Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — Merger or Acquisition (October 2015)

17 slides from Deutsche Wohnen's merger presentation, Oct 22, 2015

  1. Slide 1: Considerations on Vonovia's offer

    Deutsche Wohnen AG » Considerations on Vonovia's offer 22 October 2015 1

  2. Slide 2: Vonovia offer totally inadequate on multiple dimensions

    » Vonovia offer totally inadequate on multiple dimensions 1 Offer represents significant discount to stand-alone intrinsic value Synergy assumptions unrealistic and structurally not supportive of value creation 2 for shareholders Acquisition currency exposed to considerable valuation downside and re

  3. Slide 3: Offer represents significant discount to stand-alone intrinsic value

    1» Offer represents significant discount to stand-alone intrinsic value Impact for Deutsche Wohnen Assessment shareholders  Initial offer price of c. EUR 26 per share is wholly inadequate ₋ Significant portfolio value upside Discount to Premium ₋ Additional value upside through lfl rental growth in

  4. Slide 4: Substantial value creation potential on a stand-alone basis

    1» Substantial value creation potential on a stand-alone basis Significant value upside based on observed current market Strong market fundamentals underpinning rental growth and yield compression value generation in Core+ / Core markets (H1 2015) Core+ Core Non-core Total Portfolio appraised value

  5. Slide 5: Efficiency of business model translates into superior cash flow generation

    1» Efficiency of business model translates into superior cash flow generation Higher adjusted EBITDA(a) margin shows cost efficiency… # of 147,105 141,943 203,028 348,216 units 71.9% 67.5% 67.9%  Deutsche Wohnen with stronger profitability 63.8% and higher cash flow generation despite Vonovia's 2.5

  6. Slide 6: Synergy assumptions unrealistic and structurally not supportive of value creation

    2» Synergy assumptions unrealistic and structurally not supportive of value creation for shareholders Vonovia Deutsche Wohnen assessment estimate(a) Overhead  Conservative, if Deutsche Wohnen structure used as optimisation EUR 20m benchmark ? Revenue and cost synergies  Efficient Deutsche Wohnen p

  7. Slide 7: Overhead optimisation – projected synergies completely unrealistic

    2» Overhead optimisation – projected synergies completely unrealistic under Vonovia's organisational set-up  Deutsche Wohnen's expense ratio of <12% is the Deutsche Wohnen 2013(b) H1 2015 benchmark in the industry No. of units 150,219 141,943  Performance driven employment contracts  Restructured

  8. Slide 8: Industrialised modernisation – a new name for an established concept

    2» Industrialised modernisation – a new name for an established concept Synergy FFO relevance relevance  Existing JV contract with most attractive terms and conditions Ongoing maintenance  Lowest prices due to concentrated portfolios and competitive tenders despite VAT disadvantage on certain pers

  9. Slide 9: TGS - Internalisation of risk profile

    2» TGS - Internalisation of risk profile Vonovia exposed to TGS business risk due to 51% holding in TGS  Profit sharing with JV partner  Risk that unions may force Vonovia to implement the "Wohnungswirtschaflichen Tarifvertrag" (collective bargaining agreement for the residential real estate indus

  10. Slide 10: Services extension - Deutsche Wohnen has already established its own services value chain

    2» Services extension - Deutsche Wohnen has already established its own services value chain  Heat generation, primary energy, energy procurement JV with GETEC  Innovation leadership – energy storage and energy efficiency established in 2013  Implementation for 30% of portfolio achieved  Savings

  11. Slide 11: Acquisition currency exposed to considerable refinancing risks

    3» Acquisition currency exposed to considerable refinancing risks Comparison of key financing parameters  Structural advantage of secured bank financing (H1 2015) Deutsche Wohnen Vonovia Rating A- / A3 BBB+ / - – Significantly lower interest cost LTV(b) 41% 54% – Spread/margin for 10 year bank debt

  12. Slide 12: Marginal FFO accretion for Deutsche Wohnen shareholders

    4» Marginal FFO accretion for Deutsche Wohnen shareholders despite lower value growth profile and inferior capital efficiency of Vonovia Vonovia offer Stand-alone 40% 35% 35% (5.1%) 30% FFO I accretion(b) 25% 20% (19.8%) 15% c. 9% 10% (5.8%) 4.3% 5% (2.7%) 1.6% 0% Vonovia Hybrid Leverage Adjustment

  13. Slide 13: Vonovia offer totally inadequate on multiple dimensions

    » Vonovia offer totally inadequate on multiple dimensions 1 Offer represents significant discount to stand-alone intrinsic value Synergy assumptions unrealistic and structurally not supportive of value creation 2 for shareholders Acquisition currency exposed to considerable valuation downside and re

  14. Slide 14: Appendix

    » Appendix deutsche-wohnen.com vr) a Deutsche Wohnen 14

  15. Slide 15: Deutsche Wohnen – a compelling stand-alone business case

    » Deutsche Wohnen – a compelling stand-alone business case 1 Focused quality portfolio in dynamic growth regions in Germany 90% of total portfolio value in Core+ 2 Strongest like-for-like rental growth and tangible NAV upside potential c. 3.5%(a) rental growth expected in 2015 3 Efficiency leadershi

  16. Slide 16: Cash flow comparison

    » Cash flow comparison Deutsche Wohnen (EURm) 2014 H1 2015 FFO I after minorities as reported 217.6 142.7 - Mandatory amortisation (81.0) (29.3) - Capitalized investments (64.1) (33.4) Corp. Free Cash Flow (CFCF) excl. disposals 72.5 80.0 - FFO adjustments (EBITDA) as reported(a) (20.8) (11.3) Adjus

  17. Slide 17: Disclaimer

    » 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, the development or the

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