Liveable housing.

Simply good.

QUARTERLY REPORT AS OF 30 SEPTEMBER 2020

2

LEG IMMOBILIEN AG Q3 2020

3

About this report

3

Key figures Q3 2020

4

Portfolio

8

Analysis of net assets, financial position

and results of operations

18

Risk and opportunity report

19

Forecast report

20

Consolidated financial statements

20

Consolidated statement of financial position

21

Consolidated statement of comprehensive income

22

Statement of changes in consolidated equity

23

Consolidated statement of cash flows

24

Selected notes

24

1.

Basic information on the Group

24

2.

Interim consolidated financial statements

24

3.

Accounting policies

24

4.

Changes in the Group

25

5.

Business combinations

26

6.

Judgements and estimates

27

7.

Selected notes to the consolidated

statement of financial position

33

8.

Selected notes to the consolidated

statement of comprehensive income

35

9.

Notes on Group segment reporting

38

10.

Financial instruments

41

11.

Related-party disclosures

41

12.

Other

41

13. The Management Board and

the Supervisory Board

41

14.

Supplementary report

43 Responsibility statement

43 Financial calendar 2020/2021

43 Contact details and imprint

3

AT A GLANCE

LEG IMMOBILIEN AG Q3 2020

About this report

Key figures Q3 2020

The pdf version of our quarterly report was optimised for use on a PC or tablet. The linked tables of contents and the function buttons on each page ensure easy navigation:

To the main table of contents

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T1

Q3 2020

Q3 2019

+ / -  % 

01.01. - 

01.01. - 

+ / -   %

30.09.2020

30.09.2019

Results of operations

Rental income

€ million

156.5

147.3

6.2

464.5

439.8

5.6

Net rental and lease income

€ million

126.2

114.3

10.4

365.7

340.2

7.5

EBITDA

€ million

123.5

107.1

15.3

940.4

864.6

8.8

EBITDA adjusted

€ million

125.0

112.7

10.9

360.2

330.5

9.0

EBT

€ million

60.1

38.4

56.5

814.7

670.9

21.4

Net profit or loss for the period

€ million

42.7

19.8

115.7

656.1

488.9

34.2

FFO I

€ million

102.1

88.2

15.8

296.7

259.1

14.5

FFO I per share

1.43

1.38

3.6

4.25

4.09

3.9

FFO II

€ million

102.1

86.5

18.0

295.5

255.9

15.5

FFO II per share

1.43

1.35

5.9

4.23

4.03

5.0

AFFO

€ million

21.8

30.2

- 27.8

94.0

122.6

- 23.3

AFFO per share

0.30

0.47

- 36.2

1.34

1.93

- 30.6

Portfolio

30.09.2020

30.09.2019

+ / -   % / bp

Number residential units

138,601

133,806

3.6

In-place rent

€/sqm

5.91

5.77

2.5

In-place rent (l-f-l)

€/sqm

5.93

5.79

2.3

EPRA vacancy rate

%

3.3

3.9

- 60 bp

EPRA vacancy rate (l-f-l)

%

3.1

3.6

- 50 bp

Statement of financial position

30.09.2020

31.12.2019

+ / -   % / bp

Investment property

€ million

13,222.2

12,031.1

9.9

Cash and cash equivalents

€ million

848.8

451.2

88.1

Equity

€ million

6,677.6

5,933.9

12.5

Total financing liabilities

€ million

5,728.8

5,053.9

13.4

Current financing liabilities

€ million

487.3

197.1

147.2

LTV

%

36.4

37.7

- 130 bp

Equity ratio

%

45.8

45.9

- 10 bp

Adj. EPRA NAV, diluted

€ million

8,702.6

7,273.0

19.7

Adj. EPRA NAV per share, diluted

115.21

105.39

9.3

bp = basis points

> 2019 annual report.

4

PORTFOLIO

LEG IMMOBILIEN AG Q3 2020

Portfolio

Portfolio segmentation and housing stock

Performance of the LEG portfolio

The regular cost rent adjustment for rent-restricted apartments that is conducted every three years took place in January 2020. The average

The LEG portfolio can be divided into three market clusters using a scoring system: high-growth markets, stable markets and higher-­ yielding markets. The indicators for the scoring system are described in the

LEG's portfolio is spread across around 180 locations with a geographical focus on North Rhine-Westphalia and further activities in Lower Saxony, Bremen and Rhineland-Palatinate. The average apartment size is 64 square metres with an average monthly rent of EUR 5.91 per square metre.

As at 30 September 2020, the portfolio consisted of 138,601 residential units; 1,295 commercial units and 35,892 garages and parking spaces. All of the acquisitions made in FY 2019 were transferred to the LEG portfolio by 1 January 2020 at the latest.

Operational development

In-place rent on a like-for-like basis was EUR 5.93 per square metre as of 30 September 2020, 2.3 % up on the previous year.

In the free-financed segment which accounts for around 75 % of LEG's portfolio, rents rose by 2.3 % to EUR 6.31 per square metre/ month (on a like-for-like basis). In the high-growth markets, in-place rent increased by 2.4 % to EUR 7.34 per square metre (on a like-for- like basis). The stable markets recorded a plus of 2.7 % to an average rent of EUR 5.94 per square metre (on a like-for-like basis). In the higher-yielding markets an average increase of 1.9 % to 5.71 Euro per square metre (on a like-for-like basis) was achieved.

rent in this segment increased by 2.0 % year on year or EUR 0.09 to EUR 4.89 per square metre (on a like-for-like basis) at the end of the reporting period.

The EPRA vacancy rate on a like-for-like basis was 3.1 % as at 30 Sep- tember 2020, down 50 basis points on the previous year. With an occupancy rate of 98.3 % (on a like-for-like basis) the LEG portfolio in the high-growth markets was nearly fully let at the end of the reporting period. In the stable markets the occupancy rate was 96.9 % (on a like-for-like basis). In the higher-yielding markets, it stood at 95.2 % (on a like-for-like basis).

5

PORTFOLIO

LEG IMMOBILIEN AG Q3 2020

T2

Portfolio segments - top 3 locations

Total portfolio

Change

like-for-like basis

30.09.2020

30.09.2019

Number

Share of

Living space

In-place rent

EPRA

Number

Share of

Living space

In-place rent

EPRA

In-place rent

Vacancy rate

of LEG

LEG-portfolio

vacancy rate

of LEG

LEG-portfolio

vacancy rate

in %

basis points

apartments

in %

in sqm

€/sqm

in %

apartments

in %

in sqm

€/sqm

in %

like-for-like

like-for-like

High-growth markets

41,918

30.2

2,783,151

6.68

1.9

39,691

29.7

2,641,528

6.58

2.0

2.3

- 20

District of Mettmann

8,500

6.1

590,990

6.84

2.2

8,484

6.3

589,864

6.71

2.3

1.8

- 30

Muenster

6,198

4.5

412,104

6.75

1.0

6,126

4.6

406,760

6.67

0.9

1.4

10

Dusseldorf

5,422

3.9

352,442

7.99

1.9

5,352

4.0

348,054

7.78

3.1

3.1

- 120

Other locations

21,798

15.7

1,427,615

6.26

2.0

19,729

14.7

1,296,850

6.17

1.8

2.6

20

Stable markets

54,203

39.1

3,456,210

5.62

3.4

51,051

38.2

3,271,626

5.47

3.8

2.6

- 40

Dortmund

13,722

9.9

896,604

5.47

2.8

13,581

10.1

889,245

5.29

3.3

3.1

- 50

Moenchengladbach

6,442

4.6

408,183

5.99

2.4

6,443

4.8

408,317

5.82

2.2

3.0

20

Essen

3,372

2.4

217,538

5.67

3.4

3,373

2.5

217,595

5.51

3.1

2.9

40

Other locations

30,667

22.1

1,933,885

5.61

4.0

27,654

20.7

1,756,469

5.47

4.4

2.2

- 60

Higher-yielding markets

42,360

30.6

2,573,636

5.45

5.0

43,064

32.2

2,647,198

5.31

6.5

2.0

- 110

District of Recklinghausen

9,022

6.5

548,855

5.35

3.5

9,864

7.4

618,328

5.14

6.1

2.0

- 70

Duisburg

6,339

4.6

383,679

5.84

3.4

6,847

5.1

423,821

5.68

6.0

1.8

- 250

Maerkisch District

4,608

3.3

284,508

5.35

4.7

4,567

3.4

281,400

5.20

4.2

2.1

70

Other locations

22,391

16.2

1,356,595

5.40

6.1

21,786

16.3

1,323,649

5.29

7.4

1.9

- 120

Total 1

138,601

100.0

8,820,838

5.91

3.3

133,806

100.0

8,560,352

5.77

3.9

2.3

- 50

1 30.09.2020: Incl. 120 units intended for disposal.

6

PORTFOLIO

LEG IMMOBILIEN AG Q3 2020

T3

Performance LEG Portfolio

High-growth markets

Stable markets

Higher-yielding markets

Total

30.09.2020

30.06.2020

30.09.2019

30.09.2020

30.06.2020

30.09.2019

30.09.2020

30.06.2020

30.09.2019

30.09.2020

30.06.2020

30.09.2019

Subsidised residential units

Units

11,922

11,922

11,181

14,093

14,169

14,409

8,142

8,142

9,005

34,157

34,233

34,694

Area

sqm

820,872

820,872

775,125

954,367

958,770

982,329

534,763

534,770

598,114

2,310,001

2,314,411

2,360,546

In-place rent

€/sqm

5.21

5.19

5.11

4.82

4.81

4.73

4.54

4.53

4.46

4.90

4.88

4.79

EPRA vacancy rate

%

0.9

1.0

1.0

2.8

2.6

2.7

2.8

2.7

4.7

2.1

2.0

2.7

Free-financed residential units

Units

29,996

30,014

28,534

40,110

39,109

36,618

34,218

34,049

34,059

104,444

103,292

99,112

Area

sqm

1,962,279

1,963,494

1,867,846

2,501,844

2,437,142

2,287,854

2,038,874

2,026,479

2,049,084

6,510,837

6,434,956

6,199,806

In-place rent

€/sqm

7.30

7.26

7.20

5.93

5.90

5.79

5.69

5.66

5.56

6.28

6.25

6.15

EPRA vacancy rate

%

2.2

2.2

2.2

3.6

3.8

4.1

5.4

5.9

6.9

3.6

3.8

4.3

Total residential units 1

Units

41,918

41,936

39,715

54,203

53,278

51,027

42,360

42,191

43,064

138,601

137,525

133,806

Area

sqm

2,783,151

2,784,366

2,642,971

3,456,210

3,395,913

3,270,183

2,573,636

2,561,249

2,647,198

8,820,838

8,749,367

8,560,352

In-place rent

€/sqm

6.68

6.64

6.58

5.62

5.59

5.47

5.45

5.42

5.31

5.91

5.88

5.77

EPRA vacancy rate

%

1.9

2.0

2.0

3.4

3.5

3.8

5.0

5.4

6.5

3.3

3.4

3.9

Total commercial

Units

1,295

1,288

1,259

Area

sqm

215,458

214,464

207,946

Total parking

Units

35,892

35,460

34,117

Total other

Units

2,746

2,736

2,611

1 30.06.2020/30.09.2020: Incl. 120 units intended for disposal.

7

PORTFOLIO

LEG IMMOBILIEN AG Q3 2020

Value development

The following table shows the distribution of assets by market seg- ment. LEG did not execute a portfolio valuation in the third quarter. The rental yield based on in-place rents was 4.8 % as at 30 September 2020 (rent multiplier 20.7) excluding assets held for sale. The valuation of the residential portfolio corresponds to a net initial yield of 3.7 % as defined by EPRA.

