementation of SAP EUR 5 4 3 2 464 41 376 1 27 28 29 Note 1. 27 figures are illustrative and show a hypothetical situation. The figures are combined 12 months figures for Deutsche Wohnen and GEHAG Group. Adjustments have been made mainly to interest expense position, which includes acquisition financing for the purchase of GEHAG Group from the beginning of 27 2. Includes personnel and general / administration expenses. Costs per unit for 27 and 28 calculated based on relative split for 29 6
» 2 Portfolio Overview and Operations 7
» Portfolio Overview Portfolio as of H1 21 Number of units Area (k sqm) % of core portfolio by area In-place rent 1) ( /sqm) Market rent 2) ( /sqm) Vacancy in % Berlin 21,44 1,279 57.5% 5.29 6.2 1.8% Frankfurt/Main 3,656 217 9.7% 6.86 8.32 2.% Rhine-Main 3,743 224 1.2% 5.81 7.25 7.1% Rhine Valley South 4,346 261 11.7% 4.84 5.33 5.5% Rhine Valley North 2,688 17 7.6% 4.84 5.8 2.5% Brandenburg 963 63 2.8% 4.81 5.67 6.% Others 174 12.5% 6.6 6.21 4.7% Core portfolio 36,974 2,226 1,% 5.4 6.35 3.% Disposals 8,434 536 NA 4.95 NA 1.6% DB14 2,622 179 NA 5.53 NA 4.3% Total portfolio 48,3 2,941 NA 5.33 NA 4.3% Note 1. Contractually agreed rent of let apartments divided by the area let. 2. Average rent for contracts signed in the last twelve months. 8
» Details of the Core Portfolio Split by Year of Construction % 6% 5.% 5% 43.3% 4% 3% 25.1% 2% 15.1% 19.3% 2.9% 11.3% 1% 4.% 5.1% 5.8% % <=192 1921-4 1941-6 1961-8 >198 Berlin Frankfurt Frankfurt/ Rhine-Main 2% Rheintal 19% Other 3% Berlin 58% Split by Number of Floors % 1% 8% 84.1% 76.3% 6% 4% 2% % Berlin 8.% 3.2% 12.7% 7.9% 7.8% <=4 5 6-8 >=9 Frankfurt.% 9
» Current Rent Potential of 19% In-Place Rent (1) (Core Portfolio) in EUR per sqm 1 8 5.5% 3.1% 19% 6.35 6 5.7 5.19 5.35 4 2 31 Dec 27 31 Dec 28 31 Dec 29 New Lettings 1,886 new contracts were concluded in the core portfolio (non-subsidized) in H1 21 Average market rent for non-subsidized apartments at EUR 6.35/sqm as of 3 June 21 Rent potential of 19% Note 1. Contractually owed rent from rented apartments divided by rented area 1
» No Structural Vacancy in the Core Portfolio Vacancy Rate (Core Portfolio) in % Vacancy Structure (Core Portfolio) as of 3 June 21-43% -36% Number of Units Due to investments 387 Already rented 27 5% 4.7% 4.2% 4% 3% 2.7% Due to fluctuations 619 2% 1% % 31 Dec 27 31 Dec 28 31 Dec 29 Vacancy reduction by 36% after the restructuring Due to fluctuations: Vacancy due to termination notice Potential for rent increases for new lettings Only 117 residential units (.3% of core portfolio) have remained vacant for longer than 12 months Due to investments: Vacancy due to comprehensive modernization works for residential estates Rent potential post-modernization for these properties amounts to 35% on average 11
» Progress in Portfolio Cleaning Sales Volume in EUR million 15 1 96. 12 119.7 8 9 58.7 85.7 6 55.6 6 28.1 4 41.1 7.7 3 61. 57.6 2 33.4 4.4 31 Dec 28 31 Dec 29 Privatisation Institutional sale 3 Jun 29 3 Jun 21 Stable transaction volume in the residential privatization business with gross margins above 3% Significant stimulation of the transaction market in 21 Institutional sale in H1 21 already exceeds 29 34% of disposal portfolio already sold Improvement of operative metrics and administrative efficiency 12
» Consistent Disposal of Assets above Book Value Disposal Success Single unit privatization with different characteristics compared to block sales Significantly higher disposal margins on book values and higher rental multiplier Higher transaction costs Higher cash margin Both disposal portfolios contribute positive cash after repayment of property level loans Mid term goal to selectively increase turnover of the portfolio Disposal units generally characterized by lower overall quality, higher vacancy rate as well as limited fit compared to units in core portfolio Disposals do not dilute the quality of the remaining portfolio Single Unit Volume and Multiples # of Units x 8 2x 675 7 573 6 528 19x 467 5 18.5x 19.1x 18.6x 18x 4 3 2 1 Block Sales Volume and Multiples # of Units x 1,568 14x 1,8 1,6 1,4 1,2 1, 8 6 4 2 1) 27 28 29 H1 21 Units 32 12.5x 1,225 11.8x 898 11.4x 1) 27 28 29 H1 21 Units Multiple Multiple 1) including notarised 1) including notarised 17,6x 17x 16x 13x 12x 11,x11x 1x 13
