CORESTATE Capital S A : Presentation

Aggregate Financial Services

Creating a Leading Real Estate Financing Platform

January 15th 2021

René Parmantier, CEO | Lars Schnidrig, CFO | Sebastian Ernst, AFS | Johannes Märklin, AFS | Dr. Kai Klinger, CMO

Disclaimer

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This Presentation does not purport to contain all information that may be required to assess Corestate, its business, financial condition, results of operations and prospects for any purpose. Any recipient should conduct its own independent investigation and assessment as to the validity of the information contained in this Presentation, and the economic, financial, regulatory, legal, taxation and accounting implications of that information. Except as required by law, Corestate including their respective directors, officers, employees, agents and consultants, makes no representation or warranty, expressly or impliedly, as to the accuracy or completeness of the information contained in this Presentation, and take no responsibility under any circumstances for any loss or damage suffered as a result of any omission, inadequacy, or inaccuracy of the information contained in this Presentation.

This Presentation contains certain forward-looking statements, forecasts, estimates, projections and opinions (the "Forward-Looking Statements"). These Forward-Looking Statements can be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "intends," "may," "will" or "should" or, in each case, their negative, or other variations or comparable terminology. These Forward-Looking Statements refer to matters that are not historical facts. They appear in a number of places throughout this Presentation and include statements regarding Corestate's intentions, beliefs or current expectations concerning, among other things, its prospects, growth, strategies, the industry in which it operates and potential or ongoing acquisitions (together, the "prospects"). By their nature, Forward-Looking Statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-Looking Statements are not guarantees of future performance and that the development of its prospects may differ materially from those made in or suggested by the Forward-Looking Statements. In addition, even if the development of its prospects are consistent with the Forward-Looking Statements, such developments may not be indicative of its results, liquidity or financial position or of results or developments in subsequent periods not covered by this Presentation. No representation is made by Corestate that any of the prospects will be achieved or will prove to be correct. Similarly no representation is given that the assumptions disclosed in this Presentation upon which Forward-Looking Statements may be based are reasonable.

By accessing this Presentation, any recipient agrees to be bound by all foregoing limitations.

2

Corestate Announces Acquisition of Aggregate Financial Services as Core Component of Private Debt Strategy

Strong Strategic

Rationale for

Acquisition

Key Terms of

Transaction

Envisaged

Timeline

• Credit markets are currently constrained and disrupted, especially in higher risk asset classes, which opens an exceptional market opportunity to acquire Aggregate Financial Services ("AFS")
• HFS and AFS both have an unparalleled track record and significant complementary experience in real estate debt
• Together they will deepen the real estate financing value chain at Corestate and enhance our client reach both in terms of products and regions
• In addition, this transaction creates debt and equity cross-selling opportunities, accelerates
  Corestate's access to new client capital and adds a highly regarded management team
• Transaction enables at least c € 10 m of annual run rate synergies1 and will be earnings accretive
• Purchase price consideration of 8.5 m new Corestate shares and € 5 m in cash to be paid on completion of offer implying a consideration of € 113 m net of € 17 m cash in AFS business
• • Implied 2021E FV/EBITDA multiple of 6.5x (based on mid-point of AFS 2021E EBITDA guidance and excluding synergies)
• In addition, up to 1.5 m new shares in total could be issued over next three years on achievement of certain profitability metrics for AFS ("earn-out"): 0.5 m shares in 21E, 0.5 m shares in 22E, and 0.5 m shares in 23E
• The new shares are subjected to a long-termlock-up
• Offer announcement: 14 January 2021
• Publication of 2020 consolidated financial statements: w/c 29 March 2021
• Closing of transaction: 2Q 2021

1 Annual run rate synergies expected to be achieved within the next three years

3

AFS will Join Forces with Helvetic Financial Services ("HFS"), Corestate's Highly Profitable Private Debt Business

The post-COVID limited risk appetite in the banking market provides great opportunities for enlarging and deepening of our real estate financing business.

In our positions as Managing Partners of AFS and as new shareholders of Corestate we are proud to commit ourselves for the long term. As part of the next chapter of Corestate's evolution we plan to bring our extensive client network, where, more than 80% of

AFS clients do not take advantage of Corestate's products.

HFS is by far the most prestigious real estate mezzanine business in Germany. We are excited to realize synergies between our debt financing businesses, where AFS will bring highly complementary

products and clients and strongly benefit from HFS' market standing.

René Parmantier

Chief Executive Officer and

Chairman of the Management Board,

Corestate

Sebastian Ernst

Managing Partner, AFS and

Member of the Management Board,

Corestate

Johannes Märklin

Managing Partner, AFS and

Member of the Management Board,

Corestate

4

German Real Estate and Debt Market Update

A Global Flight to Safety and Structural Undersupply Driving Demand for German Real Estate

Structural Supply/Demand Imbalance for Residential Stock

Investment Returns

700					Completions ('000)		Government target rate ('000)							% p.a.	Rental yields, new dwellings		DAX dividend yields
																									10
600																									Rental yields, existing dwellings		10Y Bund yields
500																									8
400																									6
300																									4
200																									2
100
0																									0
1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
1997	-2
																									90	94	98	02	06	10	14	18
Source: Federal Statistics Office (Completions 1991-2019), German Government (Target 2018-2021; Federal Ministry of the		Definition: Rental yields = Rents to prices (ex transaction costs, ex maintenance, ex taxes and ex credit)
Interior, Building and Community)																				Source: Bloomberg Finance LP, bulwiengesa, Deutche Bak Research

