S Immo : Summary considerations on the proposed resolution by IMMOFINANZ (.pdf)

Summary considerations on the proposed EGM resolution by

IMMOFINANZ

(June 16, 2021)

Executive summary

1. S IMMO delivered robust performance in the last decade, underpinned by strong enhancement of property value and positive share price development
2. • 11.3% EPRA NAV per share CAGR increase over the last 10 years (2010-2020), 15.7% CAGR over the past 5 years (2015-2020)
   • Above-marketshare price performance with 25.6% CAGR over the past 5 years pre-COVID1
3. Today, S IMMO is well-positioned to accelerate its growth trajectory. A potential disposal of its equity investments in CA IMMO and IMMOFINANZ (c.€549mm2) will free-up a significant amount of growth capital
4. • Redeploy capital proceeds from sale of listed stakes to buy income generating property assets, develop existing landbank in the commuter belt of Berlin and execute the remaining development pipeline
   • • In the short-term, S IMMO will be rotating assets from financial assets to higher yielding investment properties, i.e., focusing on investments in CEE/SEE, stabilizing the hotel segment and expediting own developments on existing land reserves
     • In the mid- to long-term, the asset repositioning and streamlining of asset classes will allow for a balanced portfolio with rental and valuation upside, increasing value in the landbank in Germany and crystallizing lease potential in residential properties
5. For the upcoming EGM on June 24, 2021, IMMOFINANZ is proposing the cancellation of the maximum voting right - a condition precedent to the ongoing takeover offer by IMMOFINANZ announced on March 14, 2021 - combined with an amendment of the Articles of Association (AoA) subject to a condition precedent to reinstate the statutory maximum voting right, should the offer not become unconditionally binding
6. • Absent an attractive takeover offer, the abortion of the voting rights restriction is against the interests of the outstanding shareholders and hence an evaluation of the nature and attractiveness of the takeover by IMMOFINANZ is indicated

	Source: Company information
	1 February 21, 2020 (defined as the last date prior to the sell-off witnessed in European capital markets as a result of the COVID-19 pandemic); 2 Valued at current market value as of June 14, 2021, and incl. value of mandatory
2	convertible bonds held. Book value as Q1 2021 of €536mm

Executive summary (cont'd)

4 The S IMMO Management and Supervisory Boards have assessed the revised offer of €22.25 p.s. by IMMOFINANZ ("Offer") in detail and conclude that:

1. The Offer is inadequate from a financial perspective
2. • Offer price is at a 11.2% discount to EPRA NAV Q1 2021 of €25.051 and 15.2% discount to Revalued EPRA NAV of €26.242
   • Offer price at a discount to prevailing market prices pre-COVID (discount of 18.0% to S IMMO 2-year high3 in March 2020)
   • Premiums on stock prices refer to stock-price levels heavily impacted by the COVID-19-pandemic and ignore positive market development and news flow after the offer increase
   • Offer price at a discount of 5.6% to book value of the S IMMO share in the Q1 2021 financial report of IMMOFINANZ
   • Several equity research analysts publicly stated that Offer is inadequate4 or that they recommend shareholders to notaccept the Offer5
   • An Inadequacy Opinion by J.P. Morgan and DCF-analyses supported by external appraisers further support the assessment
3. The terms of the Offer are inadequate and do not reflect market standards
4. • IMMOFINANZ distributes material transaction risks unilaterally to S IMMO shareholders (in particular anticipatory removal of the maximum voting right before end of the acceptance period)
   • Timing unilaterally imposed by IMMOFINANZ failing to ensure shareholders' information needs are fully met
   • Offer is non-transparent in some respects, in particular with regards to reference transactions in S IMMO by IMMOFINANZ's
     CEO in the last 12 months before intention to launch the Offer had been announced for approximately 15% of S IMMO shares

	Source: Company information
	1 Last reported EPRA NAV (Q1 2021); 2 Last reported EPRA NAV (Q1 2021) of €25.05 per share, adjusted for the announced result of a value analysis on 10-May-21 of S IMMO's German and Austrian property portfolio at 30-Apr-
3	21 carried out with the involvement of an independent external appraiser, disclosing an expected increase in value of c.€85mm (€1.20 per share) for the properties located in Germany and Austria as of that date compared to Q1
2021; 3 2 year pre COVID-19(21-Feb-18 to 21-Feb-20);4 SRC Research (May 20, 2021); 5 Erste Group (May 21, 2021)

Executive summary (cont'd)

In conclusion, Offer price and structure are inadequate and there is significant room for IMMOFINANZ to improve the Offer.

We therefore recommend to our shareholders to:

• Vote againstthe EGM resolution by IMMOFINANZ to cancel the maximum voting right and againstany potential resolutions on the cancellation of the maximum voting right that are only made available after the record date
• Not acceptthe Offer by IMMOFINANZ

Source: Company information

4

Consistent ability of S IMMO's management to enhance

1 value reflected in robust EPRA NAV growth in the last decade

EPRA NAV per share (€)

				10YR CAGR: 11.3%
							5YR CAGR: 15.7%
								3YR CAGR: 11.3%
									26.45		25.05	26.241
										24.32
								21.25
							17.63
						14.62
				10.63	11.75
		9.18	9.76
8.34	8.70
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	Q1 21	Revalued
												EPRA NAV

	Source: Company information
	1 Last reported EPRA NAV (Q1 2021) of €1,777mm, adjusted for the announced result of a value analysis on 10-May-21 of S IMMO's German and Austrian property portfolio at 30-Apr-21 carried out with the involvement of an
5	independent external appraiser, disclosing an expected increase in value of c.€85mm (€1.20 per share) for the properties located in Germany and Austria as of that date compared to Q1 2021