T4

Market segments

Residential

Residential

Share

Gross asset

In-place rent

Commercial/

Total assets

units

assets

residential

value

multiplier

other assets

assets

30.09.2020

€ million 1

in %

€/sqm

€ million 2

€ million

High-growth markets

41,918

5,612

44

2,001

25.2x

252

5,864

District of Mettmann

8,500

1,159

9

1,964

24.1x

77

1,236

Muenster

6,198

948

7

2,296

28.4x

50

998

Dusseldorf

5,422

898

7

2,519

26.4x

41

939

Other locations

21,798

2,608

21

1,805

24.3x

83

2,691

Stable markets

54,203

4,404

35

1,284

19.3x

141

4,545

Dortmund

13,722

1,290

10

1,432

22.2x

53

1,343

Moenchengladbach

6,442

539

4

1,318

18.1x

14

553

Essen

3,372

280

2

1,281

19.3x

10

290

Other locations

30,667

2,295

18

1,208

18.3x

64

2,359

Higher-yielding markets

42,360

2,676

21

1,036

16.5x

86

2,762

District of Recklinghausen

9,022

584

5

1,054

16.9x

20

603

Duisburg

6,339

447

4

1,172

17.2x

28

476

Maerkisch District

4,608

279

2

980

15.9x

3

283

Other locations

22,391

1,366

11

1,002

16.2x

34

1,400

Total portfolio 3

138,481

12,692

100

1,440

20.7x

478

13,171

Assets under construction (IAS 40)

14

Leasehold and land values

37

Balance sheet property

valuation assets (IAS 40)

13,222

Inventories (IAS 2)

1

Owner-occupied property (IAS 16)

26

Held for sale (IFRS 5)

34

Total balance sheet 

13,283

  1. Excluding 276 residential units in commercial buildings; including 460 commercial units as well as several other units in mixed residential assets.
  2. Excluding 460 commercial units in mixed residential assets; including 276 residential units in commercial buildings, commercial, parking, other assets.
  3. 30.09.2020: Excluding 120 units reclassified to Assets held for sale (IFRS 5).

8

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

LEG IMMOBILIEN AG Q3 2020

Analysis of net assets, financial position and results of operations

Please see the > glossary in the 2019 annual report for a definition of

In the reporting period, net rental and lease income increased primarily

individual key figures and terms.

due to higher net cold rents by 7.5 % to EUR 365.7 million.

Adjusted EBITDA increased by 9.0 % to EUR 360.2 million. The adjusted

Results of operations

EBITDA margin increased slightly from 75.1 % (comparative period)

to 77.5 % in the reporting period.

T5

Condensed income statement

Q3 2020

Q3 2019

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Net rental and lease income

126.2

114.3

365.7

340.2

Net income from the disposal of investment properties

- 0.2

- 0.4

- 0.8

- 0.8

Net income from the remeasurement of investment properties

0.6

1.4

593.3

551.6

Net income from the disposal of real estate inventory

- 0.5

- 0.7

- 2.3

- 2.0

Net income from other services

1.3

0.9

4.2

1.5

Administrative and other expenses

- 8.2

- 12.7

- 32.6

- 38.0

Other income

0.1

0.1

0.1

0.4

Operating earnings

119.3

102.9

927.6

852.9

Interest income

0.1

0.2

0.1

0.2

Interest expenses

- 25.5

- 40.6

- 71.2

- 92.7

Net income from investment securities and other equity investments

0.0

0.4

1.9

3.1

Net income from the fair value measurement of derivatives

- 33.8

- 24.5

- 43.7

- 92.6

Net finance earnings

- 59.2

- 64.5

- 112.9

- 182.0

Earnings before income taxes

60.1

38.4

814.7

670.9

Income taxes

- 17.4

- 18.6

- 158.6

- 182.0

Net profit or loss for the period

42.7

19.8

656.1

488.9

The increase of operating earnings by EUR 74.7 million in the reporting period was mainly due to EUR 41.7 million higher net income from the remeasurement of investment properties.

In the reporting period, net income from the fair value measurement of derivatives resulted primarily from changes in the fair value of embedded derivatives from the convertible bonds in the amount of EUR - 43.7 million (comparative period: EUR - 91.3 million).

Current income tax expenses of EUR - 2.9 million were recorded affecting net income in the reporting period (comparative period: EUR - 13.0 million).

9

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

LEG IMMOBILIEN AG Q3 2020

Net rental and lease income

T6

Net rental and lease income

Q3 2020

Q3 2019

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Net cold rent

156.5

147.3

464.5

439.8

Profit from operating expenses

0.4

1.0

- 1.2

- 0.9

Maintenance for externally procured services

- 13.4

- 11.5

- 37.4

- 36.9

Staff costs

- 17.4

- 16.8

- 53.7

- 48.8

Allowances on rent receivables

- 1.3

- 1.5

- 5.6

- 5.8

Depreciation and amortisation expenses

- 2.4

- 2.6

- 7.4

- 6.9

Other

3.8

- 1.6

6.5

- 0.3

Net rental and lease income

126.2

114.3

365.7

340.2

Net operating income margin (in %)

80.6

77.6

78.7

77.4

Non-recurring project costs - rental and lease

1.1

1.3

3.2

2.9

Depreciation

2.4

2.6

7.4

6.9

Adjusted net rental and lease income

129.7

118.2

376.3

350.0

Adjusted net operating income margin (in %)

82.9

80.2

81.0

79.6

T7

EPRA vacancy rate

€ million

30.09.2020

30.09.2019

Rental value of

vacant space - like-for-like

19.0

21.9

Rental value of vacant space - total

21.9

24.5

Rental value of the

whole portfolio - like-for-like

622.3

610.2

Rental value of the

whole portfolio - total

667.0

627.0

EPRA vacancy rate -

like-for-like (in %)

3.1

3.6

EPRA vacancy rate - total (in %)

3.3

3.9

The EPRA capex splits the capitalised expenditure of the reporting period in comparison to the comparative period in three components. On a like-for-like portfolio basis, the value-adding modernization work as a result of the strategic investment program surged by EUR 67.9 million to EUR 262.8 million in the reporting period. In the Development area most of the investment is due to the construction project in Hilden.

In the reporting period, the LEG Group increased its net rental and lease income by EUR 25.5 million compared to the same period of the previous year. The main driver of this development was the EUR 24.7 million rise in net cold rents. In-place rent per square metre on a like-for-like basis rose by 2.3 % in the reporting period. The increase in Other is mainly due to the expansion of value-added services. This was countered by the increase in staff costs by EUR 4.9 million, which was mainly due to an increase in the number of employees as well as to tariff increases.

Due to disproportionate increase of net rental and lease income compared with the development of in-place rent the NOI margin increased from 77.4 % to 78.7 % in the reporting period.

The EPRA vacancy rate like-for-like has improved compared to the comparative period and stands at 3.1 % as at 30 September 2020 (3.6 % as at 30 September 2019).

10

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

LEG IMMOBILIEN AG Q3 2020

T8

T9

EPRA capex

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Acquisitions

6.7

-

Development

3.2

3.1

Like-for-like Portfolio

192.8

133.4

Capex

202.7

136.5

In addition to the value-adding modernisation, the increase in maintenance expenses by EUR 1.7 million to EUR 60.1 million resulted in total investments of EUR 262.8 million in the reporting period (comparative period: EUR 194.9 million). The capitalisation rate increased to 77.1 % in the reporting period (comparative period: 70.0 %). Despite increase in area of investment properties in the reporting period total investments rose to EUR 29.38 per square metre (comparative period: EUR 22.25 per square metre) and without new construction activities to EUR 29.02 per square metre (comparative period: EUR 21.88 per square metre).

Maintenance and modernisation

Q3 2020

Q3 2019

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Maintenance expenses

23.0

19.7

60.1

58.4

thereof investment properties

21.5

19.7

57.8

57.6

Capital expenditure

80.3

58.2

202.7

136.5

thereof investment properties

79.5

58.2

200.7

132.4

Total investment

103.3

77.9

262.8

194.9

thereof investment properties

101.0

77.9

258.5

190.0

Area of investment properties in million sqm

9.01

8.76

8.94

8.76

Average investment per sqm (€)

11.46

8.89

29.38

22.25

Average investment per sqm without new construction activities (€)

11.69

8.77

29.02

21.88

Net income from the disposal of investment properties

T10

Net income from the disposal of investment properties

Q3 2020

Q3 2019

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Income from the disposal of investment properties

3.5

3.8

30.2

26.7

Carrying amount of the disposal of investment properties

- 3.5

- 3.8

- 30.3

- 26.7

Costs of sales of investment properties

- 0.2

- 0.4

- 0.7

- 0.8

Net income from the disposal of investment properties

- 0.2

- 0.4

- 0.8

- 0.8

Disposals of investment properties increased in the reporting period. Income from the disposal of investment property amounted to EUR 30.2 million and relate mainly to objects, which were reported as

assets held for sale and were remeasured up to the agreed property value as of 31 December 2019.

11

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

LEG IMMOBILIEN AG Q3 2020

Net income from remeasurement of investment property

The remeasurement of investment properties was conducted as of 30 June 2020. There were minor changes in the third quarter 2020 due to the remeasurement of the assets held for sale according to IFRS 5.

Net income from remeasurement of investment property amounted to EUR 593.3 million in the reporting period which corresponds to a 4.8 % rise (incl. acquisitions) compared to the start of the financial year.

The average value of investment property (incl. IFRS 5 objects) is EUR 1,440 per square metre including acquisitions (31 December 2019: EUR 1,353 per square metre).

The increase in the value of the portfolio is the result of the further increase in rents as well as further reduction in the discount and capitalisation rates.

Net income from the disposal of real estate inventory

The disposal of the remaining properties of the former "Development" division continued as planned in the reporting period.

The remaining real estate inventory held as at 30 September 2020 amounts to EUR 0.4 million, of which EUR 0.4 million is land under development.

Administrative and other expenses

T11

Administrative and other expenses

Q3 2020

Q3 2019

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Other operating expenses

- 2.0

- 2.7

- 12.4

- 10.1

Staff costs

- 4.9

- 9.0

- 16.0

- 24.4

Purchased services

- 0.3

- 0.3

- 1.1

- 0.9

Depreciation and amortisation

- 1.0

- 0.7

- 3.1

- 2.6

Administratve and other expenses

- 8.2

- 12.7

- 32.6

- 38.0

Depreciation and amortisation

1.0

0.7

3.1

2.6

Non-recurring project costs and extraordinary and prior-period expenses

0.5

4.7

6.9

12.0

Adjusted administrative and other expenses

- 6.8

- 7.2

- 22.7

- 23.3

The increase in other operating expenses is mainly attributable to increased costs for advice and insurance. In contrast, staff costs in the comparative period were characterised by one-time payments (EUR 8.1 million). Non-recurring project costs therefore decreased significantly in the first nine months of 2020 compared to the same period of the previous year. Adjusted administrative expenses are therefore slightly lower than in the comparative period.

12

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

Net finance earnings

T12

Net finance earnings

Q3 2020

Q3 2019

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Interest income

0.1

0.2

0.1

0.2

Interest expenses

- 25.5

- 40.6

- 71.2

- 92.7

Net interest income

- 25.4

- 40.4

- 71.1

- 92.5

Net income from other financial assets and other investments

0.0

0.4

1.9

3.1

Net income from associates

-

0.0

-

0.0

Net income from the fair value measurement of derivatives

- 33.8

- 24.5

- 43.7

- 92.6

Net finance earnings

- 59.2

- 64.5

- 112.9

- 182.0

LEG IMMOBILIEN AG Q3 2020

Interest expenses decreased by EUR 21.5 million to EUR 71.2 million compared to the same period of the previous year. This includes the interest expense from loan amortisation, which decreased by EUR 19.7 million year on year to EUR 9.8 million. The interest expense from loan amortisation includes the measurement of the convertible and corporate bonds at amortised cost in the amount of EUR 4.7 million (comparative period: EUR 20.5 million). The main driver for the decrease are the refinancings carried out in the financial year 2019 and the early conversion of the convertible bond issued in 2014. The issue of the two corporate bonds in the fourth quarter 2019 as well as the issued convertible bond in June 2020 had an opposite effect.

Year-on-year a further reduction in the average interest rate to 1.35 % was achieved as at 30 September 2020 (1.64 % as at 30 September 2019) based on an average term of around 7.7 years (7.3 years as at 30 September 2019).

Dividends received from equity investments in non-consolidated and non-associated companies decreased by EUR 1.2 million year-on-year to EUR 1.9 million in the reporting period.

In the reporting period, net income from the fair value measurement of derivatives resulted primarily from changes in the fair value of embedded derivatives from the convertible bond in the amount of EUR - 43.7 million (comparative period: EUR - 91.3 million).

> glossary in the 2019 annual report.

13

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

LEG IMMOBILIEN AG Q3 2020

Income tax expenses

T13

Income tax expenses

Q3 2020

Q3 2019

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Current tax expenses

- 0.9

- 5.5

- 2.9

- 13.0

Deferred tax expenses

- 16.5

- 13.1

- 155.7

- 169.0

Income tax expenses

- 17.4

- 18.6

- 158.6

- 182.0

Reconciliation to FFO

FFO I is a key financial performance indicator of the LEG Group. The LEG Group distinguishes between FFO I (not including net income from the disposal of investment properties), FFO II (including net income from the disposal of investment properties) and AFFO (FFO I adjusted for capex). The calculation methods for these key figures can be found in the

An effective Group tax rate of 18.3 % was assumed in the reporting period in accordance with Group tax planning (comparative period: 22.8 %).