» 3 Financial Highlights 14
» Key P&L Items Reflect Improved Operations P&L Key Items (1) Efficiency Improvements Reflected in EBITDA (1) a b c EUR million H1 28 H1 29 H1 21 Current Gross Rental Income 96.9 96.2 95.8 Maintenance (16.2) (13.8) (14.7) Earnings from Residential Property Management 75.5 77.3 76.2 Earnings from Disposals 4.8 2.5 5.1 Corporate Expenses (2.3) (16.8) (14.9) EBITDA 65.7 1) 67.3 1) 69.8 Fair value adjustments investment properties (.5).. Net Interest Expenses 2) (61.5) (55.9) (5.4) Profit/loss continued operations.5 (2.4) 8.1 FFO 1.9 17.8 25.3 a b c 29 rental income level kept stable despite disposals Corporate restructuring resulting in overhead cost savings Increase in FFO mainly due to decrease of interest expense EBITDA (EUR million) EBITDA Margin on Rental Income % 8 7 6 5 4 3 2 1 and even more so in FFO/ Share 3) FFO / Share (EUR).35.3.25.2.15.1.5. 65.7 67.3.13 67.8%.22 7.% +41% 69.8 H1 28 H1 29 H1 21 72.9%.31 H1 28 H1 29 H1 21 8% 7% 6% 5% 4% 3% 2% Notes: 1. Adjusted for restructuring- and reorganisation costs 2. Adjusted for result of fair value adjustment to derivative financial instruments 3. 28 and 29 figures based on new number of shares 15
» Strong sustainable FFO Composition of FFO in 29 (as an example) EUR million 18 16 151. 9.7 9.1 14 12 1 8 6 (96.9) 4 2 (34.6) (3.5) 34.8 Residential Property Management Disposal Nursing and Residential Care Homes Interest Administrative Costs Other Items FFO Strong sustainable FFO from residential property management Relative independence from disposal result 16
» Key P&L Items Reflect Improved Capitalisation Composition of Balance Sheet NNAV and NNAV per Share (1) % EUR million 1% 1,3 8% 2 Assets 6% 4% 2% 93% 92% 1,1 14.89 15 Equity & Liabilities % 28 29 Investment Properties Other Assets 1% 8% 6% 4% 2% % Equity Tax Liabilities 67% 59% 21% 28% 28 29 Financial Liabilities Other Liabilities Continuous high share of properties in total assets (over 9%) Significant strengthening of equity position through capital increase Considerable reduction of financial liabilities through gradual deleveraging 884.4 87.3 859.5 NNAV declines as of 3 Jun 21 despite net income of EUR 8.1 million due to market adjustment for interest rate swaps (EUR 25.8 million); overall the negative value of the interest rate swaps depresses NNAV by EUR.92 per share as of 3 June 21 9 7 5 1,218.9 Total NNAV 1.81 1.63 1.5 27 28 29 H1 21 NNAV/ Share 1 5 Note 1. Historical numbers prior to the capital raise are adjusted for the net proceeds from the capital increase of EUR 237.78 million and 26.4 million more shares 17
» Asset Values Stabilized in 29 Comments Increasing In-place Rental Yield (Total Portfolio) Currently fair market valuation compared to competitors Rent multiplier of 14.2x based on in-place rent, down from 14.7x in 28 % 8% 6% 4% 6.% 6.8% 7.% Significant value creation through rent increases and vacancy reduction in 29 Increased in-place rental yields from 6.7% to 6.8% in the core portfolio and from 6.8% to 7.% in the overall portfolio Assuming constant 28 rental yields would result in a positive revaluation of the portfolio of ca. EUR 1 million Portfolio revaluation of EUR 276 million in 28, equivalent to 8.7% of total portfolio value 2% % Core Portfolio EUR/ sqm % 1.5 7,% 1.1 6,8% 6,8% 1. 6,6% 6,7% 943 95 929 6,4% 6,2% 9 6,% 85 6,% 5,8% 5,6% 8 27 28 29 27 28 29 5,4% Fair Value/ sqm In-place Rental Yield 18
» Solid Foundation for Refinancing Established Financial Profile Successfully De-Risked EUR 378 million repayed in 28 and 29 Further repayments of financial liabilities totaling EUR 35.5 million resulted in a decrease of the LTV ratio to 6.% in H1 21 Significant improvement of refinancing ability Banks willing to finance up to 1x Deutsche Wohnen remains at the low end of its stated target corridor of 6% - 65% LTV Decreasing Multiple improves Refinancing Ability x Reduction of Net Debt, LTV in Target Corridor Net Debt (EUR million) LTV (%) (1) 15 1 11.1x 1.3x 9.x 2,2 2,1 2, 2,156 2,73 65.4% 7.6% 8% 75% 7% 5 1,9 1,8 1,7 61.5% 1,772 6.% 1,699 65% 6% 55% 27 28 29 1,6 27 28 29 H1 21 5% Note 1. LTV: Loan to value ratio; defined as net financial liabilities divided by the sum of investment properties, non-current assets held for sale and land and buildings held for sale 19
