9. Jahreskonferenz der EACVA

Spezielle Bewertungsfragen am Beispiel von Immobiliengesellschaften

Prof. Dr. Christian Aders, ValueTrust (Moderation) Walter Sprenger, Elmar Geissinger, Ziems & Partner Dr. Christian Kames, Citigroup

Düsseldorf/Neuss, 26. November 2015 German Real Estate Market Environment Still a hot investment market in 2015

REAL ESTATE

RESIDENTIAL COMMERCIAL

Multi-unit Semi-detached Single-family Portable Hotels & Industrial & Retail Office Healthcare dwellings dwellings homes dwellings Leisure Logistics

Investment volume residential portfolios Investment volume commercial portfolios (in € bn) (in € bn) 30.0 60.0 H1 H2 H1 H2 25.0 50.0

20.0 40.0

15.0 30.0

10.0 20.0

5.0 10.0

0.0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E

Source: BNP Paribas Real Estate, Citi Research, ValueTrust analysis. November 26, 2015 2 German Real Estate Market Environment Market environment also for 2016 expected to be favorable

EURO STOXX Sector share price performance

20% Real estate outperforms all other sectors

10%

0%

-10%

-20%

-30% Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Real Estate Healthcare EURO STOXX Index Key developments and trends Chemicals Banks Automobiles & Parts . Larger real estate deals regarding portfolio size as well as M&A volume • Beginning of a consolidation phase in the residential market . Listed real estate companies are increasing their predominance • Buying large portfolios and engaging in takeovers to gain market shares and economies of scale . Increasing demand for project developments (especially high-grade project development in rural areas) . Overall favorable financing conditions . Low interest rate environment also drives foreign investors demand for German real estate (esp. in “A cities”)

Source: S&P Capital IQ, BNP Paribas Real Estate, Citi Research, ValueTrust analysis. November 26, 2015 3 German Real Estate Market Environment Current market valuations are relatively high compared to recent years

Current market valuations based on 1 year forward EBIT multiples

35.0x

30.0x

25.0x

20.0x

15.0x

10.0x

5.0x Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15

Vonovia SE AG LEG Immobilien AG

Source: S&P Capital IQ, CIQ consensus estimates, ValueTrust analysis. November 26, 2015 4 German Real Estate Market Environment Residential sector consolidation

Major Clustering/ Locations Largest listed european real estate companies

Deutsche Wohnen Deutsche Annington (Vonovia) Unibail-Rodamco

LEG GAGFAH (Vonovia) Vonovia + TAG Deutsche Wohnen

Land Securities

Vonovia

Klepierre

British Land

Deutsche Wohnen

Gecina

[...]

LEG Immobilien

Grand City Properties

TAG Immobilien

0.0 5.0 10.0 15.0 20.0 25.0 Market capitalization (in € bn) Source: S&P Capital IQ, Company reports, ValueTrust analysis. November 26, 2015 5 German Real Estate Market Environment Transformation of the German real estate industry

Residential real estate Private Equity driven Late Private Equity Tax driven Public Equity Consolidation transformation entrants Early 2000s – Mid 2000s – 1980s – 1990s 2006 – 2013 2013 - Today Mid 2000s Late 2000s

Commercial real estate

Public Equity Consolidation / Reorganization

Source: S&P Capital IQ, Vonovia, Citi Research, ValueTrust analysis. November 26, 2015 6 Beginning sector consolidation Deutsche Wohnens’ takeover of GSW in 2013

August 20, 2013 October 30, 2013 Announcement of takeover October 2, 2013 End of Acceptance period April 30, 2014 offer 78,57% accepting the offer Domination agreement September 30, 2013 Announcement of March 19, 2015 exchange offer between Deutsche Wohnen Extraordinary general November 5, 2013 and GWS Legal proceedings at the meeting Berlin Regional Court

Announcement Acceptance Additional Domination Agreement and legal proceedings (SpruchV) period period acceptance period

Portfolio comprises 150,000 Deduction of EUR 45m for expected transaction and integration costs residential units Portfolio Synergies

Portfolio valued at about Net present value of synergies EUR 8.5 bn estimated at ca. EUR 430m

72% of total portfolio is located in Berlin (incl. Greater Berlin) Expected full integrations costs of ca. EUR 25m Transaction

Critical size allowing efficient Combined FFO without dispositions after management, bundling of services and full integration of. ca. EUR 210m opportunistic disposals

Economies of scale on management and FFO per share expected to increase from administrative expenses - positive EUR 0.65 > EUR 0.70 effects on the procurement side

Source: Company reports, ValueTrust analysis. November 26, 2015 7 The IVG Restructuring Transformation in the German commercial real estate sector

Until August 2013 August 20, 2013 November 1, 2013 July 15, 2014

Pre-insolvency Protective shield Legal effect of Insolvency plan proceeding proceedings proceedings insolvency plan Indicativ Valuati Indicative Valuations (Negotiations, Preparation of insolvency plan etc.) Debt-Equity-Swap Valuation e on Valuatio n Indicative Valuation Minimum value certifications for the change of legal form Indicative Valuation

Indicative Valuation Carve-out Valuations

Structure of the IVG insolvency proceedings

Debt-Equity-Swap or quota Share- . Debt-equity-swap to strengthen capital structure and provide Hybrids Converts SynLoan I SynLoan II holder (Finance BV) (secured) debt relief . Carve-out of certain business units to simplify corporate structure Other Property Insolvency Quota . Transformation of various legal entities due to German real Creditors IVG AG Financing (unsecured) (secured) estate transfer tax . Today: After the successful restructuring of IVG, assessment of exit options and initiation of dual-track process (acc. to Bloomberg, Börsen-Zeitung) REIT AG KG1 KG2 KG3 KG4

KG5 KG5 KG7 KGn Properties (Kommanditgesellschaften) Source: Company reports, Bloomberg, Börsen-Zeitung, ValueTrust analysis. November 26, 2015 8 The Deutsche Annington - GAGFAH takeover Valuations along the transaction process

Value and Portfolio M&A Takeover offer, Valuation acc. to national Purchase Price Management / Strategy Fairness Opinion corporate/takeover law Allocation Impairment Test December 1, 2014 Announcement of takeover offer December 19, 2014 Start of acceptance period January 27, 2015 February 10, 2015

Acceptance Additional Sell-out right Further measures such as period acceptance period exercise period Squeeze-out, Domination agreement… • Target Fairness Opinion • Independent valuation opinion regarding the • Independent valuation opinion regarding the fair value to • Buyer Fairness Opinion fair price of the cash only offer (according implement measures such as a Squee-out, a Delisting etc. • Minimum value certification article 16 of the Luxemburg takeover law) for the Buyer

Regulator BaFin CSSF

Domicile Luxemburg

Listing MDAX MDAX

Source: Company reports, ValueTrust analysis. November 26, 2015 9