The effective group tax rate used is significantly lower than in the comparative period, because since the financial year 2020 another large group company with a property portfolio is subject to the expanded trade tax reduction.

14

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

LEG IMMOBILIEN AG Q3 2020

FFO I, FFO II and AFFO were calculated as follows in the reporting period and the same period of the previous year:

T14

Calculation of FFO I, FFO II and AFFO

Q3 2020

Q3 2019

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Net cold rent

156.5

147.3

464.5

439.8

Profit from operating expenses

0.4

1.0

- 1.2

- 0.9

Maintenance for externally procured services

- 13.4

- 11.5

- 37.4

- 36.9

Staff costs

- 17.4

- 16.8

- 53.7

- 48.8

Allowances on rent receivables

- 1.3

- 1.5

- 5.6

- 5.8

Other

3.8

- 1.6

6.5

- 0.3

Non-recurring project costs (rental and lease)

1.1

1.3

3.2

2.9

Current net rental and lease income

129.7

118.2

376.3

350.0

Current net income from other services

2.1

1.6

6.6

3.4

Staff costs

- 4.9

- 9.0

- 16.0

- 24.4

Non-staff operating costs

- 2.4

- 2.9

- 13.6

- 10.9

Non-recurring project costs (admin.)

0.5

4.7

6.9

12.0

Extraordinary and prior-period expenses

0.0

0.0

0.0

0.0

Current administrative expenses

- 6.8

- 7.2

- 22.7

- 23.3

Other income and expenses

0.0

0.1

0.0

0.4

Adjusted EBITDA

125.0

112.7

360.2

330.5

Cash interest expenses and income

- 21.1

- 19.4

- 59.7

- 58.4

Cash income taxes from rental and lease

- 0.8

- 3.8

- 2.0

- 10.0

FFO I (before adjustment of non-controlling interests)

103.1

89.5

298.5

262.1

Adjustment of non-controlling interests

- 1.0

- 1.3

- 1.8

- 3.0

FFO I (after adjustment of non-controlling interests)

102.1

88.2

296.7

259.1

Weighted average number of shares outstanding

71,451,447

63,904,421

69,876,373

63,426,930

FFO I per share

1.43

1.38

4.25

4.09

Net income from the disposal of investment properties

0.0

- 0.1

- 0.3

- 0.3

Cash income taxes from disposal of investment properties

0.0

- 1.6

- 0.9

- 2.9

FFO II (incl. disposal of investment properties)

102.1

86.5

295.5

255.9

Capex

- 80.3

- 58.0

- 202.7

- 136.5

Capex-adjusted FFO I (AFFO)

21.8

30.2

94.0

122.6

At EUR 296.7 million, FFO I was 14.5 % higher in the reporting period than in the same period of the previous year (comparative period: EUR 259.1 million). In particular, this increase is attributable to the positive impact from the rise in net cold rent including the effects of the concluded acquisitions. As well the temporary decline in cash income taxes from rental business has an impact.

With slightly increased interest expenses, there is an increase of the interest coverage ratio (ratio of adjusted EBITDA to cash interest expense) from 566 % in the same period of the previous year to 603 % in the reporting period with simultaneously reduced net gearing.

15

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

LEG IMMOBILIEN AG Q3 2020

EPRA earnings per share (EPS)

The following table shows earnings per share according to the best practice recommendations by EPRA (European Public Real Estate Association):

T15

EPRA earnings per share (EPS)

Q3 2020

Q3 2019

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Net profit or loss for the period attributable to parent shareholders

41.8

19.1

653.4

486.2

Changes in value of investment properties

- 3.8

- 1.4

- 593.4

- 551.6

Profits or losses on disposal of investment properties, development properties held

for investment, other interests and sales of trading properties including impairment

charges in respect of trading properties

0.8

1.1

3.3

2.8

Tax on profits or losses on disposals of trading properties

0.2

1.5

1.0

2.9

Changes in fair value of financial instruments and associated close-out costs

33.8

24.5

43.7

92.6

Acquisition costs on share deals and non-controlling joint venture interests

3.2

- 0.1

4.3

0.0

Deferred tax in respect of EPRA adjustments

0.1

- 0.9

108.5

125.3

Refinancing expenses

0.0

4.5

0.4

4.9

Other interest expenses

1.1

0.0

1.1

0.2

Non-controlling interests in respect of the above

0.2

0.0

0.4

0.3

EPRA earnings

77.4

48.3

222.7

163.6

Weighted average number of shares outstanding

71,451,447

63,904,421

69,876,373

63,426,930

= EPRA earnings per share (undiluted) in €

1.08

0.76

3.19

2.58

Potentially diluted shares

3,438,349

5,370,572

3,438,349

5,609,317

Interest coupon on convertible bond after taxes

2.1

- 0.6

2.1

-

Amortisation expenses convertible bond after taxes

0.7

10.5

0.7

13.2

EPRA earnings (diluted)

80.2

58.2

225.5

176.8

Number of diluted shares

74,889,796

69,274,993

73,314,722

69,036,247

= EPRA earnings per share (diluted) in €

1.07

0.84

3.08

2.56

16

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

LEG IMMOBILIEN AG Q3 2020

Net assets

(Consolidated statement of financial position)

T16

Consolidated statement of financial position

€ million

30.09.2020

31.12.2019

Investment properties

13,222.2

12,031.1

Prepayments for

investment properties

69.7

53.5

Other non-current assets

280.8

269.2

Non-current assets

13,572.7

12,353.8

Receivables and other assets

128.9

89.6

Cash and cash equivalents

848.8

451.2

Current assets

977.7

540.8

Assets held for sale

33.7

25.2

Total assets

14,584.1

12,919.8

Equity

6,677.6

5,933.9

Non-current financial liabilities

5,241.5

4,856.8

Other non-current liabilities

1,878.8

1,654.2

Non-current liabilities

7,120.3

6,511.0

Current financial liabilities

487.3

197.1

Other current liabilities

298.9

277.8

Current liabilities

786.2

474.9

Total equity and liabilities

14,584.1

12,919.8

A fair value measurement of investment property was conducted in the reporting period. The resulting profit from remeasurement of investment property of EUR 593.3 million (comparative period: EUR 551.6 million) was the main driver for the increase compared to 31 December 2019. Furthermore, additions from acquisitions with EUR 431.5 million and capitalisation of property modernisation measures with EUR 203.5 million contributed to the increase of investment properties.

The recognition of real estate tax expense as other inventories (EUR 5.9 million) for the remainder of the financial year and the deferral of prepaid operating costs (EUR 29.9 million) contributed significantly to the development of the current assets.

Cash and cash equivalents increased by EUR 397.6 million to EUR 848.8 million. This development was mainly due to the cash flow from operating activities (EUR 240.5 million) and the capital measures implemented to finance investments. A capital increase (EUR 269.6 mil- lion), the issuance of a convertible bond (EUR 544.0 million), a registered bonds (EUR 50.0 million) as well as cash payments of loans in the amount of EUR 258.4 million are to be mentioned here. Scheduled and unscheduled repayments (EUR 173.5 million) and payments for acquisitions (EUR - 629.4 million) had an opposite effect. For the financial year 2019, less the dividend distribution through the issue of new shares, a cash dividend of EUR 172.4 million was paid.

The development of equity since 31 December 2019 was primarily due to the capital increase of EUR 354.1 million, the net profit for the period of EUR 647.5 million and the dividend payment of EUR 257.0 million (thereof EUR 84.6 million by issuing new shares).

Within the non-current liabilities, the issued convertible bonds increased the obligations by EUR 136.3 million, within the current liabilities these obligations increased by EUR 387.0 million. Driven by the property valuation as at 30 June 2020, deferred tax liabilities shown in other non-current liabilities increased by EUR 155.7 million.

Net asset value (NAV)

A further key metric relevant in the property industry is NAV. The calculation method for the respective key figure can be found in the

> glossary in the 2019 annual report.

The LEG Group reports a basic EPRA NAV of EUR 8,356.1 million as at 30 September 2020. The effects of the possible conversion of the convertible bond 2017 are shown by the additional calculation of diluted EPRA NAV. After further adjustment for goodwill effects, the adjusted diluted EPRA NAV amounts to EUR 8,702.6 million at the reporting date.

17

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

LEG IMMOBILIEN AG Q3 2020

T17

EPRA NAV

30.09.2020

31.12.2019

Undiluted

Effect of exercise

Diluted

Undiluted

Effect of exercise

Diluted

of convertibles

of convertibles

€ million

and options

and options

Equity attributable to shareholders of the parent company

6,653.1

-

6,653.1

5,909.9

-

5,909.9

Non-controlling interests

24.5

-

24.5

24.0

-

24.0

Equity

6,677.6

-

6,677.6

5,933.9

-

5,933.9

Effect of exercise of options, convertibles and other equity interests

-

444.9

444.9

-

26.1

26.1

NAV

6,653.1

444.9

7,098.0

5,909.9

26.1

5,936.0

Fair value measurement of derivative financial instruments

135.6

- 15.4

120.2

84.0

-

84.0

Deferred taxes on WFA loans and derivatives

1.6

-

1.6

6.2

-

6.2

Deferred taxes on investment property

1,621.7

-

1.621.7

1,386.0

-

1,386.0

Goodwill resulting from deferred taxes on EPRA adjustments

- 55.9

-

- 55.9

- 55.8

-

- 55.8

EPRA NAV

8,356.1

429.5

8,785.6

7,330.3

26.1

7,356.4

Number of shares

72,095,943

3,438,349

75,534,292

69,009,836

0

69,009,836

EPRA NAV per share (€)

115.90

-

116.31

106.22

-

106.60

Goodwill resulting from synergies

83.0

-

83.0

83.4

-

83.4

Adjusted EPRA NAV (w/o effects from goodwill)

8,273.1

429.5

8,702.6

7,246.9

26.1

7,273.0

Number of shares

72,095,943

3,438,349

75,534,292

69,009,836

0

69,009,836

Adjusted EPRA NAV per share (€)

114.75

-

115.21

105.01

-

105.39

EPRA NAV

8,356.1

429.5

8,785.6

7,330.3

26.1

7,356.4

Fair value measurement of derivative financial instruments

- 135.6

15.4

- 120.2

- 84.0

-

- 84.0

Deferred taxes on WFA loans and derivatives

- 1.6

-

- 1.6

- 6.2

-

- 6.2

Deferred taxes on investment property

- 1,621.7

-

- 1,621.7

- 1,386.0

-

- 1.386.0

Goodwill resulting from deferred taxes on EPRA adjustments

55.9

-

55.9

55.8

-

55.8

Fair value measurement of financing liabilities

- 401.6

-

- 401.6

- 333.5

-

- 333.5

Valuation uplift resulting from FV measurement financing liabilities

184.4

-

184.4

130.1

-

130.1

EPRA NNNAV

6,435.9

444.9

6,880.8

5,706.5

26.1

5,732.6

Number of shares

72,095,943

3,438,349

75,534,292

69,009,836

0

69,009,836

EPRA NNNAV per share (€)

89.27

-

91.10

82.69

-

83.07

> 2019 annual report.

18

ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS • RISK AND OPPORTUNITY REPORT

LEG IMMOBILIEN AG Q3 2020

Loan-to-value ratio (LTV)

Net debt at the end of the reporting period is higher compared with 31 December 2019. Investment properties increased even more, which resulted in a further decline in loan-to-value ratio (LTV) of 36.4 % at the interim reporting date (31 December 2019: 37.7 %).

T18

LTV

€ million

30.09.2020

31.12.2019

Financing liabilities

5,728.8

5,053.9

Without lease liabilities IFRS 16

(not leasehold)

29.5

31.8

Less cash and cash equivalents

848.8

451.2

Net financing liabilities

4,850.5

4,570.9

Investment properties

13,222.2

12,031.1

Assets held for sale

33.7

25.2

Prepayments for investment properties

69.7

53.5

Real estate assets

13,325.6

12,109.8

Loan to value ratio (LTV) in %

36.4

37.7

A condensed form of the LEG Group's statement of cash flows for the reporting period is shown below:

T19

Statement of cash flows

01.01. -

01.01. -

€ million

30.09.2020

30.09.2019

Cash flow from operating activities

240.5

224.8

Cash flow from investing activities

- 607.9

- 4.7

Cash flow from financing activities

765.0

- 71.4

Change in cash and cash equivalents

397.6

148.7

In the reporting period, the increase in cash flow from operating activities resulted from higher receipts from net cold rent.

The cash flow from investing activities is mainly influenced by acquisitions and modernisation work on the existing portfolio with cash payments of EUR - 629.4 million. In addition cash proceeds from property disposals of EUR 30.0 million, repayments of long term invested financial resources of EUR 25.1 million and prepayment for a company acquisition of EUR - 22.6 million have an effect.

