DW Investor-Pres Dez2010

8/8/2019 DW Investor-Pres Dez2010

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Deutsche Wohnen AG

Investor Presentation

December 2010


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Agenda

Introduction to Deutsche Wohnen

Portfolio Overview and Operations

Financial Highlights

Guidance and Strategic Objectives

Appendix

1

2

3

4

5


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Introduction to Deutsche Wohnen1


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A Major German Residential Platform

Deutsche Wohnen Business Overview

Deutsche Wohnen Corporate Structure

A focused residential property company listed in the German Prime Standard

Focus on Berlin and Rhine-Main areas

Market capitalisation of approx. EUR 725 million

Second-largest listed German residential real estate company, part of SDAX index

Management of residential property portfolio comprising 47,209 units (September 2010) and selective value-enhancingdisposal activities

Note

1. Closing price of EUR 8.86 as at 24 November 20102. Management of rents and receivables, projects, large scale maintenance and facility management

Non-Core BusinessResidential Properties

Portfolio Management

Nursing andAssisted Living

Asset and Property Management

Central ServiceCenter Berlin

CentralFunctions (2)

RegionalService Points

Single UnitPrivatization

Acquisitions

Sales and Acquisition

InstitutionalBlock Sales

Deutsche Wohnen

Accounting/Tax Legal Personnel Communication IR


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Portfolio Overview and Operations2


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Portfolio Overview

Portfolio as of 30 September 2010

3.9%NA5.52NA1792,622DB14

10.5%NA4.97NA5017,829Disposals

2.7%6.425.43100%2,21236,758Core portfolio

6.4%6.056.080%12174Others

4.0%NA5.36NA2,89247,209Total portfolio

5.5%5.684.853%63958Brandenburg

2.4%5.084.847%1672,637Rhine Valley North

5.1%5.434.8612%2584,310Rhine Valley South

6.5%7.265.8410%2243,746Rhine-Main

1.8%8.366.8810%2173,656Frankfurt/Main

1.6%6.115.3258%1,27121,277Berlin

Vacancy

in %

Market rent2)

(/sqm)

In-placerent1)

(/sqm)

% of coreportfolio

by area

Area

(k sqm)

Number of

units

Note

1. Contractually agreed rent of let apartments divided by the area let.2. Average rent for contracts signed in the last twelve months for units not subject to rent control.


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Details of the Core Portfolio

Split by Year of Construction

Split by Number of Floors

50.0%43.3%

11.3%

4.0%

19.3% 20.9%

5.8%

25.1%

15.1%

5.1%

0%

10%

20%

30%

40%

50%

60%

1980

Berlin Frankfurt

%

8.0%0.0%

76.3%

7.9% 7.8%12.7%

3.2%

84.1%

0%

20%

40%

60%

80%

100%

=9

Berlin Frankfurt

%

Berlin

58%

Other3%

Rheintal19%

Frankfurt/Rhine-Main20%


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Increased fundamentals generate accelerating rent potential

5.31

0.950.99

5.17

5.43

0.77

4.50

5.00

5.50

6.00

6.50

7.00

30 Sep 08 30 Sep 09 30. Sep 10

in/sqm

Inplace rent Rent potential (Market rent ./. In-place rent)

5.175.94

6.26

5.31

6.42

5.43

4.50

5.00

5.50

6.00

6.50

7.00

In-place rent Market rent

in/sqm

30 Sep 08 30 Sep 09 30 Sep 10

9

2.7%2.3%

5.4%2.6%

5.0 % 8.1 %

> 2,763 new contracts were concluded in the core portfolio (non-subsidised) in 9m/2010

> Average market rent for non-subsidised apartments at EUR 6.42/sqm as of 30 September 2010

Rent potential of 18%

> Average in-place rent was increased by 5.0% (or CAGR: 2.5% p.a.) since Sep 2008

> Average market rent was increased by 8.1% (or CAGR:4.0 % p.a.) since Sep 2008

Core portfolio Core portfolio

In-place rent: Contractually owed rent from the rented apartments divided by the rented area