» Attractive Long Term Financing Secured (1) Sustainable Debt Financing ~91% of interest rate exposure hedged Hedging provides for stable interest cost and sustainable financial results Average interest rate of 4.3% Average mandatory redemption p.a.: ~1.8% (excl. sales release payments) ~65% of bank debt matures after 215, less than EUR 15 million maturing in 21/ 11 Current Covenant Structure 69% of loan portfolio bears financial covenants (EUR 1.2 billion) Credit volume of approx. EUR 9 million has been renegotiated in 29 Covenants were adjusted and standardized Leverage as rental multiplier: 11. 14.3 in loan agreement, 7.4 11.4 in business plan Debt service coverage ratio: 1.3 1.1 in loan agreement, 1.3 2. in business plan Debt Structure Long Term Maturities Financial liabilities in EUR million Mark-to-market LTV (%) (2) Nominal value LTV (%) (2) Total 1,771 6. 1,884 64. 2,5 2, 1,771 1,5 (7) (5) 1,167 (422) (25) 1, (145) 5 Total 21 211 212 213 214 215 Debt Maturities Notes 1. Excludes liabilities from convertible bonds 2. LTV: Loan to value ratio, defined as net financial liabilities divided by the sum of investment properties, non-current assets held for sale and land and buildings held for sale 2
» 4 Guidance and Strategic Objectives 21
» Strategic and Growth Objectives The business model of Deutsche Wohnen proved viable and strong during the financial crisis. In the context of our corporate strategy, we focus on long-term earnings potential and solid financing structures that reduce our exposure to the volatility of the market It is our aim to permanently establish the company as the German market leader in the listed residential space by focusing on: Sustainable topline and earnings growth Sustainability of dividends Listing in the MDAX and increased liquidity of the Deutsche Wohnen share Three general routes to growth: 1 2 3 Value Crystallization from Core Internal Optimization Portfolio Growth via Acquisitions Increase of rents per sqm, reduction of vacancies or costs Internal optimisation process largely completed Additional upside resulting from potential platform growth Selective disposal of optimised assets from core portfolio in order to crystallise existing value without affecting quality of residual portfolio No effect on business model fundamentals, as Deutsche Wohnen will remain a portfolio company Selective acquisitions allow for realisation of economies of scale and offer potential asset management upside Focus on attractive relative pricing DW can lever significant experience through integration of GEHAG Organic Acquisitive 22
» 21 Financial Guidance (1) Rental income Continued monetisation of rent potential in the core portfolio; further decrease of investment-related vacancies upon conclusion of the investments Enlargement of portfolio in the favoured regions through acquisitions (EUR 1 5 million) Deutsche Wohnen is open to consider large strategic acquisitions, as long as they are accretive Proceeds from sales Target volume of sales of privatisation units up from 5 to 55 with gross margins 35%; taking advantage of market opportunities by selective sales from the core portfolio Institutional disposal of units located in structurally weak regions to strengthen the overall portfolio mix Profit Positive result FFO Increased forecast for entire 21 to EUR.54 per share, i.e. 25% increase compared to actual FFO in 29 (EUR.43 per share) Dividend Policy Management announced to initiate dividend payments from 21 onwards Note 1. Not included: contributions to operating income from valuation, bloc sales and / or acquisitions 23
» 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, development or performance of the company to differ materially from the estimations expressed or implied herein. The company 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 the company or any of its parent or 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. 24
Deutsche Wohnen AG Head Office Pfaffenwiese 3 65929 Frankfurt am Main Berlin Office Mecklenburgische Straße 57 14197 Berlin Telefon: 3 897 86 51 Telefax: 3 897 86 519 21 Deutsche Wohnen AG 25