Risk and opportunity report

The risks and opportunities faced by LEG in its operating activities

were described in detail in theThis did not include the new risks caused by the coronavirus pandemic. Due to the dynamic crisis situation and the second lockdown, it is difficult to assess short and medium-term development. However, the anticipated negative effects can generally be considered low, particularly in comparison to other sectors.

In view of the global effects of the coronavirus pandemic on the economy and society, all current forecasts can be made only with a considerably higher degree of uncertainty. This applies particularly in the context of international links and interrelations between the financial markets, the real economy and political decisions, which each individually have an influence on the economic effects of the pandemic already, but when combined are impossible to assess with any certainty ex ante. The following sections are therefore based on the fundamental premise that the coronavirus pandemic represents a temporary phenomenon.

Financial position

A net profit for the period of EUR 656.1 million was realised in the reporting period (comparative period: EUR 488.9 million). Equity amounted to EUR 6,677.6 million at the reporting date (31 December 2019: EUR 5,933.9 million). This corresponds to an equity ratio of 45.8 % (31 December 2019: 45.9 %).

In the first nine months of 2020, the main drivers of the cashflow from financing activities amounting to EUR 765.0 million were the issuance of a convertible bond (EUR 544.0 million), a registered bond (EUR 50.0 million), the capital increase (EUR 269.6 million) and the cash payments of loans (EUR 258.4 million). An opposite effect had the scheduled repayments (EUR - 173.5 million) of bank and subsidised loans as well as dividend payment (EUR - 172.4 million).

The LEG Group's solvency was ensured at all times in the reporting period.

Development of property prices and demand

Supply and demand for housing will still be the decisive factors for future price development. It can be assumed that the general conditions in terms of supply (only a slightly increasing number of comple- tions) and demand (continued high level of migration to Germany, particularly in cities and densely populated areas) will continue.

19

RISK AND OPPORTUNITY REPORT • FORECAST REPORT

LEG IMMOBILIEN AG Q3 2020

Development of rent defaults and rent deferrals

Only a slight increase in rent defaults can be observed at present. This is partly due to the extensive state transfer payments. Due to the LEG-specific low level of commercial letting, potential rent defaults from commercial properties can be currently classified as insignificant.

Housing vacancies

No developments can be seen at present that would indicate higher vacancies. Although new lettings are in a difficult environment, on the other hand tenant terminations are also decreasing. In addition, it could be, as in the financial crisis in 2008/2009, that immigration from EU countries that are hard hit by the economic consequences of the Sars-CoV-2 pandemic could increase creating additional demand for housing in the medium term. In the event of a severe recession, it could even prove to be an opportunity specifically for LEG Group that the company has a large number of affordable apartments and can thus benefit from increased demand for inexpensive housing in times of recession.

Forecast report

Based on the business performance to date, LEG believes it is well positioned overall to confirm its outlook for fiscal year 2020. Regarding FFO I, the outlook is narrowed to an amount of around EUR 380 million (before: upper end in the range of EUR 370 million to EUR 380 million).

Regarding like-for-like rental growth LEG still expects an increase of around 2.3 %, in line with the adjusted guidance released with the quarterly report as of 30 June 2020. This includes Corona-related effects like the voluntary and temporary deferral of rent increases according to section 558 German Civil Code (rent increase up to local reference rent level), legally possible deferral of payments as well as some postponements of modernisation measures.

LEG further expects a slightly decreasing vacancy (on a like-for-like basis) compared to financial year-end 2019.

The outlook for investments remains unchanged after the adjustment made with the release of the quarterly report as of 30 June 2020.

T20

Outlook 2020

FFO I

c. EUR 380 million (before:

EUR 370 - 380 million, upper end)

Like-for-like rental growth

c. 2.3 % 1

Like-for-like vacancy

slightly decreasing compared to

financial year-end 2019

Investments

c. EUR 38 - 40 per sqm 1

LTV

43 % max.

Dividend

70 % of FFO I

1 In line with the adjusted outlook released with the quarterly report as of 30 June 2020

With the earnings release as at 30 September 2020, the outlook has been extended by the following targets for financial year 2021.

T21

Outlook 2021

After carefully weighing up the information currently available at LEG Group, we have come to the conclusion that the effects of the Sars- CoV-2 pandemic on the housing sector in Germany and the effects on the business performance and the intrinsic value of the real estate assets of LEG Group should be manageable. There can even be opportunities for LEG Group in some cases.

The investments planned for the current fiscal year therefore amount to around EUR 38 - 40 per square metre.

In order to ensure a defensive long-term risk profile, LEG sticks to a maximum LTV of 43 %. LEG plans to distribute 70 % of its FFO I to shareholders as a dividend on a long-term basis.

For more details, please refer to the forecast report in the > 2019

FFO I

Like-for-like rental growth

Investments

LTV

Dividend

EUR 410 million to EUR 420 million

c. 3.0 %

c. EUR 40 - 42 per sqm

43 % max.

70 % of FFO I

For further information, please refer to the > consolidated financial

annual report (page 71 f.).

statements as at 31 December 2019.

20 CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

Consolidated statement of financial position

T22

Consolidated statement of financial position

Assets

€ million

30.09.2020

31.12.2019

Non-current assets

13,572.7

12,353.8

Investment properties

13,222.2

12,031.1

Prepayments for investment properties

69.7

53.5

Property, plant and equipment

81.4

83.7

Intangible assets and goodwill

141.2

140.6

Investments in associates

9.9

9.9

Other financial assets

35.7

23.2

Receivables and other assets

0.3

0.3

Deferred tax assets

12.3

11.5

Current assets

977.7

540.8

Real estate inventory and other inventory

9.7

4.6

Receivables and other assets

112.2

81.8

Income tax receivables

7.0

3.2

Cash and cash equivalents

848.8

451.2

Assets held for sale

33.7

25.2

Equity and liabilities

€ million

30.09.2020

31.12.2019

Equity

6,677.6

5,933.9

Share capital

72.1

69.0

Capital reserves

1,553.2

1,202.2

Cumulative other reserves

5,027.8

4,638.7

Equity attributable to shareholders of the parent company

6,653.1

5,909.9

Non-controlling interests

24.5

24.0

Non-current liabilities

7,120.3

6,511.0

Pension provisions

164.9

164.9

Other provisions

4.6

5.2

Financing liabilities

5,241.5

4,856.8

Other liabilities

222.3

152.8

Deferred tax liabilities

1,487.0

1,331.3

Current liabilities

786.2

474.9

Pension provisions

5.4

7.0

Other provisions

21.8

20.2

Provisions for taxes

0.1

0.2

Financing liabilities

487.3

197.1

Other liabilities

258.5

239.2

Tax liabilities

13.1

11.2

Total Assets

14,584.1

12,919.8

Total Equity and Liabilities

14,584.1

12,919.8

21 CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

Consolidated statement of comprehensive income

T23

Consolidated statement of comprehensive income

Q3 2020

Q3 2019

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Net rental and lease income

126.2

114.3

365.7

340.2

Rental and lease income

215.4

204.2

632.5

604.6

Cost of sales in connection with

rental and lease income

- 89.2

- 89.9

- 266.8

- 264.4

Net income from the disposal

of investment properties

- 0.2

- 0.4

- 0.8

- 0.8

Income from the disposal of investment properties

3.5

3.8

30.2

26.7

Carrying amount of the disposal

of investment properties

- 3.5

- 3.8

- 30.3

- 26.7

Cost of sales in connection with disposed

investment properties

- 0.2

- 0.4

- 0.7

- 0.8

Net income from the remeasurement

of investment properties

0.6

1.4

593.3

551.6

Net income from the disposal

of real estate inventory

- 0.5

- 0.7

- 2.3

- 2.0

Income from the real estate inventory disposed of

-

-

-

-

Carrying amount of the

real estate inventory disposed of

-

-

-

-

Costs of sales of the real estate inventory disposed of

- 0.5

- 0.7

- 2.3

- 2.0

Net income from other services

1.3

0.9

4.2

1.5

Income from other services

2.9

2.5

9.4

5.8

Expenses in connection with other services

- 1.6

- 1.6

- 5.2

- 4.3

Administrative and other expenses

- 8.2

- 12.7

- 32.6

- 38.0

Other income

0.1

0.1

0.1

0.4

Operating Earnings

119.3

102.9

927.6

852.9

Interest income

0.1

0.2

0.1

0.2

Interest expenses

- 25.5

- 40.6

- 71.2

- 92.7

Net income from investment securities

and other equity investments

0.0

0.4

1.9

3.1

Net income from the fair value

measurement of derivatives

- 33.8

- 24.5

- 43.7

- 92.6

Earnings before income taxes

60.1

38.4

814.7

670.9

Income taxes

- 17.4

- 18.6

- 158.6

- 182.0

Net Profit or loss for the period

42.7

19.8

656.1

488.9

Q3 2020

Q3 2019

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Change in amounts recognised

directly in equity

- 4.9

- 10.9

- 8.6

- 41.5

Thereof recycling

Fair value adjustment of

interest rate derivatives in hedges

0.0

- 6.7

- 7.8

- 25.1

Change in unrealised gains/(losses)

0.0

- 8.2

- 8.3

- 31.0

Income taxes on amounts

recognised directly in equity

0.0

1.5

0.5

5.9

Thereof non-recycling

Actuarial gains and losses from the

measurement of pension obligations

- 4.9

- 4.2

- 0.8

- 16.4

Change in unrealised gains/(losses)

- 7.1

- 6.0

- 1.1

- 23.6

Income taxes on amounts

recognised directly in equity

2.2

1.8

0.3

7.2

Total comprehensive income

37.8

8.9

647.5

447.4

Net profit or loss for the period

attributable to:

Non-controlling interests

0.8

0.7

2.7

2.7

Parent shareholders

41.9

19.1

653.4

486.2

Total comprehensive income

attributable to:

Non-controlling interests

0.8

0.7

2.7

2.7

Parent shareholders

37.0

8.2

644.8

444.7

Basic earnings per share in €

0.50

0.30

9.35

7.67

Diluted earnings per share in €

0.50

0.30

9.35

7.67

22 CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

Statement of changes in consolidated equity

T24

Statement of changes in consolidated equity

Cumulative other reserves

Share capital

Capital reserves

Revenue reserves

Actuarial gains

Fair value

Equity

Non-controlling

Consolidated

and losses from the

adjustment of

attributable to

interests

equity

measurement of

interest derivatives

shareholders

€ million

pension obligations

in hedges

of the Group

As of 01.01.2019

63.2

611.2

4,131.4

- 35.1

- 13.1

4,757.6

26.3

4,783.9

Initial application of IFRS 16

-

-

- 4.6

-

-

- 4.6

-

- 4.6

As of 01.01.2019, adjusted

63.2

611.2

4,126.8

- 35.1

- 13.1

4,753.0

26.3

4,779.3

Net profit or loss for the period

-

-

486.2

-

-

486.2

2.7

488.9

Other comprehensive income

-

-

-

- 16.4

- 25.1

- 41.5

0.0

- 41.5

Total comprehensive income

-

-

486.2

- 16.4

- 25.1

444.7

2.7

447.4

Other

-

-

1.3

-

-

1.3

0.8

2.1

Change in consolidated companies

-

-

-

-

-

-

-

-

Capital increase

5.4

546.1

-

-

-

551.5

-

551.5

Withdrawals from reserves

-

-

-

-

-

-

- 1.8

- 1.8

Changes from Put-Options

-

-

-

-

-

-

-

-

Distributions

-

-

- 223.1

-

-

- 223.1

- 5.9

- 229.0

As of 30.09.2019

68.6

1,157.3

4,391.2

- 51.5

- 38.2

5,527.4

22.1

5,549.5

As of 01.01.2020

69.0

1,202.2

4,718.9

- 53.0

- 27.2

5,909.9

24.0

5,933.9

Initial application of IFRS 16

-

-

-

-

-

-

-

-

As of 01.01.2020, adjusted

69.0

1,202.2

4,718.9

- 53.0

- 27.2

5,909.9

24.0

5,933.9

Net profit/loss for the period

-

-

653.4

-

-

653.4

2.7

656.1

Other comprehensive income

-

-

-

- 0.8

- 7.8

- 8.6

0.0

- 8.6

Total comprehensive income

-

-

653.4

- 0.8

- 7.8

644.8

2.7

647.5

Other

-

-

1.3

-

-

1.3

-

1.3

Change in consolidated companies

-

-

-

-

-

-

-

-

Capital increase

3.1

351.0

-

-

-

354.1

-

354.1

Withdrawals from reserves

-

-

-

-

-

-

- 2.2

- 2.2

Changes from Put-Options

-

-

-

-

-

-

-

-

Distributions

-

-

- 257.0

-

-

- 257.0

-

- 257.0

As of 30.09.2020

72.1

1,553.2

5,116.6

- 53.8

- 35.0

6,653.1

24.5

6,677.6

23 CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

Consolidated statement of cash flows

T25

Consolidated statement of cash flows

01.01. -

01.01. -

€ million

30.09.2020

30.09.2019

Operating earnings

927.6

852.9

Depreciation on property, plant and equipment

and amortisation on intangible assets

12.9

11.6

(Gains)/Losses from the measurement of investment properties

- 593.4

- 551.6

(Gains)/Losses from the disposal of assets held for sale

and investment properties

0.2

-

(Decrease)/Increase in pension provisions and other non-current provisions

- 3.2

0.5

Other non-cash income and expenses

4.6

4.0

(Decrease)/Increase in receivables, inventories and other assets

- 61.3

- 45.5

Decrease/(Increase) in liabilities (not including financing liabilities) and provisions