Market rent: Average rent for contracts signed in the last twelve months for units not subject to rent control

17.9%14.9% 18.2%


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No Structural Vacancy in the Core Portfolio

Vacancy Rate (Core Portfolio)in %

Already rented360

Due to fluctuations423

Due to investments390

Number of Units

4.5%

3.3%

2.7%

0%

1%

2%

3%

4%

5%

30 Sep 2008 30 Sep 2009 30 Sep 2010

-18%

-43%

Due to fluctuations: Vacancy due to terminationnotice

Potential for rent increases for new lettings

Only 100 residential units (0.3% of core portfolio)

have remained vacant for longer than 12 months Due to investments: Vacancy due to comprehen-

sive modernization works for residential estates

Rent potential post-modernization for theseproperties amounts to 35% on average

Vacancy reduction by 43% since 30September 2008

Vacancy Structure (Core Portfolio)as of 30 September 2010


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Progress in Portfolio Cleaning

Sales Volume

in EUR million

61.0 57.6

58.7

28.1

85.7

119.7

020

40

60

80

100

120

140

160

180

31 Dec 2008 31 Dec 2009

Privatisation Institutional sale

49.4 56.1

22.9

102.3

158.4

72.3

020

40

60

80

100

120

140

160

180

30 Sep 2009 30 Sep 2010

Stable transaction volume in the residential privatization business with gross margins above 30%

Significant stimulation of the transaction market in 2010 Institutional sales in 9m 2010 have already been more than tripled compared to full-year 2009

40% of disposal portfolio already sold

Improvement of operative metrics and administrative efficiency


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Consistent Disposal of Assets above Book Value

Disposal Success

Single unit privatisation with different characteristicscompared to block sales

Significantly higher disposal margins on book

values (e.g. privatisation: 34%; bloc-sales: 6%*)and higher rental multiplier

Higher transaction costs

Higher cash margin

Both disposal portfolios contribute positive cashafter repayment of property level loans

Mid term goal to selectively increase turnover of theportfolio

Disposal units generally characterized by lower

overall quality, higher vacancy rate as well aslimited fit compared to units in core portfolio

Disposals do not dilute the quality of theremaining portfolio

Block Sales Volume and Multiples1)

302

1,225

898

2,633

12,5x

11,8x11,4x

12,8x

0

500

1.000

1.500

2.000

2.500

3.000

2007 2008 2009 9m/2010

10x

11x

12x

13x

14x

Units Multiple

# of Units x

Single Unit Volume and Multiples1)

657675

573528

17,8x

18,6x

19,1x18,5x

0

100

200

300

400

500

600

700

800

2007 2008 2009 9m/2010

16x

17x

18x

19x

20x

Units Multiple

# of Units x

1) Multiple on potential gross rental income2) including notarised

2)

2)

1) Multiple on current gross rental income2) including notarised

*) margins for 9m/2010; based on notarised volume


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Financial Highlights3


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P&L Key Items (1)

EUR million 9m 2008 9m 2009 9m 2010

Current Gross Rental Income 145.7 144.4 143.1

Maintenance (24.8) (21.1) (21.8)

Earnings from ResidentialProperty Management 113.3 114.3 113.4

Earnings from Disposals 7.3 6.7 8.8

Corporate Expenses (28.6) (24.9) (22.5)

EBITDA 99.41)

102.51)

104.6

Fair value adjustments investment

properties 0.4 0.0 0.0

Net Interest Expenses2) (95.7) (85.1) (75.3)

Profit/loss continued operations (13.2) (2.5) 10.1

FFO 19.6 27.4 37.7

Key P&L Items Reflect Improved Operations

0.24

0.34

0.46

0.00

0.10

0.20

0.30

0.40

0.50

9m 2008 9m 2009 9m 2010

and even more so in FFO/ Share 3)

FFO / Share (EUR)

+35%

a

c

b

99.4 102.5104.6

73.1%71.0%68.2%

0

20

40

60

80

100

9m 2008 9m 2009 9m 2010

20%

30%

40%

50%60%

70%

80%

Efficiency Improvements Reflected in EBITDA (1)

