Aroundtown : FY 2019 Preliminary Consolidated Financial Statements

AROUNDTOWNS A

Preliminary

Consolidated

Financial

Statements

The following unaudited results and amounts have not yet been approved nor adopted by the Board of Directors

For the year ended December 31, 2019

Munich

Aroundtown SA | Preliminary Consolidated Financial Statements | 2

Key Financials
in € millions unless otherwise indicated	1-12/2019	change	1-12/2018
Revenue	894.8	20%	747.1
Net rental income	765.7	21%	633.0
Adjusted EBITDA 1)	772.7	28%	606.0
FFO I 1 ) 2)	503.4	24%	405.7
FFO I per share (in €)	0.43	10%	0.39
FFO I per share after perpetual notes attribution (in €)	0.38	12%	0.34
FFO II	814.3	42%	574.6
ICR	4.8x	3%	4.7x
Profit for the year	1,709.1	-6%	1,827.8
EPS (basic) (in €)	1.12	-27%	1.54
EPS (diluted) (in €)	1.11	-26%	1.49

1. including AT's share in GCP and other joint ventures, net of contributions from commercial assets held for sale
2. excluding minorities

	2019*		change	2018
Dividend per share (in €)	0.28	10%	0.2535
*2019 dividend distribution is subject to the next AGM approval and based on a payout ratio of 65% of FFO I per share
	Dec 2019
in € millions unless otherwise indicated		Dec 2018		Dec 2017
Total Assets	25,444.7		19,040.8		13,770.4
Total Equity	13,378.9		9,944.3		7,249.9
Cash and liquid assets 1)	3,043.8		1,600.6		848.7
Unencumbered assets ratio 2)	81%		72%		71%
Equity Ratio	53%		52%		53%
Loan-to-Value	34%		35%		36%

1. including cash and liquid assets under held for sale
2. by rent

Net Asset Value

in € millions unless otherwise indicated

Dec 2019

Dec 2019 per share

(in €)

Per share growth

(dividend adjusted)

Per share growth

Dec 2018

Dec 2018 per share (in €)

				EPRA NAV
				including
NAV		EPRA NAV		perpetual notes
11,942.8		10,633.4		13,117.4
9.8		8.7		10.7
+23%		+16%		+20%
+20%		+13%		+18%
9,309.5		8,742.4		10,290.1
8.2		7.7		9.1

3 | Aroundtown SA | Preliminary Consolidated Financial Statements

Adjusted EBITDA

	For the year ended December 31,
	2019	2018
	in € millions
Operating profit	2,155.8	2,293.5
Total depreciation and amortization	1.7	1.6
EBITDA	2,157.5	2,295.1
Property revaluations and capital gains	(1,217.5)	(1,536.4)
Share in profit from investment in equity-accounted investees	(298.7)	(251.6)
Other adjustments	(0.3)	(10.4)
Adjusted EBITDA commercial portfolio, recurring long-term	641.0	496.7
Adjustment for GCP's and other investments' adjusted EBITDA contribution*	131.7	109.3
Adjusted EBITDA	772.7	606.0

• the adjustment is to reflect AT's share in GCP's and other joint ventures' adjusted EBITDA. GCP generated an adjusted EBITDA of €298 million in FY 2019 and €276 million in FY 2018

Adjusted EBITDA is a key performance measure used to evaluate the operational result of the Company, derived by deducting from the EBITDA non-operational items such as revaluation and capital gains, result from disposal of properties and other adjustments. Additionally, in order to mirror the recurring operational results of the Group, the share in profit from investment in equity-accounted investees is subtracted as this also includes the Company's share in non-operational profits generated by its equity-accounted investees. Due to the nature of its strategic investment in GCP and in other investments, AT includes in its adjusted EBITDA calculation its share in the adjusted EBITDA generated by those investments for the period in accordance with its holding rate over the period. AT's holding rate in GCP is 39% as at the end of December 2019.

The Group generated in 2019 an adjusted EBITDA of €773 million, an increase of 28% compared to €606 million generated in 2018. The main driver of this increase is the strong growth in revenues where the main contributor was the accretive acquisitions in combination with a strong like-for-like performance of 4.2% in 2019. Efficiency gains in the property operating expenses in 2019 further contributed to the increase of the adjusted EBITDA, validating AT's efficient and scalable operating platform. The adjusted EBITDA additionally includes contributions from GCP's and other investments' adjusted EBITDA due to the strategic nature of the investment. GCP recorded a growth of 8% in its adjusted EBITDA in 2019, demonstrating its high operational profitability.

The adjusted EBITDA additionally accounts for other adjustments in the amount of €0.3 million in 2019. These adjustments are implemented mainly to deduct non-recurring items and add back non-cash items. Non-recurring items being mainly the contributions from properties marked for disposal since they are intended to be disposed and therefore not part of the recurring adjusted EBITDA, and non-cash items being mainly expenses for the employee share incentive plan.