14.1

18.4

Interest paid

- 59.8

- 58.6

Interest received

0.1

0.2

Received income from investments

3.1

3.1

Taxes received

2.7

0.4

Taxes paid

- 7.1

- 10.6

Net cash from/(used in) operating activities

240.5

224.8

Cashflow from investing activities

Investments in investment properties

- 629.4

- 166.4

Proceeds from disposals of non-current assets held for sale

and investment properties

30.0

184.3

Investments in intangible assets and property, plant and equipment

- 11.0

- 12.7

Investments in financial assets and other assets

25.1

- 9.9

Acquisition of shares in consolidated companies

- 22.6

-

Net cash from/(used in) investing activities

- 607.9

- 4.7

01.01. -

01.01. -

€ million

30.09.2020

30.09.2019

Cash flow from financing activities

Borrowing of bank loans

258.4

436.5

Repayment of bank loans

- 173.5

- 270.2

Issue of convertible corporate bonds

544.0

-

Repayment of lease liabilities

- 8.0

- 7.7

Other proceeds

-

0.7

Other payments

- 1.3

-

Capital increase

269.6

-

Issue of registered bonds

50.0

-

Distribution to shareholders

- 172.4

- 223.1

Distribution and withdrawal from reserves of non-controlling interest

- 1.8

- 7.6

Net cash from/(used in) financing activities

765.0

- 71.4

Change in cash and cash equivalents

397.6

148.7

Cash and cash equivalents at beginning of period

451.2

233.6

Cash and cash equivalents at end of period

848.8

382.3

Composition of cash and cash equivalents

Cash in hand, bank balances

848.8

382.3

Cash and cash equivalents at end of period

848.8

382.3

24

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

Selected notes

on the IFRS in terim consolidated financial statements as at 30 September 2020

1. Basic information on the Group

2. Interim consolidated financial statements

4. Changes in the Group

LEG Immobilien AG, Dusseldorf (hereinafter: "LEG Immo"), its

subsidiary LEG NRW GmbH, Dusseldorf (hereinafter: "LEG") and the subsidiaries of the latter company (hereinafter referred to collectively as the "LEG Group") are among the largest residential companies in Germany. The LEG Group held a portfolio of 139,896 (30 September 2019: 135,065) residential and commercial units on 30 September 2020 (139,448 (30 September 2019: 132,019) units excluding IFRS 5 objects).

The LEG Group engages in three core activities as an integrated property company: the optimisation of the core business, the expansion of the value chain as well as the portfolio strengthening.

The interim consolidated financial statements are prepared in euros. Unless stated otherwise, all figures have been rounded to millions of Euro (EUR million). For technical reasons, tables and references can include rounded figures that differ from the exact mathematical values.

LEG Immo prepared the interim consolidated financial statements in accordance with the provisions of the International Financial Reporting Standards (IFRS) for interim reporting, as endorsed in the EU, and their interpretation by the International Financial Reporting Interpretations Committee (IFRS IC). Based on the option under IAS 34.10, the notes to the financial statements were presented in a condensed form. The condensed interim consolidated financial statements have not been audited or subjected to an audit review.

The LEG Group primarily generates income from the rental and letting of investment properties. Rental and lease business, in essence, is unaffected by seasonal and cyclical influences.

3. Accounting policies

The accounting policies applied in the interim consolidated financial statements of the LEG Immo are the same as those presented in the IFRS consolidated financial statements of LEG Immo as of 31 Decem- ber 2019. These interim consolidated financial statements as at 30 September 2020 should therefore be read in conjunction with the consolidated financial statements as at 31 December 2019.

The LEG Immo has fully applied the new standards and interpretations that are mandatory from 1 January 2020. The amendments to IFRS 3 will be considered in future business combinations. The amendments to the Interest Rate Benchmark Reform of IFRS 9, IAS 39 and IFRS 7 have no significant impact on the measurement of derivatives used in hedge accounting. Within the prospective effectiveness of the hedging relationship it is assumed that the underlying reference rate is not affected from the replacement of the IBOR reform.

On 12 May 2020, the conversion of LEG Immobilien AG into the legal form of an SE Societas Europaea (European Company) was initiated.

On 1 April 2020, LEG Wohngelegenheit Süd GmbH was consolidated for the first time.

On 16 June 2020, the companies LEG Rhein Neckar GmbH and LEG Niedersachsen GmbH were founded and consolidated for the first time.

25

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

5. Business combinations

On 8 November 2019, to enhance its portfolio LEG Immo signed a purchase agreement with the Baum Group on assuming a 94.9 % stake in each of the companies Baum Erste Wohnimmobilien Bremen GmbH, Baum Zweite Wohnimmobilien Bremen GmbH and Baum Wohnimmobilien Oldenburg GmbH.

Five employees were assumed in the scope of the transaction. After antitrust approval, the transaction was closed on 31 December 2019.

As at 31 December 2019, the acquisition of these companies was treated as a business combination within the meaning of IFRS 3 as material business processes were acquired.

The purchase price allocation is final as at 30 September 2020. The final consideration for the business combination is made up as follows:

T26

Consideration

31.12.2019

31.12.2019

Change

€ million

final

provisional

Net purchase price

254.3

254.2

0.1

Contingent reimbursement

-

-

-

Total consideration

254.3

254.2

0.1

The purchase price can be allocated to the acquired assets and liabilities measured at fair values as follows:

T27

Purchase price allocation

31.12.2019

31.12.2019

Change

€ million

final

provisional

Investment properties

231.1

231.1

0.0

Property, plant and equipment - finance lease

0.1

0.2

- 0.1

Deferred tax assets

0.0

0.0

0.0

Receivables from operating costs

3.9

3.9

0.0

Receivables and other assets

0.5

0.8

- 0.3

Cash and cash equivalents

2.1

2.1

0.0

Total assets

237.7

238.1

- 0.4

Other financing liabilities

0.1

0.1

-

Deferred tax liabilities

23.8

23.8

-

Other provisions

0.0

0.0

-

Trade payables not yet invoiced

4.1

4.1

-

Other liabilities

2.6

3.5

- 0.9

Total liabilities

30.6

31.5

- 0.9

Net assets at fair value

207.1

206.6

0.5

Non-controlling interests

6.8

6.8

-

Net assets at fair value without non-controlling interests

200.3

199.8

0.5

Consideration

254.3

254.2

0.1

Goodwill

54.0

54.4

- 0.4

The fair value of the rent receivables acquired totals EUR 0.0 million. The gross amount of the rent receivables due amounts to EUR 0.3 million with an impairment of EUR 0.3 million recognised at the time of acquisition.

Non-controlling interests in the acquired companies are recognised at the level of their share in the acquired net assets.

The transaction costs of the business combination amount to EUR 1.3 million and essentially include legal and consulting expenses as well as real estate transfer tax.

The synergies anticipated from the business combination relate primarily to cost advantages and additional revenue potential.

For tax purposes, the goodwill is not deductible.

26

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

6. Judgements and estimates

The preparation of interim consolidated financial statements in accordance with IFRS requires assumptions and estimates to be made that affect the recognition of assets and liabilities, income and expenses and the disclosure of contingent liabilities. These assumptions and estimates particularly relate to the measurement of investment properties, the recognition and measurement of pension provisions, the recognition and measurement of other provisions, the measurement of financing liabilities, and the eligibility for recognition of deferred tax assets.

Although the management believes that the assumption and estimates used are appropriate, any unforeseeable changes in these assumptions could impact the net assets, financial position and results of operations. The current Covid-19 situation has been considered by judgements. There were no significant impacts. Moreover, there were no triggering events for the conduct of an impairment test on goodwill during the year.

In view of the global effects of the coronavirus pandemic on the economy and society, all current forecasts can be made only with a considerably higher degree of uncertainty. This applies particularly in the context of international links and interrelations between the financial markets, the real economy and political decisions, which each individually have an influence on the economic effects of the pandemic already, but when combined are impossible to assess with any certainty ex ante. The following sections are therefore based on the fundamental premise that the coronavirus pandemic represents a temporary phenomenon.

Development of property prices and demand

Supply and demand for housing will still be the decisive factors for future price development. It can be assumed that the general conditions in terms of supply (only a slightly increasing number of com- pletions) and demand (continued high level of migration to Germany, particularly in cities and densely populated areas) will continue.

Development of rent defaults and rent deferrals

Only a slight increase in rent defaults can be observed at present. This is partly due to the extensive state transfer payments. Due to the LEG-specific low level of commercial letting, potential rent defaults from commercial properties can be currently classified as insignificant.

Housing vacancies

No developments can be seen at present that would indicate higher vacancies. Although new lettings are in a difficult environment, on the other hand tenant terminations are also decreasing. In addition, it could be, as in the financial crisis in 2008/2009, that immigration from EU countries that are hard hit by the economic consequences of the Sars-CoV-2 pandemic could increase creating additional demand for housing in the medium term. In the event of a severe recession, it could even prove to be an opportunity specifically for LEG Group that the company has a large number of affordable apartments and can thus benefit from increased demand for inexpensive housing in times of recession.

After carefully weighing up the information currently available at LEG Group, we have come to the conclusion that the effects of the Sars-CoV-2 pandemic on the housing sector in Germany and the effects on the business performance and the intrinsic value of the real estate assets of LEG Group should be manageable. There could even be opportunities for LEG Group in some cases.

For further information, please refer to the > consolidated financial

statements as at 31 December 2019.

27

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

7. Selected notes to the consolidated statement of financial position

On 30 September 2020, the LEG Group held 138,601 apartments and 1,295 commercial units in its portfolio (139,448 units excluding IFRS 5 objects).

Investment property developed as follows in the financial year 2019 and in 2020 up to the reporting date of the interim consolidated financial statements:

T28

Investment properties

Residential assets

Total

High-growth

Stable

Higher-yielding

without market

Commercial

Parking and

Lease-hold

Land values

€ million

markets

markets

markets

allocation

assets

other assets

Carrying amount as of 01.01.2020 1

12,031.1

5,126.8

3,923.0

2,390.2

0.0

225.9

219.4

113.3

32.5

Acquisitions

431.5

116.1

187.5

86.6

12.6

11.3

8.7

5.7

3.0

Other additions

203.5

73.3

67.0

56.4

0.0

1.8

0.2

2.9

1.8

Reclassified to assets held for sale

- 38.7

- 3.7

- 13.5

- 7.3

- 13.1

- 0.4

- 0.3

0.0

- 0.3

Reclassified from assets held for sale

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Reclassified to property, plant and equipment

- 1.1

- 0.6

- 0.1

- 0.1

0.0

0.0

- 0.2

0.0

0.0

Reclassified from property, plant and equipment

2.6

0.0

0.0

0.0

0.0

2.6

0.0

0.0

0.0

Fair value adjustment

593.3

237.3

215.4

114.6

0.5

- 2.6

17.1

9.9

1.2

Reclassification

0.0

10.4

- 4.4

- 5.4

0.0

- 5.5

6.9

- 0.7

- 1.3

Carrying amount as of 30.09.2020

13,222.2

5,559.7

4,374.9

2,635.0

0.0

233.1

251.6

131.1

36.9

1 Extension of the market classification to the whole territory of the Federal Republic of Germany.

€ million

Fair value adjustment as of 30.09.2020

593.3

- hereupon as of 30.09.2020 in the portfolio

592.7

- hereupon as of 30.09.2020 disposed investment properties

0.6

28

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

T29

Investment properties

Residential assets

Total

High-growth

Stable

Higher-yielding

Non NRW

Commercial

Parking and

Lease-hold

Land values

€ million

markets

markets

markets

assets

other assets

Carrying amount as of 01.01.2019

10,709.0

4,607.3

3,296.8

2,212.1

164.5

209.4

184.9

3.4

30.6

Initial application of IFRS 16

35.8

- 26.4

- 9.3

- 17.9

- 2.7

0.1

- 0.1

92.2

0.0

Acquisitions

360.7

134.3

156.2

31.8

26.6

7.7

4.1

- 0.3

0.2

Other additions

201.5

73.8

66.3

49.3

3.8

3.7

0.1

3.6

0.8

Reclassified to assets held for sale

- 200.2

- 9.3

- 55.4

- 125.9

- 1.8

- 1.1

- 4.0

0.0

- 2.8

Reclassified from assets held for sale

0.1

0.0

0.0

0.1

0.0

0.0

0.0

0.0

0.0

Reclassified to property, plant and equipment

- 0.5

1.4

- 0.1

0.1

0.0

- 1.6

0.0

- 0.2

0.0

Reclassified from property, plant and equipment

1.3

0.0

0.0

0.0

0.0

0.0

0.0

1.3

0.0

Fair value adjustment

923.4

427.0

283.8

132.6

7.2

7.0

34.7

28.0

3.0

Carrying amount as of 31.12.2019

12,031.1

5,208.1

3,738.3

2,282.2

197.6

225.2

219.7

128.0

31.8

€ million

Fair value adjustment 31.12.2019

923.4

- hereupon as of 31.12.2019 in the portfolio

923.2

- hereupon as of 31.12.2019 disposed investment properties

0.2

29

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

On 27 December 2019, LEG acquired the F 99 and F 101 projects (land plus defined construction project specifications) from F 101 Projekt GmbH & Co. KG. The purchase prices are due with the acceptance of the completed buildings (F 99 anticipated for 1 March 2022/F 101 for 1 September 2022).