EBITDA (EUR million) EBITDA Margin on Rental Income %

c Increase in FFO mainly due to decrease of interest expense

a 2009 rental income level kept almost stable despite disposals

b Corporate restructuring resulting in overhead cost savings

Notes:

1. Adjusted for restructuring- and reorganisation costs2. Adjusted for result of fair value adjustment to derivative financial instruments3. 2008 and 2009 figures based on new number of shares


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Stable asset values and increasing operating performance

Increasing In-place Rental Yield (Core Portfolio)Comments

Currently fair market valuation compared tocompetitors

Rent multiplier in the core portfolio of 14.5x based onin-place rent, down from 14.9x in 2008

Significant value creation through rent increases andvacancy reduction in 2009 and 9m/2010

Increased in-place rental yields from 6.7% to 6.9%

in core portfolio

Assuming constant 2008 rental yields would resultin a positive revaluation of the portfolio of ca.EUR 100 million

Since a smaller portfolio generates almost the same

amount of rental earnings, the operating performancein fact improved

The net operating income (NOI) per sqm rose fromEUR 3.31/sqm to 3.79/sqm

945943929

6.9%6.8%6.7%

800

850

900

950

1,000

1,050

2008 2009 30 Sep 2010

5.4%

5.6%

5.8%

6.0%

6.2%

6.4%

6.6%

6.8%

7.0%

Fair Value/ sqm In-place Rental Yield

EUR/ sqm %

Increasing NOI per month and per sqm1)

3.31

3.57

3.79

3.00

3.203.40

3.60

3.80

4.00

Monthly avg. 2008 Monthly avg. 2009 Monthly avg.9m/2010

EU

R/sqm

+15 %

Notes:

1. Net operating income of the period divided by months of the period and area at the end of the periodAllocation of personnel and G&A-expenses as part of corporate expenses to residential property management segment In 2008 approximated based on 2009allocation


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Early refinancing of large loans for 2012 finalised

Financial Profile Successfully De-Risked

EUR 490 million repayed since Jan 2008

Repayments resulted in a decrease of the LTV ratio to 58.8% in 9m 2010

Successful early refinancing of 100% of large value loans originally due in 2012 already in 9m/2010 finalised; in this context wemanaged to secure further loan funds of EUR 95 million for investments

Significant improvement of refinancing ability

Banks willing to finance up to 10x

Deutsche Wohnen remains below the low end of its stated target corridor of 60% - 65% LTV

Reduction of Net Debt, LTV in Target Corridor

1,657

1,772

2,073

2,156

58.8%

65.4%

70.6%

61.5%

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2007 2008 2009 30 Sep 10

50%

55%

60%

65%

70%

75%

80%

Net Debt (EUR million) LTV (%) (2)

NNAV and NNAV per Share (1)

884.4 870.3 866.2

1,218.9

14.89

10.5810.6310.81

500

700

900

1,100

1,300

2007 2008 2009 30 Sep 10

0

5

10

15

20

Total NNAV NNAV/ Share

Notes

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 shares2. 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


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Attractive Long Term Financing Secured (1)

Sustainable Debt Financing

~95% of interest rate exposure hedged

Hedging provides for stable interest cost andsustainable financial results

Average interest rate of 4.4%

Average mandatory redemption p.a.: ~2.0% (excl. salesrelease payments)

~88% of bank debt matures after 2015, remainder in2011-2013 only represent several small loans

Debt Structure as at 30 September 2010

Financial liabilities in EUR million Total

Mark-to-market

LTV (%) (2)

Nominal value

LTV (%) (2)

1,722

58.8

1,833

62.7

Long Term Maturities as at 30 September 2010

1721.71,511.8

144.724.935.64.70.0

0

5001,000

1,500

2,000

2,500

Total 2010 2011 2012 2013 2014 2015

Notes

1. Excludes liabilities from convertible bonds2. LTV: Loan to value ratio, defined as net financial liabilities divide d by the sum of investment properties, non-current assets held for sale and land and

buildings held for sale

Current Covenant Structure

69% of loan portfolio bears financial covenants(EUR 1.2 billion)

