Combination of DEMIRE AG and Fair Value REIT AG Creating a leading - - PowerPoint PPT Presentation

Combination of DEMIRE AG and Fair Value REIT AG

Creating a leading commercial real estate player in Germany, supported by a strong rental income profile and unique growth opportunities

Contents 1. Transaction overview 2. Key investment highlights 3. Shareholder structure overview

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Transaction overview

Share for share transaction with attractive implied premium Proposed offer terms

For each FVR share shareholders will receive two Demire shares

Offer terms

• verview

» Share for share transaction proposed to Fair Value REIT (“FVR“) shareholders » 2:1 exchange ratio offer:

• For each FVR share shareholders will receive two Demire shares

» Acceptance threshold 50.1% required for transaction to be successful » Premium offered on implied FVR valuation justified by combined value creation potential

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23.21% irrevocable undertaking granted from main shareholders Strong shareholder support to the transaction

Key shareholders representing c.23.21% of the share capital have committed to the transaction

Strong support

• btained

» Significant shareholder support

• btained already

» Merits of the transaction allowed for significant shareholder commitment » Obotritia Capital and Kienzle Vermoegensverwaltung have irrevocably supported the transaction

• Obotritia Capital is controlled by Rolf

Elgeti, Chairman of FVR’s supervisory board

• Kienzle Vermoegensverwaltung is

controlled by Dr. Oscar Kienzle, deputy Chairman of FVR’s supervisory board

Free float 77.90% Obotritia Capital 22.10%

FVR shareholder structure1 Key terms irrevocable undertaking » Committed to tender shares even if 50.1% threshold is not reached » Should tender offer surpass more than 94.9% threshold, investors will not tender their shares accordingly (land transfer tax (RETT)

• ptimisation)

Note 1) Free float as per Frankfurt stock exchange definition (< 5%) Source: Based on Demire and FVR public available information

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10 week voting period for FVR investors Key transaction milestones

Tender offer period to last approximately until 23th November followed by an extended acceptance until 14th December

Expected timing

» Announcement 31th of July » FVR and Demire Q2 15 results to be released on 13th August and 28th August, respectively

• Further additional financial information regarding the envisaged combination will subsequently be

provided

» Demire shareholders meeting on 14th September » Publication of offer document approximately 28th September » Tender offer period approximately from 28th September till 23th November » Publication of reasoned opinion mid of October by FVR » Extended acceptance period (2 weeks) from 30th November till 14th December » Settlement of shares approximately 29th December

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Key investment highlights

Strong rental income profile supported by unique growth platform Creating a leading commercial real estate player in Germany

Creating a leading €1.0 billion commercial real estate player in Germany focused on secondary locations

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Levering integrated asset and portfolio management towards combined economies of scale and portfolio optimisation

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Combining strong real estate sourcing networks and demonstrable integration track-record

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Defensive long-leased portfolio and strong tenant structure supportive of additional debt funding costs reduction

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Strengthening balance sheet profile supported by expected deleveraging trajectory towards an LTV ratio of 50-60%

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Implementation of “Prime Standard” adequate corporate governance structure

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» Strong value creation potential to both equity and debt investors » Building critical mass in secondary locations in Germany » Management team commits to Prime Standard corporate governance

Increasing capital markets presence and improved access to financing markets

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€1.0 billion assets under management in secondary locations A leading commercial real estate player in Germany

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Munich Frankfurt Hamburg Cologne Stuttgart Rostock Freiburg Leipzig Kassel Bonn Ulm Dresden Berlin Düsseldorf

Significant overlap of existing commercial real estate assets portfolios

Demire portfolio Fair Value Reit portfolio

Multi-tenant commercial real estate assets mainly comprising of office and retail

Office Retail Logistics Other

>€50m >€10m >€1m Headquarters

Office (84%) Retail (9%) Logistics (11%)

Demire FVR Combined

Office (66%) Retail (24%) Logistics (7%) Other (3%)

Source: Based on Demire company data and FVR public available information

Office (33%) Retail (57%) Other (10%) GAV EUR684m GAV EUR306m GAV EUR990m

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Integrated asset management capabilities Considerable economies of scale and portfolio optimization upside

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Active asset management 60% Stabilised assets 30% Non-core / dispose assets 10%

Rent increase and vacancy reduction potential provide substantial value upside Fully integrated asset management company equipped to exploit existing portfolio potential Exploiting portfolio underlying potential via leveraging on existing management capabilities

Integration of internal asset management capabilities to further enhance value potential of combined entity Substantial value creation through vacancy reduction / rent increase via active portfolio management

EURm Combined1 GAV 684 306 990 GRI 52.2 25.3 77.5 GRI yield (%) 7.6% 8.3% 7.8% Vacancy (%) 13.7% 8.2% 12.0% Potential GRI 60.5 27.6 88.1

Note: 1) Based on FVR Q1 report, company presentation and press releases; Demire company data; adjusted for signed acquisitions and capital activities

Demire

Property Management Asset Management Facility Management

100% 51% 51%

FVR

Asset Management

» Capitalise internal know-how, further enhancing existing portfolio potential » Fully integrated asset management capabilities » Unique deleveraging