Portfolio acquisition 1

The acquisition of a property portfolio of around 2,010 residential and commercial units was notarised on 27 September 2019. The portfolio generates annual net cold rent of around EUR 7.1 million. The average in-place rent is around EUR 4.97 per square metre and the initial vacancy rate is around 4.5 %. The transaction was closed on 1 January 2020. The portfolio acquisition does not constitute a business combination as defined by IFRS 3.

Portfolio acquisition 2

The acquisition of a property portfolio of 1,406 residential and commercial units was notarised on 30 January 2020. The portfolio generates annual net cold rent of around EUR 6.0 million. The average in-place rent is around EUR 5.71 per square metre and the initial vacancy rate is around 4.4 %. The transaction was closed on 1 May 2020. The portfolio acquisition does not constitute a business combination as defined by IFRS 3.

Portfolio acquisition 3

The acquisition of a property portfolio of around 1,082 residential and commercial units was notarised on 16 June 2020. The portfolio generates annual net cold rent of around EUR 4.9 million. The average in-place rent is around EUR 5.79 per square metre and the initial vacancy rate is around 3.0 %. The transaction was closed on 1 August 2020. The portfolio acquisition does not constitute a business combination as defined by IFRS 3.

Investment property was remeasured most recently by the LEG Group as of the interim reporting date of 30 June 2020. No further fair value adjustment was made as at 30 September 2020. With regard to the calculation methods and parameters, please refer to the consolidated financial statements as at 31 December 2019.

Significant market developments and measurement parameters affecting the market values of the property portfolio of LEG Immo are reviewed each quarter. If necessary, the property portfolio is revalued. As at 30 September 2020, the results of this review did not require any value adjustment. Despite the proceeded Covid-19 pandemic there are no observable effects on the market, which could affect the long-term value of the property portfolio.

The following tables show the measurement method used to determine the fair value of investment property and the material unobservable inputs used as of 30 June 2020 and 31 December 2019:

30

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

T30

Valuation parameters as at 30 June 2020

GAV

Valuation technique

Market rent

Maintenance cost

Administrative cost rate

Stabilised vacancy ratio

investment properties

residential/commercial

residential/commercial

residential/commercial

€/sqm

€/sqm

€/unit

%

€ million

min

Ø

max

min

Ø

max

min

Ø

max

min

Ø

max

Residential assets

(incl. leasehold buildings)

High-growth markets

5,533

DCF

3.56

8.10

13.33

5.56

11.77

15.58

129

302

462

1.0 

1.9 

7.0 

Stable markets

4,237

DCF

2.31

6.55

9.98

6.58

11.82

15.08

159

300

462

1.5 

3.0 

9.0 

Higher-yielding markets

2,619

DCF

0.33

5.95

9.31

5.80

11.90

15.45

165

300

462

1.5 

4.2 

9.0 

Residential units without

market allocation

12

DCF

6.61

6.75

7.76

11.96

12.54

12.90

305

305

305

2.0 

2.9 

3.0 

Commercial assets

229

DCF

1.00

7.50

27.00

0.87

6.53

15.37

1

259

5,481

1.0 

2.6 

9.0 

Leasehold (land)

127

DCF

Parking and other assets

249

DCF

1

37

887

Land values

Earnings/

36

reference value method

1

6

14

Total portfolio (IAS 40) 1

13,043

DCF

0.33

6.76

27.00

0.87

11.77

15.58

1

275

5,481

1.0 

3.1 

9.0 

Discount rate

Capitalisation rate

Estimated rental development

%

%

%

min

Ø

max

min

Ø

max

min

Ø

max

Residential assets

(incl. leasehold buildings)

High-growth markets

3.5 

4.6 

5.4 

2.1 

5.2 

9.5 

1.2 

1.7 

2.0 

Stable markets

3.4 

4.6 

5.5 

2.0 

5.8 

11.2 

0.8 

1.3 

1.8 

Higher-yielding markets

3.5 

4.7 

5.3 

3.0 

6.3 

10.6 

0.7 

1.0 

1.5 

Residential units without

market allocation

4.8 

4.8 

4.9 

4.0 

4.3 

5.6 

1.3 

1.6 

1.7 

Commercial assets

2.5 

6.5 

9.0 

2.8 

7.2 

9.5 

0.7 

1.5 

1.9 

Leasehold (land)

Parking and other assets

3.3 

4.7 

5.6 

2.8 

6.9 

12.7 

0.7 

1.3 

1.9 

Land values

4.5 

4.7 

5.3 

2.9 

11.2 

12.7 

0.2 

1.3 

1.9 

Total portfolio (IAS 40) 1

2.5 

4.7 

9.0 

2.0 

5.9 

12.7 

0.2 

1.3 

2.0 

1 In addition, there are assets held for sale (IFRS 5) as at 30 June 2020 in the amount of EUR 3.1 million that are assigned to level 2 of the fair value hierarchy.

31

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

T31

Valuation parameters as at 31 December 2019

GAV

Valuation technique

Market rent

Maintenance cost

Administrative cost rate

Stabilised vacancy ratio

investment properties

residential/commercial

residential/commercial

residential/commercial

€/sqm

€/sqm

€/unit

%

€ million

min

Ø

max

min

Ø

max

min

Ø

max

min

Ø

max

Residential assets

High-growth markets

4,824

DCF

3.84

8.16

13.33

5.56

11.77

15.58

215

303

462

1.0

1.8

6.0

Stable markets

3,665

DCF

2.40

6.36

9.84

4.53

11.82

15.08

198

300

462

1.5

3.1

9.0

Higher-yielding markets

2,200

DCF

0.36

5.85

8.78

1.92

11.91

15.45

164

300

462

1.5

4.3

9.0

Acquisitions

363

DCF

4.15

7.61

14.00

7.16

13.07

14.00

39

239

299

0.0

2.6

7.7

Commercial assets

211

DCF

1.00

7.41

27.00

0.87

5.99

13.03

1

279

5,482

1.0

2.6

9.0

Leasehold

520

DCF

1.50

6.46

11.25

7.42

11.63

14.88

11

279

2,662

1.0

2.9

7.0

Parking and other assets

215

DCF

0

37

54

Land values

Earnings/

33

reference value method

0

6

14

Total portfolio (IAS 40) 1

12,031

DCF

0.36

6.66

27.00

0.87

11.84

15.58

0

276

5,482

0.0

3.1

9.0

Discount rate

Capitalisation ratio

Estimated rent development

%

%

%

min

Ø

max

min

Ø

max

min

Ø

max

Residential assets

High-growth markets

3.6

4.7

5.6

2.2

5.2

9.6

1.3

1.7

2.0

Stable markets

3.6

4.7

5.6

2.5

6.0

10.0

0.8

1.2

1.8

Higher-yielding markets

3.9

4.9

6.3

3.5

6.4

10.6

0.7

1.0

1.5

Acquisitions

4.6

4.8

6.6

3.4

5.1

8.2

1.0

1.4

1.9

Commercial assets

2.5

6.5

9.0

2.8

7.1

11.4

0.7

1.5

1.9

Leasehold

3.6

4.9

6.9

3.1

6.3

12.4

0.8

1.2

1.9

Parking and other assets

4.1

4.8

5.7

2.9

7.1

12.8

0.7

1.3

2.0

Land values

3.6

4.8

5.4

2.2

11.1

12.3

0.9

1.3

1.9

Total portfolio (IAS 40) 1

2.5

4.8

9.0

2.2

6.05

12.8

0.7

1.3

2.0

1 In addition, there are assets held for sale (IFRS 5) as at 31 December 2019 in the amount of EUR 25.2 million that are assigned to level 2 of the fair value hierarchy.

32

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

With regard to the calculation methods, please refer to the > consoli-

dated financial statements as of 31 December 2019.

In addition, the LEG Group's portfolio still includes land and buildings accounted for in accordance with IAS 16.

Property, plant and equipment as well as intangible assets included right of use leases in the amount of EUR 29.5 million as of 30 Septem- ber 2020. The right of uses result from rented land and buildings, cars, heat contracting, measurement and reporting technology, IT peripheral devices as well as software. In the reporting period right of uses in the amount of EUR 5.4 million have been added.

T32

Right of use leases

€ million

30.09.2020

31.12.2019

Right of use buildings

4.5

5.8

Right of use technical equipment

and machinery

17.3

19.2

Right of use operating and office equipment

5.9

5.2

Property, plant and equipment

27.7

30.2

Right of use software

1.8

0.9

Intangible assets

1.8

0.9

Cash and cash equivalents mainly consist of bank balances.

Changes in the components of consolidated equity are shown in the statement of changes in consolidated equity.

Financing liabilities are composed as follows:

T33

As of 30 September 2020, the issuance of a convertible bond with a carrying amount of EUR 552.4 million, the issuance of a registered bond in the amount of EUR 50.3 million, a loan of an acquisition in the amount of EUR 14.5 million and the cash payments of loans in the amount of EUR 245.0 million increased the financing liabilities. Scheduled and unscheduled repayments of EUR 173.0 million had an opposite effect.

Financing liabilities from real estate financing include among other things two convertible bonds with a nominal value of EUR 550.0 million and an IFRS carrying amount of EUR 522.4 million and a nominal value of EUR 400.0 million and an IFRS carrying amount of EUR 388.2 million as well as three corporate bonds, one with a nominal value of EUR 500.0 million (IFRS carrying amount of EUR 498.4 million), one with a nominal amount of EUR 300.0 million (IFRS carrying amount of EUR 298.9 million), and one with a nominal amount of EUR 500.0 million (IFRS carrying amount of EUR 501.1 million).

Already concluded leases starting after the reporting date will lead to probable cash outflows in the amount of EUR 15.9 million.

Financing liabilities

€ million

30.09.2020

31.12.2019

Financing liabilities from real estate financing

5,648.1

4,973.4

Financing liabilities from lease financing

80.7

80.5

Financing liabilities

5,728.8

5,053.9

Financing liabilities from property financing serve the financing of investment properties.

The main driver for the changes in maturity of financing liabilities as against 31 December 2019 is the issuance of the convertible bond 2020, the reclassification of the convertible bond 2017, cash payments of loans as well as repayment of the commercial papers.

