1. IMMOFINANZ GROUP ERES 2013 - 4 July 2013

2. 2 5 Years After The Crisis – Sustainable Business Models For The Listed Sector In Real Estate

3. 3 Strategy Value creation Acquisition oriented Relying on yield compression Financing Equity and equity linked as the primary source – Huge capital increases Examples:IMMOEAST, IMMOFINANZ, MEINL, etc. High (structured) leverage Examples:Eastern European Developers IVG Extremely low margins on debt Example:IMMOFINANZ “FOREST FINANCE” CMBS 25 – 42 bips BUWOG-Financing: 7bips BUSINESS MODELS BEFORE THE CRISIS

4. 4 Profits through appreciation Cash flow:irrelevant!!! “Economic laws” were abolished like in the internet boom (“value creation” became the successor of the “Cash-Burn-Rate”) GOALS

5. 5 Starting with 2007 and reaching its peak with the “Lehman Collapse” in September 2008 Massive revaluation of (Eastern European) properties Liquidity disappeared from the financial system Cash became king (once more again) The Eastern European real estate market collapsed “CRISIS”

6. 6 Normality is back Boring German residential is everybody’s darling Interest rates are extremely low Bank margins are extremely high Debt is very cheap, especially including hedging costs 2013 – FIVE YEARS AFTER THE CRISIS

7. 7 Characteristics: – Simple(st) business models (e.g. “triple pure play” of GSW) – (Moderate) dividend yields – Riskless and boring Why: – To replace asset classes like money market funds – Safe, with a little upside for appreciation – Inflation protected – Structural upside potential  Low housing spending as a percentage of disposable income  Positive demographics (household figures grow faster than population, migration, urbanisation) “Disadvantage / Danger” – Business model becomes unattractive as soon as growth is back and interest rates rise again STOCK LISTED SECTOR 2013: HIGHFLYER GERMAN RESIDENTIAL I

8. 8 “Breaking News”: – Deutsche Annington has cancelled the IPO! Reasons? – Pricing (foreground) – Limited business model (background) STOCK LISTED SECTOR 2013: HIGHFLYER GERMAN RESIDENTIAL II

9. 9 Simplicity – (very) limited number of asset classes Dividends, i.e. cash flow generation Limited leverage “Safe harbours” – “Köpenick” instead of “Krasnodar” or “Cluj” respectively “Berlin” and not “Budapest” or “Bukarest” REQUESTS OF RE SECTOR INVESTORS FOR BUSINESS MODELS

10. 10 IMMOFINANZ portfolio consists of – Four asset classes – Eight countries – More than 50% of the portfolio is located in Eastern Europe Portfolio does not comply with the ideal of investors Therefore IMMOFINANZ had to create a sustainable cash flow generating business model of its own: “The Real Estate Machine” WHAT DOES THAT MEAN FOR A COMPANY LIKE IMMOFINANZ? Development Stabilisation through active asset management Cycle-optimsed sale Cash

11. 11 Development Stabilisation through active asset management Cycle-optimsed sale Cash 650500 550 220 180 THE REAL ESTATE MACHINE Figures in Mio EUR

12. 12 Listed real estate companies have to develop specific business models, which are capable to convince investors (1) that these business models can survive at least two real estate cycles (2) that the company provides sound and secured dividend yields (ie. has sustainable cash flows over the cycles) (3) that the leverage does not trigger covenant breaches during the lower parts of the cycles. CONCLUSION