• pportunities

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Illustration of great GRI upside-potential through vacancy reduction

Robust acquisition and demonstrable integration track-records Combining strong real estate sourcing networks

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Diverse off-market / value-added investment

• pportunities sourced from extensive network

Demire management’s proven ability to drive growth via targeted acquisitions and portfolio optimization

REITs / Real Estate Funds Financial institutions Institutional Investors Corporates …sourced from a diverse range of participants Unique set of opportunities… Special situations (bankruptcy, etc.) Non-core disposals Stressed / distressed sellers Undervalued assets

21 333 371 392 684

H1 2014 FY 2014 Q1 2015 Q2 2015 July 2015

Demire Gross Asset Value (EURm)

• Ongoing: Acquisition of T6 portfolio (office

portfolio) (adj Jul 15 GAV figures)

• Ongoing: Acquisition of Kurfürsten Galerie and

Gutenberg Galerie (retail properties)

• Q2 2015: Acquisition of LogPark Leipzig (logistics

properties)

Strong deal sourcing network providing access to unique off-market undervalued investment opportunities

Source: Based on Demire public available information and adjusted for acquisitions; non-audited figures

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Robust acquisition and demonstrable integration track-records Combining strong real estate sourcing networks (cont’d)

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Potential to further expand FVR’s business model following transaction closing

FVR growth potential through well established closed end fund investment platform

Discounts in minority buy

• uts

Q1 2015 IFRS balance sheet minorities

? 57

FVR unique business model leveraged on singular sourcing strategy

Invest in fund stakes below NAV Active management of funds invested Gradually increase position across funded already invested Liquidate fund and buy-out or sale of properties

Opportunity to further acquire assets below NAV via combination with Demire in an over EUR50bn market

Source: Based on FVR public available information

NAV growth potential through minorities buy-out Growth potential from large closed end fund market Invest in funds / liquidate fund and buy-out of properties 45 46 50 2011 2012 2013

EURbn

• Direct buy-out of

property in Cologne in Q1 2015

• Direct buy-out of

property in Dresden in Q2 2015

• Acquisition of 54% stake

in BBV 08 with 26% value uplift on purchase price in Q2 2015

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Strong multi-tenant assets with long lease contracts in place Defensive commercial real estate portfolio

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Broad base of high credit quality tenants with long-lease contracts in place Balanced expiry lease schedule providing unique rent increase renegotiation potential Combining two high credit quality multi-tenant companies with a WALT of 5.7 years 3% 7% 7% 8% 3%

18% 6% 16% 6% 13% 2015 2016 2017 2018 2019 Demire FVR % Gross Rental Income up for review

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Further deleveraging expected Strengthening balance sheet profile

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Deleveraging process to continue following business combination Further cash-flow generation potential expected as new combined entity allow for capital structure optimization Substantial financing synergies expected following increase in asset base

EURm Combined Gross asset value 684 306 990 Gross financial debt 530 180 710 Cash 14 46 60 Net financial debt 516 134 650 LTV 75% 44% 66% Average interest cost 4.7% 2.7% 4.2%

Source: Based on Demire company data and FVR public available information, adjusted for acquisitions and capital activities

1 2 3

• Increase of assets under

management post merger

• Focus on debt reduction

and cash-flow generation

• Balance sheet
• ptimization and further

reduction of average cost of debt

Enlarged asset base Continuing LTV reduction Focus on cost of debt optimization Continuing FFO expansion going forward 1 2 3

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Further deleveraging expected Strengthening balance sheet profile (cont’d)

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Room for substantial cost of debt improvement as existing maturities are coming for refinancing (2015-2016) Management track-record supportive of continuing LTV reduction post merger

85% 81% 75% 66% Q4 2014 Q1 2015 Q1 adj. 2015 Combined Demire LTV evolution pre / post merger Debt maturity schedule (EURm)

Substantial financing synergies expected following increase in asset base

Note: 1) Adjusted for acquisitions Source: Based on Demire and FVR public available information adjusted for acquisitions

13 12 24 30 282 64 45 19 45 2015 2016 2017 2018 2019 Demire FVR

EUR135m short- term refinancing

• pportunities

Mid-term LTV target of 50-60%

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1

Improved liquidity and access to improved funding terms Increasing capital markets presence

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1,979 1,029 561 555 226 137 115

Becoming a top 5 German commercial real estate player by market capitalisation

Market capitalisation (EURm)

Reduced debt funding costs and improved liquidity expected post business combination

• Increase market capitalization to boost liquidity
• Larger investors likely to get involved both on

the equity and debt side

Enhanced liquidity

• Better coverage from financial analysts
• Improve understanding of equity story

Improved visibility

• Increased critical mass to provide access to

more competitive funding

• Access to alternative funding solutions

provided by market participants

Access to alternative funding

• Improve market segmentation into Prime

Standard listing

Enhanced transparancy

Source: Market data as of 4 August 2015

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Implementing an integrated supervisory / management structure Robust corporate governance structure of Demire