Credit volume of approx. EUR 900 million has been

renegotiated in 2009 Covenants were adjusted and standardized

Leverage as rental multiplier: 11.0 14.3 in loanagreement, 7.4 11.4 in business plan

Debt service coverage ratio: 1.03 1.10 in loanagreement, 1.30 2.00 in business plan

Debt maturities


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Guidance and Strategic Objectives4


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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 f inancing structures that reduce our

exposure to the volatility of the market

It is our aim to permanently establish the company as the Germanmarket 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:

Growth via Acquisitions

Selective acquisitions allow forrealisation of economies of scaleand offer potential assetmanagement upside

Focus on attractive relative pricing DW can lever significant experience

through integration of GEHAG

Internal Optimization

Increase of rents per sqm, reductionof vacancies or costs

Internal optimisation processlargely completed

Additional upside resulting frompotential platform growth

Value Crystallization from CorePortfolio

Selective disposal of optimisedassets from core portfolio in order tocrystallise existing value withoutaffecting quality of residual portfolio

No effect on business modelfundamentals, as DeutscheWohnen will remain a portfoliocompany

1 2 3

Organic Acquisitive


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2010 Financial Guidance (1)

Note

1. Not included: contributions to operating income from valuation, bloc sales and / or acquisitions

Rental income

Continued monetisation of rent potential in the core portfolio; further decrease ofinvestment-related vacancies upon conclusion of the investments

Enlargement of portfolio in the favoured regions through acquisitions (EUR 10 50 million)

Deutsche Wohnen is open to consider large strategic acquisitions, as long as they areaccretive

Proceeds from sales

Target volume of sales of privatisation units up from 500 to 550 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 overallportfolio mix

FFO Increased forecast for entire 2010 to EUR 0.54 per share, i.e. 25% increase compared toactual FFO in 2009 (EUR 0.43 per share)

Dividend Policy Management announced to initiate dividend payments from 2010 onwards


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Appendix5


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Current shareholder structure*)

Oaktree Capital Group

Holdings GP, LLC 1);11.35%

Asset Value Investors

Ltd.2)

; 9.99%

rzteversorgung

Westfalen-Lippe6);3.33%

Sun Life Financial

Inc.5); 5.03%

Cohen & Steers, Inc.4);5.24%

First Eagle OverseasFund; 5.24%

Other; 48.46%

Ruffer LLP3); 5.61%

Zurich DeutscherHeroldLebensversicherungAG; 5.75%

* according to latest WpHG notification** without Oaktree Capital Group Holdings GP. LLC and

Zurich Deutscher Herold Lebensversicherung AG

1) Attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No. 1 and No. 6 in connection with Sent. 2WpHG

2) Attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No.6 WpHG3) Attributed voting rights acc. to Art. 22, Sect. 1, Sent. 1, No. 6 WpHG4) Attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No. 6 WpHG in connection with Art. 22,

Sec. 1, Sent. 2 WpHG5) Attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No. 6 in connection with Art. 22, Sec. 1,

Sent. 2 WpHG6) Feri Finance AG resp. MLP AG attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No. 1

WpHG

Shareholders

> 10% Oaktree Capital Group Holdings GP, LLC1) 11.35%

> 5% Asset Value Investors Ltd.2)

9.99%Zurich Deutscher Herold Lebensversicherung AG 5.75%Ruffer LLP3) 5.61%First Eagle Overseas Fund 5.24%Cohen & Steers Inc.4) 5.24%Sun Life Financial Inc.5) 5.03%

> 3% rzteversorgung Westfalen-Lippe6) 3.33%.8 institutional shareholders in total 51.54%___________________________________________________________________________

Freefloat acc. to Deutsche Brse 82.90%**


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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 persons 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.


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Deutsche Wohnen AG

Head Office

Pfaffenwiese 30065929 Frankfurt am Main

Berlin Office

Mecklenburgische Strae 5714197 BerlinTelefon: 030 897 86 501

Telefax: 030 897 86 519

2010 Deutsche Wohnen AG

DW Investor-Pres Dez2010

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