Adjusted EBITDA annual development (in € millions)

CAGR
+42%			773
		606
	429
268
2016	2017	2018	2019

4 | Aroundtown SA | Preliminary Consolidated Financial Statements

Funds From Operations I (FFO I)

		For the year
		ended December 31,
		2019		2018
		in € millions
Adjusted EBITDA
commercial portfolio,
recurring long-term	641.0		496.7
Finance expenses 1)	(141.7)		(114.6)
Current tax expenses	(70.6)		(44.4)
Contribution to minorities	(17.4)		(6.7)
Other adjustments	3.4		7.9
FFO I commercial portfolio,
recurring long-term	414.7		338.9
Adjustment for GCP's and other
joint ventures' FFO I contribution 2)	88.7		66.8
FFO I	503.4		405.7
Weighted average basic shares
(in millions)	1,172.9		1,052.6
FFO I per share (in €)	0.43		0.39

1. including the effects of IFRS 16
2. the adjustment is to reflect AT's share in GCP's and other investments'
   FFO I. GCP generated an FFO I after perpetual notes attribution of €179 million in 2019 and €168 million in 2018

Funds from Operations I (FFO I) is an industry standard performance indicator, reflective of the recurring operational profits after deducting the finance expenses and current tax expenses from the adjusted EBITDA. The calculation further includes adjustments to consider minorities and the relative share of AT in GCP's reported FFO I (after perpetual notes attribution), and the FFO I of other significant investment positions.

In 2019, the Group increased the FFO I by 24% to €503 million from €406 million recorded in 2018. AT's operational platform embeds strong capabilities to transform its high upside potential into recurring operational profits, which are reflected in this strong bottom-line growth. The strong growth in the adjusted EBITDA was partially offset by higher finance expenses, which is driven by AT's successful capital market issuances to fund its accretive growth and optimize its debt profile which resulted in a long-term average debt maturity of 7.2 years and a low average cost of debt of 1.7%. The FFO I additionally includes adjustments which consider minorities and the contribution from GCP and other investments, including dividend received. The contribution to minorities increased due to acquisitions with minority share and changes in ownership interests. The Group strongly benefitted from GCP's high operational profitability where it recorded a 7% FFO I growth. In addition, the FFO I includes other adjustments in the amount of €3.4 million, mainly related to finance and tax expenses from the contribution of properties marked for disposal.

FFO I annual development (in € millions)

CAGR			503
+45%
		406
	293
166
2016	2017	2018	2019

5 | Aroundtown SA | Preliminary Consolidated Financial Statements

FFO I per share

FFO I per share in 2019 amounted to €0.43, a growth of 10% compared to €0.39 recorded in 2018. A per share level growth despite a higher share count validates AT's accretive growth. The average share count between the two periods grew mainly as a result of the equity capital increase and new shares from the scrip dividend in 2019.

FFO I per share development (in €)

0.43

0.39

+10%

2018 2019

FFO I per share after perpetual notes attribution

		For the year
		ended December 31,
		2019	2018
		in € millions
FFO I	503.4	405.7
Adjustment for accrued perpetual
notes attribution	(57.8)	(46.1)
FFO I after perpetual notes
attribution	445.6	359.6
Weighted average basic shares
(in millions)	1,172.9	1,052.6
FFO I per share after perpetual
notes attribution (in €)	0.38	0.34

According to IFRS accounting treatment, contributions to perpetual notes are recorded through changes in equity and not as a financial expenses in the income statement. In order to ensure a high level of transparency, the Company additionally presents an adjusted FFO I per share figure factoring in these attributions. FFO I per share after perpetual notes attribution amounted to €0.38 in 2019, up by 12% compared to €0.34 recorded in 2018. The growth follows the FFO I per share growth, partially offset by the impact from approx. €1 billion perpetual notes issuances in 2019.

FFO I per share annual development (in €)

				FFO I per share after perpetual notes attribution
				development (in €)
CAGR
+20%
			0.43
	0.36	0.39	0.38	+12%		0.38
	0.34		0.34
	0.32
0.25
2016	2017	2018	2019		2018	2019

FFO I per share		FFO I per share after perpetual
		notes attribution

FFO II		For the year
		ended December 31,
	2019		2018
		in € millions
FFO I	503.4		405.7
Result from disposal of properties 1)
310.9		168.9
FFO II	814.3		574.6

1. the excess amount of the gross sale price to total cost (cost price plus capex of the disposed properties)

FFO II is an additional key performance indicator used in the real estate industry to evaluate the operational recurring profits including the impact from disposal profits during the reporting period. The result from disposal of properties amounted to €311 million, 84% higher compared to the €169 million recorded in 2018. Therefore, the FFO II amounted to €814 million in 2019, up by 42% compared to €575 million recorded in 2018. During 2019, AT disposed €745 million of non-core and mature assets with a 72% margin over total costs. In 2018 AT sold assets at a value over €740 million and a disposal margin over total cost of approx. 30%. The comparatively higher disposal margins in 2019 at around similar disposal volumes compared to 2018 testify the significant value creation achieved in the disposed properties.

