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 2
Transaction overview
Proposed offer terms Share for share transaction with attractive implied premium » Share for share transaction proposed to Fair Value REIT (“FVR“) shareholders » 2:1 exchange ratio offer: Offer - For each FVR share shareholders will receive two Demire shares terms overview » Acceptance threshold 50.1% required for transaction to be successful » Premium offered on implied FVR valuation justified by combined value creation potential For each FVR share shareholders will receive two Demire shares 4
Strong shareholder support to the transaction 23.21% irrevocable undertaking granted from main shareholders Obotritia » Significant shareholder support Capital 22.10% obtained already FVR shareholder » Merits of the transaction allowed structure 1 for significant shareholder commitment Free float Strong 77.90% » Obotritia Capital and Kienzle support Vermoegensverwaltung have » Committed to tender shares obtained irrevocably supported the even if 50.1% threshold is not transaction reached Key terms - Obotritia Capital is controlled by Rolf » Should tender offer surpass Elgeti, Chairman of FVR’s supervisory irrevocable more than 94.9% threshold, board undertaking investors will not tender their - Kienzle Vermoegensverwaltung is shares accordingly (land controlled by Dr. Oscar Kienzle, deputy transfer tax (RETT) Chairman of FVR’s supervisory board optimisation) Key shareholders representing c.23.21% of the share capital have committed to the transaction Note 5 1) Free float as per Frankfurt stock exchange definition (< 5%) Source: Based on Demire and FVR public available information
Key transaction milestones 10 week voting period for FVR investors » 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 Expected timing » 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 Tender offer period to last approximately until 23th November followed by an extended acceptance until 14th December 6
Key investment highlights
Creating a leading commercial real estate player in Germany Strong rental income profile supported by unique growth platform Creating a leading € 1.0 billion commercial real estate player in 1 Germany focused on secondary locations » Strong value creation potential to both equity Levering integrated asset and portfolio management towards 2 and debt investors combined economies of scale and portfolio optimisation Combining strong real estate sourcing networks and demonstrable 3 integration track-record » Building critical mass in secondary locations Defensive long-leased portfolio and strong tenant structure 4 supportive of additional debt funding costs reduction in Germany Strengthening balance sheet profile supported by expected 5 deleveraging trajectory towards an LTV ratio of 50-60% » Management team Increasing capital markets presence and improved access to financing commits to Prime 6 markets Standard corporate governance Implementation of “Prime Standard” adequate corporate governance 7 structure 8
A leading commercial real estate player in Germany 1 € 1.0 billion assets under management in secondary locations Significant overlap of existing commercial real estate Multi-tenant commercial real estate assets mainly assets portfolios comprising of office and retail Demire portfolio Combined Fair Value Reit portfolio Demire Rostock GAV EUR684m GAV EUR990m Hamburg Office (84%) Berlin Retail (9%) Düsseldorf Logistics (11%) Leipzig Dresden Kassel Cologne Bonn FVR Frankfurt GAV EUR306m Office Office (66%) Office (33%) Retail Stuttgart Logistics Retail (24%) Other Retail (57%) Ulm Munich Logistics (7%) > € 50m Freiburg > € 10m Other (10%) > € 1m Other (3%) Headquarters Source: Based on Demire company data and FVR public available information 9
Considerable economies of scale and portfolio optimization upside 2 Integrated asset management capabilities Rent increase and vacancy reduction potential provide Fully integrated asset management company equipped substantial value upside to exploit existing portfolio potential » Capitalise internal know-how, further Combined 1 EURm Demire enhancing existing portfolio potential 100% 51% 51% GAV 684 306 990 » Fully integrated asset management Property Asset Facility GRI 52.2 25.3 77.5 Management Management Management capabilities » Unique deleveraging GRI yield (%) 7.6% 8.3% 7.8% opportunities FVR Vacancy (%) 13.7% 8.2% 12.0% Non-core / dispose assets 10% Potential GRI 60.5 27.6 88.1 Asset Stabilised Illustration of great GRI upside-potential through vacancy Management assets reduction 30% Active asset management 60% Substantial value creation through vacancy reduction / rent increase Integration of internal asset management capabilities to further via active portfolio management enhance value potential of combined entity Exploiting portfolio underlying potential via leveraging on existing management capabilities Note: 10 1) Based on FVR Q1 report, company presentation and press releases; Demire company data; adjusted for signed acquisitions and capital activities
Combining strong real estate sourcing networks 3 Robust acquisition and demonstrable integration track-records Demire management’s proven ability to drive growth via Diverse off-market / value-added investment opportunities sourced from extensive network targeted acquisitions and portfolio optimization Ongoing : Acquisition of T6 portfolio (office Unique set of opportunities… portfolio) (adj Jul 15 GAV figures) Ongoing : Acquisition of Kurfürsten Galerie and Special situations Non-core disposals Gutenberg Galerie (retail properties) (bankruptcy, etc.) Q2 2015 : Acquisition of LogPark Leipzig (logistics properties) Undervalued assets 684 Stressed / distressed sellers Demire Gross Asset Value (EURm) 392 371 333 …sourced from a diverse range of participants REITs / Real Estate Funds Financial institutions 21 Institutional Corporates Investors H1 2014 FY 2014 Q1 2015 Q2 2015 July 2015 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 11
Combining strong real estate sourcing networks (cont’d) 3 Robust acquisition and demonstrable integration track-records Potential to further expand FVR’s business model FVR unique business model leveraged on singular sourcing strategy following transaction closing FVR growth potential through well established closed end fund investment Invest in fund platform stakes below NAV Growth potential from Invest in funds / liquidate NAV growth potential Active large closed end fund fund and buy-out of through minorities buy-out management of market properties funds invested EURbn Direct buy-out of property in Cologne in Gradually increase 50 Q1 2015 46 57 position across 45 ? funded already Direct buy-out of invested property in Dresden in Q2 2015 Acquisition of 54% stake Liquidate fund and in BBV 08 with 26% buy-out or sale of Discounts in Q1 2015 IFRS 2011 2012 2013 value uplift on purchase properties minority buy balance sheet price in Q2 2015 outs minorities Opportunity to further acquire assets below NAV via combination with Demire in an over EUR50bn market Source: Based on FVR public available information 12
Defensive commercial real estate portfolio 4 Strong multi-tenant assets with long lease contracts in place Broad base of high credit quality tenants with long-lease Balanced expiry lease schedule providing unique rent contracts in place increase renegotiation potential % Gross Rental Income up for review 18% 16% 13% 8% 7% 7% 6% 6% 3% 3% 2015 2016 2017 2018 2019 Demire FVR Combining two high credit quality multi-tenant companies with a WALT of 5.7 years 13
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