Board

Asset / portfolio management Accounting Controlling Property and facility management Investors Relations Supervisory Management

Internalised management structure Business combination agreement to define final management structure

Supervisory Board and Management Board compositions of Demire to be defined upon final terms of the business combination Expected internalisation of asset- and property management functions as well as accounting and reporting departments

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TBD TBD TBD TBD TBD TBD

Proven long-lasting real estate experience in both companies

Supervisory Boards

• Prof. Dr. Hermann Anton Wagner

Chairman of the Supervisory Board

• Dr. Peter Maser

Vice Chairman of the Supervisory Board Günther Walcher Member of the Supervisory Board Rolf Elgeti Chairman of the Supervisory Board

• Dr. Oscar Kienzle

Vice Chairman of the Supervisory Board

• Prof. Dr. Heinz Rehkugler

Member of the Supervisory Board Management Boards Frank Schaich Chief Executive Officer

• Hon. Prof. Andreas Steyer

Chief Executive Officer Markus Drews Chief Operating Officer

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Shareholder structure overview

Increased free float and no significant shareholding position Shareholder structure overview

Free float 77.90% Obotritia Capital 22.10% Free float 44.85% DeGeLog 14.99% Alpine Real Estate 11.92% Wecken & Cie. 10.97% M1 Beteiligungs 9.29% Ketom AG 7.98%

FVR shareholder structure Demire shareholder structure

• Combined entity to have enlarged free float

leading to higher liquidity of the shares

Increased free float

• No significant majority shareholder

Disperse shareholder structure

• Transaction and future prospects of

combined entity already well received by major shareholders in both companies

Long-term investment horizon

Free float 70.13% Obotritia Capital 11.22% DeGeLog 7.38% Alpine Real Estate 5.87% Wecken & Cie. 5.40%

Combined shareholder structure1

Note 1) Free float as per Frankfurt stock exchange definition (< 5%) Source: Based on Demire and FVR public available information

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Disclaimer DEMIRE AG

This document and its contents are confidential and not meant for forwarding, transmission, publication, duplication, or disclosure (in whole or part) to other

• persons. Outside of Germany the distribution of this document may be restricted by applicable laws.

This document does not constitute an offer to sell or an invitation to make an offer to buy or subscribe for securities. This document and the information contained therein may not be distributed in the United States of America, Canada, Australia, Japan or other jurisdictions, in which such offer, respectively, such invitation to make an offer to buy or subscribe for securities is not allowed. This document does not constitute an offer to sell securities in the United States. Securities, including the bond of DEMIRE AG may not be sold or offered for sale within the United States or to or for the account of / in favour of US citizens (as defined in Regulation S under the U.S. Securities Act of 1933 in the current version (the "Securities Act") unless they are registered under the regulations of the Securities Act or unless they are subject to an exemption from registration. Neither DEMIRE AG nor any other person intend to register the offer or a part thereof in the United States or to make a public offer of the securities in the United States. Certain information in this presentation is based on management estimates. Such estimates have been made in good faith and represent the current beliefs of applicable members of management. Those management members believe that such estimates are founded on reasonable grounds. However, by their nature, estimates may not be correct or complete. Accordingly, no representation or warranty (express or implied) is given that such estimates are correct or complete. This document includes 'forward-looking statements'. Forward-looking statements are all statements which do not describe facts of the past but contain the words "believe", "estimate", "expect", "anticipate", "assume", "plan", "intend", "could", and words of similar meaning. These forward-looking statements are subject to inherent risks and uncertainties since they relate to future events and are based on current assumptions and estimates of DEMIRE AG, which might not occur at all or occur not as assumed. They therefore do not constitute a guarantee for the occurrence of future results or performances of DEMIRE AG. The actual financial position and the actual results of DEMIRE AG as well as the overall economic development and the regulatory environment may differ materially from the expectations which are assumed explicitly or implicitly in the forward-looking statements and do not comply to them. Therefore, investors are warned to base their investment decisions with respect to DEMIRE AG on the forward-looking statements mentioned in this document.

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Disclaimer Fair Value REIT AG

This publication is neither an offer to exchange nor a solicitation for an offer to exchange Fair Value shares. Moreover, this publication does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities. The securities referred to in this publication may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the „Securities Act”) or in a transaction exempted from or not subject to the registration requirements of the Securities Act. Subject to certain exceptions, the securities referred to in this publication may not be offered or sold in Australia, Canada, or Japan or to, or for the account or benefit of, any national, resident, or citizen of Australia, Canada, or Japan. The offer and sale of the securities referred to in this publication has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada, Japan, or any other jurisdiction. There will be no public offer of the securities in the United States or anywhere outside of Germany. The final terms and further provisions regarding the public takeover offer will be disclosed in the offer document. The actual financial position and the actual results of Fair Value REIT-AG as well as the overall economic development and the regulatory environment may differ materially from the expectations which are assumed explicitly or implicitly in the forward-looking statements and do not comply to them. Therefore, investors are warned to base their investment decisions with respect to Fair Value REIT-AG on the forward-looking statements mentioned in this document.

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