6 | Aroundtown SA | Preliminary Consolidated Financial Statements

EPRA NAV

EPRA NAV is defined by the European Public Real Estate Association (EPRA) as the net asset value of the Company adjusted to include real estate properties and other investment interests at fair values and exclude certain items that are not expected to materialize in a long-term real estate business model. The purpose of the EPRA NAV is to adjust the IFRS NAV in order to provide stakeholders

with the most relevant information on the Group's balance sheet items in the context of a real estate investment company with a long-term oriented investment strategy. As perpetual notes are classified as equity in accordance with IFRS accounting treatment, AT additionally reports an EPRA NAV including perpetual notes.

		Dec 2019		Dec 2018
		in € millions	per share	in € millions	per share
NAV per the financial statements	13,378.9		9,944.3
Equity attributable to perpetual notes investors	(2,484.0)		(1,547.7)
NAV excluding perpetual notes	10,894.9		8,396.6
Fair value measurements of derivative financial instruments*	(71.6)		25.1
Deferred tax liabilities*	1,119.5		887.8
NAV	11,942.8	€9.8	9,309.5			€8.2
Non-controlling interests	(1,309.4)		(567.1)
EPRA NAV	10,633.4	€8.7	8,742.4			€7.7
Equity attributable to perpetual notes investors	2,484.0		1,547.7
EPRA NAV including perpetual notes	13,117.4	€10.7	10,290.1			€9.1
Number of shares, including in-the-money dilution effects
(in millions)	1,224.9		1,129.7

* including balances in assets held for sale

EPRA NAV as of year-end 2019 increased by 22% to €10.6 billion and €8.7 on a per share basis, which reflects an increase of 13% compared to year-end 2018. The total shareholder return which includes the dividends and the EPRA NAV per share growth resulted in a 16% growth. This robust growth was largely driven by net profits from

revaluations, as well as from a €601 million equity capital increase in July 2019. The EPRA NAV including perpetual notes increased further to a 27% increase compared to year-end 2018 and amounted to €13.1 billion at-year end 2019 due to around €1 billion of perpetual notes issuances in 2019.

7 | Aroundtown SA | Preliminary Consolidated Financial Statements

Consolidated Statement Of Profit Or Loss

		Year ended December 31,
		2019			2018
		Unaudited	Audited
		in € millions
Revenue	894.8			747.1
Capital gains, property revaluations and other income	1,217.5			1,536.4
Share in profit from investment in equity-accounted investees	298.7			251.6
Property operating expenses	(227.9)			(219.1)
Administrative and other expenses	(27.3)			(22.5)
Operating profit	2,155.8			2,293.5
Finance expenses and other financial results	(96.0)			(208.4)
Profit before tax	2,059.8			2,085.1
		(70.6)
Current tax expenses			(44.4)
Deferred tax expenses	(280.1)			(212.9)
Profit for the year from continuing operations	1,709.1			1,827.8
		-
Profit from discontinued operation, net of tax			-
Profit for the year	1,709.1			1,827.8
Profit attributable to:
Owners of the Company	1,308.1			1,620.4
Perpetual notes investors	57.8			46.1
Non-controlling interests	343.2			161.3
Profit for the year	1,709.1			1,827.8
Net earnings per share attributable to the owners of the Company
(in €)
Basic earnings per share	1.12			1.54
		1.11
Diluted earnings per share			1.49

Aroundtown SA | Preliminary Consolidated Financial Statements | 8

Consolidated Statement Of

Comprehensive Income

			Year ended December 31,
	2019				2018
			Unaudited	Audited
			in € millions
Profit for the year	1,709.1				1,827.8
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss
Foreign operations - foreign currency translation difference, net	(3.8)
of investment hedges of foreign operations				(21.8)
Cash flow hedges and cost of hedging	20.1				(14.5)
Equity-accounted investees - share of OCI	(1.9)				(4.0)
Tax related to the other comprehensive income components	(4.9)				1.7
Total other comprehensive income / (loss) for the year, net of tax	9.5				(38.6)
Total comprehensive income for the year	1,718.6				1,789.2
Total comprehensive income attributable to:
Owners of the Company	1,317.6				1,581.8
Perpetual notes investors	57.8				46.1
Non-controlling interests	343.2				161.3
Total comprehensive income for the year	1,718.6				1,789.2