T34

Maturity of financing liabilities from real estate financing

Remaining term

Total

€ million

< 1 year

> 1 to 5 years

> 5 years

30.09.2020

477.3

1,808.8

3,362.0

5,648.1

31.12.2019

187.5

1,456.3

3,329.6

4,973.4

33

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

8. Selected notes to the consolidated statement of comprehensive income

Net rental and lease income is broken down as follows:

T35

Net rental and lease income

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Net cold rent

464.5

439.8

Profit from operating expenses

- 1.2

- 0.9

Maintenance for externally procured services

- 37.4

- 36.9

Staff costs

- 53.7

- 48.8

Allowances on rent receivables

- 5.6

- 5.8

Depreciation and amortisation expenses

- 7.4

- 6.9

Other

6.5

- 0.3

Net rental and lease income

365.7

340.2

Net operating income margin (in %)

78.7

77.4

Non-recurring project costs - rental and lease

3.2

2.9

Depreciation

7.4

6.9

Adjusted net rental and lease income

376.3

350.0

Adjusted net operating

income margin (in %)

81.0

79.6

In the reporting period, LEG Immo increased its net rental and lease income by EUR 25.5 million compared to the same period of the previous year. The main driver of this development was the EUR 24.7 million rise in net cold rents. In-place rent per square metre on a like-for- like basis rose by 2.3 % in the reporting period. The increase in other is mainly due to the expansion of value-added services. This was countered by the increase in staff costs by EUR 4.9 million, which was mainly due to an increase in the number of employees as well as to tariff increases.

Due to disproportionate development of net rental and lease income compared with the development of in-place rent the NOI margin increased from 77.4 % to 78.7 % in the reporting period.

In the reporting period the following depreciation expenses for right of use from leases are included.

T36

Depreciation expense of leases

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Right of use buildings

0.1

0.1

Right of use technical equipment

and machinery

3.6

3.6

Right of use operating and office equipment

1.6

1.5

Depreciation expense of leases

5.3

5.2

In the reporting period expenses of leases of a low-value asset in the amount of EUR 0.4 million were included in the net rental and lease income (comparative period: EUR 0.2 million).

Net income from the disposal of investment properties is composed as follows:

T37

Net income from the disposal of investment properties

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Income from the disposal of investment

30.2

26.7

Carrying amount of the disposal

of investment properties

- 30.3

- 26.7

Costs of sales of investment properties

- 0.7

- 0.8

Net income from the disposal

of investment properties

- 0.8

- 0.8

Net income from the remeasurement of investment properties

The remeasurement of investment properties was conducted as of 30 June 2020. There were minor changes in the third quarter 2020 due to the remeasurement of the assets held for sale according to IFRS 5.

Net income from remeasurement of investment property amounted to EUR 593.3 million in the reporting period which corresponds to a 4.8 % rise (incl. acquisitions) compared to the start of the financial year.

As at 30 September 2020, the average value of investment property (incl. IFRS 5 objects) is EUR 1,440 per square metre including acquisitions (31 December 2019: EUR 1,353 per square metre).

The increase in the value of the portfolio is the result of the further increase in rents as well as further reduction in the discount and capitalisation rates.

34

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

Administrative and other expenses

T38

Administrative and other expenses

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Other operating expenses

- 12.4

- 10.1

Staff costs

- 16.0

- 24.4

Purchased services

- 1.1

- 0.9

Depreciation and amortisation

- 3.1

- 2.6

Administratve and other expenses

- 32.6

- 38.0

Depreciation and amortisation

3.1

2.6

Non-recurring project costs and

extraordinary and prior-period expenses

6.9

12.0

Adjusted administrative

and other expenses

- 22.7

- 23.3

The increase in other operating expenses is mainly attributable to increased costs for advice and insurance. In contrast, staff costs in the comparative period were characterised by one-time payments (EUR 8.1 million). Therefore non-recurring project costs decreased significantly in the reporting period. Adjusted administrative expenses are therefore slightly lower than in the comparative period.

In the reporting period following depreciation expenses for right of use from leases are included.

T39

Depreciation expense of leases

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Right of use buildings

1.5

1.5

Right of use operating and office equipment

0.2

0.2

Right of use software

0.1

0.1

Depreciation expense of leases

1.8

1.8

Interest income

Net interest income is composed as follows:

T40

Interest income

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Other interest income

0.1

0.2

Interest income

0.1

0.2

T41

Interest expenses

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Interest expenses from real estate financing

- 51.0

- 50.9

Interest expense from loan amortisation

- 9.8

- 29.5

Prepayment penalty

- 0.4

- 2.4

Interest expense from interest

derivatives for real estate financing

- 6.2

- 5.8

Interest expense from change

in pension provisions

- 0.9

- 1.9

Interest expense from interest

on other assets and liabilities

- 0.2

- 0.6

Interest expenses from lease financing

- 1.6

- 1.6

Other interest expenses

- 1.1

0.0

Interest expenses

- 71.2

- 92.7

Interest expense from loan amortisation decreased by EUR 19.7 million year on year to EUR 9.8 million. This includes the measurement of the convertible and corporate bonds at amortised cost in the amount of EUR 4.7 million (comparative period: EUR 20.5 million). The main drivers for the decrease are the refinancings carried out in the financial year 2019 and the early conversion of the convertible bond issued in 2014. The issue of the two corporate bonds in the fourth quarter 2019 as well as the issued convertible bond in June 2020 had an opposite effect.

The conclusion of a derivative in the financial year 2019 resulted in an increase of interest expenses from interest derivatives by EUR 0.4 million in the reporting period.

> glossary in the 2019 annual report.

35

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

Income taxes

T42

Income tax expenses

01.01.-

01.01.-

€ million

30.09.2020

30.09.2019

Current tax expenses

- 2.9

- 13.0

Deferred tax expenses

- 155.7

- 169.0

Income tax expenses

- 158.6

- 182.0

As at 30 September 2020, an effective Group tax rate of 18.3 % was assumed in accordance with Group tax planning (comparative period: 22.8 %).

Current tax expenses comprise taxes relating to other periods in the amount of EUR 0.1 million as at 30 September 2020 (comparative period: EUR 1.4 million).

Earnings per share

Basic earnings per share are calculated by dividing the net profit for the period attributable to the shareholders by the average number of shares outstanding during the reporting period.

On 25 June 2020, LEG Immo implemented a capital increase with shareholders' pre-emptive rights disapplied by way of accelerated bookbuilding. A total of 2,370,000 new shares were placed.

Due to issuing stock dividends for the financial year 2019 a capital increase was carried out on 22 September 2020. A total of 716,107 new shares were issued.

T43

Earnings per share (basic)

30.09.2020

30.09.2019

Net profit or loss attributable

to shareholders in € million

653.4

486.2

Average numbers of shares outstanding

69,876,373

63,426,930

Earnings per share (basic) in €

9.35

7.67

T44

Earnings per share (diluted)

30.09.2020

30.09.2019

Net profit or loss attributable

to shareholders in € million

653.4

486.2

Convertible bond coupon after taxes

2.6

2.0

Measurement of derivatives after taxes

43.7

88.4

Amortisation of the

convertible bond after taxes

1.9

13.9

Net profit or loss for the period

for diluted earnings per share

701.6

590.5

Average weighted number

of shares outstanding

69,876,373

63,426,930

Number of potentially new shares in the

event of exercise of conversion rights

4,633,776

9,020,694

Number of shares for

diluted earnings per share

74,510,149

72,447,624

Intermedia result

9.42

8.15

Diluted earnings per share in €

9.35

7.67

As at 30 September 2020, LEG Immo had potential ordinary shares from convertible bonds, which authorise the bearers to convert it into up to 4.6 million shares.

Diluted earnings per share are calculated by increasing the average number of shares outstanding by the number of all potentially dilutive shares. The net profit/loss for the period is adjusted for the expenses no longer incurring for the interest coupon, the measurement of the embedded derivatives and the amortisation of the convertible bond and the resulting tax effect in the event of the conversion rights being exercised in full.

Owing in particular to the expenses no longer incurring in the event of conversion for the measurement of the embedded derivative, the potential ordinary shares from the convertible bond are not dilutive within the meaning of IAS 33.41 as at 30 September 2019 and 30 September 2020.

The diluted earnings per share are therefore equal to basic earnings per share as at 30 September 2019 and 30 September 2020.

9. Notes on Group segment reporting

As a result of the revision of internal management reporting, LEG Group has no longer been managed as two segments since the 2016 financial year. The Group is now managed as one segment.

The LEG Group is managed by the following key performance indicators:

Reconciliation to FFO

FFO I is a key financial performance indicator of the LEG Group. The LEG Group distinguishes between FFO I (not including net income from the disposal of investment properties), FFO II (including net income from the disposal of investment properties) and AFFO (FFO I adjusted for capex). The calculation methods for these key figures can be found in the

36

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

FFO I, FFO II and AFFO were calculated as follows in the reporting period and the same period of the previous year:

T45

Calculation of FFO I, FFO II and AFFO

Q3 2020

Q3 2019

01.01. - 

01.01. - 

€ million

30.09.2020

30.09.2019

Net cold rent

156.5

147.3

464.5

439.8

Profit from operating expenses

0.4

1.0

- 1.2

- 0.9

Maintenance for externally procured services

- 13.4

- 11.5

- 37.4

- 36.9

Staff costs

- 17.4

- 16.8

- 53.7

- 48.8

Allowances on rent receivables

- 1.3

- 1.5

- 5.6

- 5.8

Other

3.8

- 1.6

6.5

- 0.3

Non-recurring project costs (rental and lease)

1.1

1.3

3.2

2.9

Current net rental and lease income

129.7

118.2

376.3

350.0

Current net income from other services

2.1

1.6

6.6

3.4

Staff costs

- 4.9

- 9.0

- 16.0

- 24.4

Non-staff operating costs

- 2.4

- 2.9

- 13.6

- 10.9

Non-recurring project costs (admin.)

0.5

4.7

6.9

12.0

Extraordinary and prior-period expenses

0.0

0.0

0.0

0.0

Current administrative expenses

- 6.8

- 7.2

- 22.7

- 23.3

Other income and expenses

0.0

0.1

0.0

0.4

Adjusted EBITDA

125.0

112.7

360.2

330.5

Cash interest expenses and income

- 21.1

- 19.4

- 59.7

- 58.4

Cash income taxes from rental and lease

- 0.8

- 3.8

- 2.0

- 10.0

FFO I (before adjustment of non-controlling interests)

103.1

89.5

298.5

262.1

Adjustment of non-controlling interests

- 1.0

- 1.3

- 1.8

- 3.0

FFO I (after adjustment of non-controlling interests)

102.1

88.2

296.7

259.1

Weighted average number of shares outstanding

71,451,447

63,904,421

69,876,373

63,426,930

FFO I per share

1.43

1.38

4.25

4.09

Net income from the disposal of investment properties

0.0

- 0.1

- 0.3

- 0.3

Cash income taxes from disposal of investment properties

0.0

- 1.6

- 0.9

- 2.9

FFO II (incl. disposal of investment properties)

102.1

86.5

295.5

255.9

CAPEX

- 80.3

- 58.0

- 202.7

- 136.5

CAPEX-adjusted FFO I (AFFO)

21.8

30.2

94.0

122.6

> glossary in the 2019 annual report.

37

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

Net asset value (NAV)

A further key metric relevant in the property industry is NAV. The calculation method for the respective key figure can be found in the

The LEG Group reports a basic EPRA NAV of EUR 8,356.1 million as at 30 September 2020. The effects of the possible conversion of the convertible bond 2017 are shown by the additional calculation of diluted EPRA NAV. After further adjustment for goodwill effects, the adjusted diluted EPRA NAV amounts to EUR 8,702.6 million at the reporting date.

T46

EPRA NAV

30.09.2020

31.12.2019

Undiluted

Effect of exercise

Diluted

Undiluted

Effect of exercise

Diluted

of convertibles

of convertibles

€ million

and options

and options

Equity attributable to shareholders of the parent company

6,653.1

-

6,653.1

5,909.9

-

5,909.9

Non-controlling interests

24.5

-

24.5

24.0

-

24.0

Equity

6,677.6

-

6,677.6

5,933.9

-

5,933.9

Effect of exercise of options, convertibles and other equity interests

-

444.9

444.9

-

26.1

26.1

NAV

6,653.1

444.9

7,098.0

5,909.9

26.1

5,936.0

Fair value measurement of derivative financial instruments

135.6

- 15.4

120.2

84.0

-

84.0

Deferred taxes on WFA loans and derivatives

1.6

-

1.6

6.2

-

6.2

Deferred taxes on investment property

1,621.7

-

1,621.7

1,386.0

-

1,386.0

Goodwill resulting from deferred taxes on EPRA adjustments

- 55.9

-

- 55.9

- 55.8

-

- 55.8

EPRA NAV

8,356.1

429.5

8,785.6

7,330.3

26.1

7,356.4

Number of shares

72,095,943

3,438,349

75,534,292

69,009,836

0

69,009,836

EPRA NAV per share (€)

115.90

-

116.31

106.22

-

106.60

Goodwill resulting from synergies

83.0

-

83.0

83.4

-

83.4

Adjusted EPRA NAV (w/o effects from goodwill)

8,273.1

429.5

8,702.6

7,246.9

26.1

7,273.0

Number of shares

72,095,943

3,438,349

75,534,292

69,009,836

0

69,009,836

Adjusted EPRA NAV per share (€)

114.75

-

115.21

105.01

-

105.39

38

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

Loan-to-value ratio (LTV)

Net debt at the end of the reporting period is higher compared with 31 December 2019. Investment properties increased even more, which resulted in a further decline in loan-to-value ratio (LTV) of 36.4 % at the interim reporting date (31 December 2019: 37.7 %).