9 | Aroundtown SA | Preliminary Consolidated Financial Statements

Consolidated Statement Of Financial Position

	December 31,
	2019			2018
	Unaudited	Audited
	in € millions
Assets
Equipment and intangible assets	19.8			33.1
Investment property	18,127.0			14,174.0
Advanced payments for real estate transactions	181.4			48.6
Investment in equity-accounted investees	2,505.9			2,214.8
Derivative financial assets	158.7			22.0
Other non-current assets	628.3			369.8
Deferred tax assets	80.8			76.6
Non-current assets	21,701.9			16,938.9
	2,191.7
Cash and cash equivalents			1,242.8
Short-term deposits	4.7			4.7
Financial assets at fair value through profit or loss	842.2			352.0
Trade and other receivables	453.9			277.0
Derivative financial assets	36.1			14.4
Assets held for sale	214.2			211.0
Current assets	3,742.8			2,101.9
Total Assets	25,444.7			19,040.8

Aroundtown SA | Preliminary Consolidated Financial Statements | 10

		December 31,
		2019			2018
		Unaudited	Audited
		in € millions
Equity
Share capital	12.2			11.3
Retained earnings and other reserves	9,573.3			7,818.2
Equity attributable to the owners of the Company	9,585.5			7,829.5
Equity attributable to perpetual notes investors	2,484.0			1,547.7
Equity attributable to the owners of the Company and perpetual
notes investors	12,069.5			9,377.2
Non-controlling interests	1,309.4			567.1
Total Equity	13,378.9			9,944.3
Liabilities
Loans and borrowings	620.6			1,092.9
Straight bonds	9,138.9			6,351.6
Derivative financial liabilities	71.7			61.5
Other non-current liabilities	270.6			102.6
Deferred tax liabilities	1,107.4			882.3
Non-current liabilities	11,209.2			8,490.9
		245.9
Current portion of long-term loans and loan redemptions			27.0
Trade and other payables	342.8			450.8
Tax payable	24.9			10.0
Provisions for other liabilities and charges	149.1			106.5
Derivative financial liabilities	51.5			-
Liabilities held for sale	42.4			11.3
Current liabilities	856.6			605.6
Total Liabilities	12,065.8			9,096.5
Total Equity and Liabilities	25,444.7			19,040.8

11 | Aroundtown SA | Preliminary Consolidated Financial Statements

Consolidated Statement Of Cash Flows

					Year ended December 31,
		2019			2018
					Unaudited	Audited
					in € millions
Cash flows from operating activities
Profit for the year		1,709.1			1,827.8
Adjustments for the profit:
Depreciation and amortization	1.7			1.6
Property revaluations and capital gains	(1,217.5)			(1,536.4)
Share in profit from investment in equity-accounted investees	(298.7)			(251.6)
Finance expenses and other financial results	96.0			208.4
Current and deferred tax expenses	350.7			257.3
Share-based payment agreements	4.5			3.3
Change in working capital	(36.7)			(42.1)
Dividend received		61.4			50.9
Tax paid		(56.9)			(46.4)
Net cash provided by operating activities	613.6			472.8
Cash flows from investing activities
Acquisitions of equipment and intangible assets, net	(3.1)			(4.7)
Investment and acquisitions of investment property,	(538.2)
capex and advances paid, net			(915.1)
(Acquisitions)/ disposals of investees and loans,	(1,772.8)
net of cash acquired/ (disposed)			(1,829.2)
Proceeds from/ (investments in) traded securities	(575.7)
and other financial­	assets, net			(175.3)
Net cash used in investing activities	(2,889.8)			(2,924.3)

Berlin

				Year ended December 31,
	2019			2018
				Unaudited	Audited
				in € millions
Cash flows from financing activities
Proceeds from issuance of ordinary shares, net	595.4			600.5
Proceeds from issuance of straight bonds, net	2,653.9			2,455.5
Proceeds from perpetual notes investors, net	878.5			352.1
Proceeds (repayments) from/(of) loans from	(484.5)
financial institutions and others, net			157.1
Amortizations of loans from financial institutions	(21.7)			(24.6)
Transactions with non-controlling interests	(24.5)			(265.4)
Dividend distribution	(209.4)			(225.7)
Interest and other financial expenses paid, net	(159.8)			(96.6)
Net cash provided by financing activities	3,227.9			2,952.9
Net changes in cash and cash equivalents	951.7			501.4
Assets held for sale - change in cash	(4.1)			5.9
Cash and cash equivalents as at January 1	1,242.8			736.4
Effect of movements in exchange rates on cash held	1.3			(0.9)
Cash and cash equivalents as at December 31	2,191.7			1,242.8