T47

LTV

€ million

30.09.2020

31.12.2019

Financing liabilities

5,728.8

5,053.9

Without lease liabilities IFRS 16

(not leasehold)

29.5

31.8

Less cash and cash equivalents

848.8

451.2

Net financing liabilities

4,850.5

4,570.9

Investment properties

13,222.2

12,031.1

Assets held for sale

33.7

25.2

Prepayments for investment properties

69.7

53.5

Real estate assets

13,325.6

12,109.8

Loan-to-value ratio (LTV) in %

36.4

37.7

10. Financial instruments

The table on > page 39 shows the financial assets and liabilities broken down by measurement category and class. Receivables and liabilities from finance leases and derivatives used as hedging instruments are included even though they are not assigned to an IFRS 9 measurement category. With respect to reconciliation, non-financial assets and non-financing liabilities are also included although they are not covered by IFRS 7.

The fair values of financial instruments are determined on the basis of corresponding market values or measurement methods. For cash and cash equivalents and other short-term primary financial instruments, the fair value is approximately the same as the carrying amount at the end of the respective reporting period.

For non-current receivables, other assets and liabilities, the fair value is calculated on the basis of the forecast cash flows, applying the reference interest rates as of the end of the reporting period. The fair values of derivative financial instruments are determined based on the benchmark interest rates in place as of the reporting date.

For financial instruments at fair value, the discounted cash flow method is used to determine fair value using corresponding quoted market prices, with individual credit ratings and other market conditions being taken into account in the form of standard credit and liquidity spreads when calculating present value. If no quoted market prices are available, the fair value is calculated using standard measurement methods applying instrument-specific market parameters.

When calculating the fair value of derivative financial instruments, the input parameters for the valuation models are the relevant market prices and interest rates observed as of the end of the reporting period, which are obtained from recognised external sources. The derivatives are therefore attributable to level 2 of the fair value hierarchy as defined in IFRS 13.72 ff (measurement on the basis of observable inputs).

Both the Group's own risk and the counterparty risk were taken into account in the calculation of the fair value of derivatives in accordance with IFRS 13.

39

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

T48

Classes of financial instruments for financial assets and liabilities 30.09.2020

Measurement

Measurement

Measurement

Measurement

(IFRS 9)

(IFRS 16)

(IFRS 9)

(IFRS 16)

Carrying

Amortised

Fair value

Fair value

Carrying

Amortised

Fair value

Fair value

amounts

cost

through

30.09.2020

amounts

cost

through

30.09.2020

as per

profit or loss

as per

profit or loss

statement

statement

of financial

of financial

positions

positions

€ million

30.09.2020

€ million

30.09.2020

Assets

Liabilities

Other financial assets

35.7

35.7

Financial liabilities

- 5,728.8

- 6,050.4

Hedge accounting derivatives

-

-

FLAC

- 5,648.1

- 5,648.1

- 6,050.4

AC

23.7

23.7

23.7

Liabilities from lease financing

- 80.7

- 80.7

-

FVtPL

12.0

12.0

12.0

Other liabilities

- 480.8

- 480.8

Receivables and other assets

112.4

112.4

FLAC

- 174.7

- 174.7

- 174.7

AC

74.5

74.5

74.5

Derivatives HFT

- 127.0

- 127.0

- 127.0

Other non-financial assets

37.9

37.9

Hedge accounting derivatives

- 46.9

- 46.9

Cash and cash equivalents

848.8

848.8

Other non-financial liabilities

- 132.2

- 132.2

AC

848.8

848.8

848.8

Total

- 6,209.6

- 5,822.8

- 127.0

- 80.7

- 6,531.2

Total

996.9

947.0

12.0

996.9

Of which IFRS 9

measurement categories

Of which IFRS 9

measurement categories

FLAC

- 5,822.8

- 5,822.8

- 6,225.1

AC

947.0

947.0

947.0

Derivatives HFT

- 127.0

- 127.0

- 127.0

FVtPL

12.0

12.0

12.0

AC = Amortised cost

FVtPL = Fair value through profit and loss

FLAC = Financial liabilities at amorised cost

HFT = Held for trading

40

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

T49

Classes of financial instruments for financial assets and liabilities 31.12.2019

Measurement

Measurement

Measurement

Measurement

(IFRS 9)

(IFRS 16)

(IFRS 9)

(IFRS 16)

Carrying

Amortised

Fair value

Fair value

Carrying

Amortised

Fair value

Fair value

amounts

cost

through

31.12.2019

amounts

cost

through

31.12.2019

as per

profit or loss

as per

profit or loss

statement

statement

of financial

of financial

positions

positions

€ million

31.12.2019

€ million

31.12.2019

Assets

Liabilities

Other financial assets

23.2

23.2

Financial liabilities

- 5,053.9

- 5,306.8

Hedge accounting derivatives

-

-

FLAC

- 4,973.4

- 4,973.4

- 5,306.8

AC

11.2

11.2

11.2

Liabilities from lease financing

- 80.5

- 80.5

FVtPL

12.0

12.0

12.0

Other liabilities

- 392.0

- 392.0

Receivables and other assets

82.0

82.0

FLAC

- 126.8

- 126.8

- 126.8

AC

76.7

76.7

76.7

Derivatives HFT

- 60.3

- 60.3

- 60.3

Other non-financial assets

5.3

5.3

Hedge accounting derivatives

- 39.0

- 39.0

Cash and cash equivalents

451.2

451.2

Other non-financial liabilities

- 165.9

- 165.9

AC

451.2

451.2

451.2

Total

- 5,445.9

- 5,100.2

- 60.3

- 80.5

- 5,698.8

Total

556.4

539.1

12.0

556.4

Of which IFRS 9

measurement categories

Of which IFRS 9

measurement categories

FLAC

- 5,100.2

- 5,100.2

- 5,433.6

AC

539.1

539.1

539.1

Derivatives HFT

- 60.3

- 60.3

- 60.3

FVtPL

12.0

12.0

12.0

AC = Amortised cost

FVtPL = Fair value through profit and loss

FLAC = Financial liabilities at amorised cost

HFT = Held for trading

41

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

As at 30 September 2020, the fair value of the very small equity investments was EUR 12.0 million, unchanged to the valuation as at 31 December 2019. The fair value of the very small equity investments is calculated using DCF procedures as there are no quoted prices in an active market for the relevant equity investments. The fair value calculated using valuation models is allocated to level 3 of the IFRS 13 measurement hierarchy. Allocation to level 3 takes place based on valuation models with inputs not observed on a market. This relates primarily to the capitalisation rate of 4.8 %. As at 30 Sep- tember 2020, the fair value of the very small equity investments was EUR 12.0 million. The stress test of this parameter on the basis of plus 50 basis points results in the fair value being EUR 11.0 million lower and at minus 50 basis points EUR 13.2 million higher.

11. Related-party disclosures

Please see the IFRS consolidated financial statements as at 31 Decem- ber 2019 for the presentation of the IFRS 2 programmes for long-term incentive Management Board agreements.

12. Other

There were no changes with regard to contingent liabilities in comparison to 31 December 2019.

14. Supplementary report

Since 7 October 2020 Martin Wiesmann is member of the Supervisory Board.

The acquisition of a property portfolio of around 6,418 residential and commercial units was notarised on 22 June 2020. The portfolio generates annual net cold rent of around EUR 30.2 million. The average in-place rent is around EUR 5.95 per square metre and the initial vacancy rate is around 2.5 %. The transaction was closed for 6,104 units on 1 November 2020. The transition date for the remaining 314 units will be on 1 January 2021. The portfolio acquisition does not constitute a business combination as defined by IFRS 3.

13. The Management Board and the Supervisory Board

There were no changes to the composition of the Supervisory Board as at 30 September 2020 compared with the disclosures as at 31 December 2019.

The following change occurred in the composition of the Management Board:

Effective 1 July 2020, Susanne Schröter-Crossan was appointed as CFO of LEG Immo.

On 19 August 2020, LEG Immo signed a purchase agreement with the Fischbach Holding GmbH assuming a 100 % stake of the company Fischbach Service GmbH (rebranded in LWS Plus GmbH). The trans- action's objectives are the expansion of the value chain and the reduction of the interfaces between the LEG Group and the general contractors, so that in the course of the refurbishments of vacant apartments the LEG Group assume the steering and controlling function.

29 employees were taken on in the scope of the transaction. After antitrust approval, the transaction was closed on 1 October 2020.

As at 1 October 2020, the acquisition of the company was treated as a business combination within the meaning of IFRS 3 as material business processes were acquired.

42

CONSOLIDATED FINANCIAL STATEMENTS

LEG IMMOBILIEN AG Q3 2020

The provisional consideration for the business combination is made up as follows:

T50

Provisional consideration

01.10.2020

€ million

provisional

Net purchase price

22.6

Contingent reimbursement

11.8

Total consideration

34.4

The provisional purchase price can be allocated to the acquired assets and liabilities measured at fair values as follows:

T51

Provisional purchase price allocation

01.10.2020

€ million

provisional

Factory and office equipment

0.1

Property, plant and equipment - finance lease

0.6

Intangible assets

0.0

Inventories

5.8

Receivables and other assets

0.7

Cash and cash equivalents

2.4

Total Assets

9.6

Other provisions

0.1

Other liabilities

5.6

Total Liabilities

5.7

Net assets at fair value

3.9

Non-controlling interests

0.0

Net assets at fair value without non-controlling interests

3.9

Consideration

34.4

Goodwill

30.5

The transaction costs of the business combination amount to EUR 0.2 million and essentially include consulting expenses.

The synergies anticipated from the business combination relate primarily to cost advantages as well as a reduction of the vacancy duration and thereby a reliable letting.

For tax purposes, the goodwill is not deductible.

In addition to the total consideration, due to the currently incomplete existing data basis the purchase price allocation is provisional in respect to the following items:

  • Inventories
  • Accounting for leases
  • Deferred tax expenses
  • Contingent liabilities.

The LEG Group concluded agreements of secured financing in the amount of EUR 130 million. These funds will be paid in the fourth quarter 2020.

There were no other significant events after the end of the interim reporting period on 30 September 2020.

Dusseldorf, 12 November 2020

LEG Immobilien AG

The Management Board

Lars von Lackum (CEO)

Susanne Schröter-Crossan (CFO)

Dr Volker Wiegel (COO)

> website.

43

RESPONSIBILITY STATEMENT • FINANCIAL CALENDAR 2020/2021 • CONTACT DETAILS AND IMPRINT

LEG IMMOBILIEN AG Q3 2020

Responsibility statement

Financial calendar 2020/2021

Contact details and imprint

"To the best of our knowledge, and in accordance with the applicable reporting principles for financial reporting, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the LEG Group, and the management report of the Group includes a fair review of the development and performance of the business and the position of the LEG Group, together with a description of the principal opportunities and risks associated with the expected development of the LEG Group."

Dusseldorf, 12 November 2020

LEG financial calendar 2020/2021

Release of quarterly report as of 30 September 2020

Release of annual report 2020

Release of quarterly statement as of 31 March 2021

Release of quarterly report as of 30 June 2021

Release of quarterly statement as of 30 September 2021

12 November 2020

10 March 2021

11 May 2021

10 August 2021

10 November 2021

PUBLISHER

LEG Immobilien AG Hans-Böckler-Straße 38 D- 40476 Dusseldorf Tel. + 49 (0) 2 11 45 68 - 0info@leg-wohnen.dewww.leg.ag

CONTACT DETAILS

Investor Relations

Frank Kopfinger

LEG Immobilien AG The Management Board

Lars von Lackum (CEO)

Susanne Schröter-Crossan (CFO)

Dr Volker Wiegel (COO)

For additional information, see the Investor Relations calendar on our

Tel. +49 (0) 2 11 45 68 - 400ir@leg.ag

CONCEPT, EDITING DESIGN

HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg

The quarterly report as of 30 September 2020 is also available in German.

In case of doubt, the German version takes precedence.

LEG Immobilien AG Hans-Böckler-Straße 38 D- 40476 Dusseldorf Tel. + 49 (0) 2 11 45 68 - 0info@leg-wohnen.dewww.leg.ag

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LEG Immobilien AG published this content on 12 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 November 2020 11:00:14 UTC