European Dry Powder for Real Estate Debt

US$ (billions)

20

18

16

14

12

10

8

6

4

2

0

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Source: JLL

• Germany is largest housing market in Europe and is structurally undersupplied
• With government bond yields close to historic lows, German residential properties look even more attractive on a relative basis
• Credit remains accessible, as dry powder of European debt funds continues to grow
• Negative bond yields have investors searching for yield: long-dated real estate debt in prime locations is seen as an attractive alternative

5

German Real Estate and Debt Market Update (Continued)

Rationalization of Lending has Created Opportunities for Alternative Financing Solutions in the Real Estate Debt Market

European Real Estate Debt Fundraising

LTV and Margins for Existing Properties Mezzanine Financing in Germany

Cumulative capital raised (LHS)

(US$bn) 60

50

40

30

20

10

0

Cumulative number of funds (RHS)

Number of funds 120 100 80 60 40 20 0

	LTV	Coupon
	95	1200	Mezzanine Coupon in bps
Mezzanine LTV in %	90	1000
85	800
80	600
75
70	400
65	200
60	0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: JLL

Q1 18

Q2 18

Q3 18

Q4 18

Q1 19

Q2 19

Q3 19

Q4 19

Q1 20

Q2 20

Q3 20

Source: Prime Capital

Expected Yield of Senior CRE Loans

Core	Core+ /Core Dev		Value add/Core+ Dev		Opportunistic/value add Dev
Expected return (p.a.)
8%
6%
4%
2%
0%						Loan-to-value (LTV)
40%	50%	60%	70%	80%	90%	100%

As of: 29 May 2020; Source: DWS International GmbH. Forecasts are not a reliable indicator of future returns. Forecasts are based on assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect

• Banks have rationalized their real estate lending activities and net lending has been negative recently
• Non-banklenders and specialist debt funds are becoming increasingly popular alternatives for commercial real estate borrowers
• Mezzanine lenders are managing to obtain more favourable terms (e.g. higher coupons and lower LTVs) as a result of this trend
• There remain significant refinancing requirements in the market, creating abundant opportunities for alternative lenders to take advantage of decreased competition and capitalize on more attractive loan pricing

6

AFS Team Joining Management Board with Extensive Real Estate Private Debt Experience

Sebastian Ernst	Johannes Märklin
Managing Partner	Managing Partner

• The managementof AFS has extensive experience in the international capital market business
• Before founding AFS, the team held various management positions at Deutsche Bank AG in investment banking
• These included the following core areas:
• • Global distribution and structuring of capital market products
  • International responsibility for credit trading and banking books
  • International issuing and syndication business
  • Management, control and organization of business processes

AFS as Part of Corestate:

• Founders will receive shares with a long term lock-up
• They will remain Managing Partners in AFS for at least three years, and will be members of the management board at Corestate and members of board of directors at HFS

7

AFS is a BaFin-Regulated Securities Trading Bank with a Wide Spectrum of Offerings

CORPORATESINVESTORS

	Aggregate Financial
	Services
MEZZANINE	FUNDS
FINANCING	SOLUTIONS
REAL ESTATE	PROMISSORY
LOANS	NOTES
	SECURIZATIONS
	OF RECEIVABLES
	AND LOANS
WHOLE-LOANS	REAL ESTATE
	BONDS

1 CorporateFinance

2 CapitalMarkets

3 Structuring

Institutional

4 Clients and

Sales

• Financing advice on small to mid-size tickets
• Advice on takeovers, mergers and sales
• Support and strategic advice for corporate clients
• Highly flexible, agile and independent
• Support of corporate customers in the issuance of financial instruments and assignable loans
• Securities Trading
• Capital structure optimisation
• Structural arrangements of financing instruments, collateral structures, corporate law and company structures
• Internal support of the transaction teams in legal aspects
• Placement of transactions with institutional investors
• Development of product ideas based on investor needs and regulatory requirements
• Supporting institutional investors with regard to ongoing investment needs

8

Track Record of AFS Growth

• 2.4 m
• 1.1 m

(Revenue 2018)

(EBITDA 2018)

• 20.8 m
• 12.9 m

Guidance FY21

(Revenue 2019)

€ 25 - 30 m (Revenue 2021E)

(EBITDA 2019)

€ 15 - 20 m (EBITDA 2021E)

July 2018

Commencement of business as a company in accordance with Section 34c Gewerbeordnung (loan broker)

May 2019

BaFin licence as financial services provider

August 2020

BaFin licence as a securities trading bank

>40 transactions

>€ 3.0 bn

Grew from 3
founders to 20+	270 years of

financing volume

since 2019

in 18 months

Banking License

• BaFin regulated securities trading bank licensed (Section 32 of the German Banking Act) to provide a range of banking transactions and financial services

Real Estate Structuring and Consulting

• Arranged and structured real estate loans

full time	experience
employees

Placement, Investment and
Acquisition Brokerage,		Real Estate Underwriting
Investment Advice
▪ Brokered and placed		▪ Further increase of revenue
originated loans and secured		through primary issuance and
financings		secondary trading of illiquid
		securities

9

Enhanced Real Estate Debt Offering for our Clients to go with our Diversified Product Line-up

One-Stop-Shop

Products

Return1

Integrated Platform

Clients / Investors

Equity Product Range

Debt Product Range

Residential	City Quarters	Office	Logistics	Micro Living	Senior	Whole	Mezzanine	Debt Advisory
and
						Loan	Loan		Structuring
3.5%-4.5%	3.5%-5%	3.5%-4%	4%-6%	5%-5.5%		3%-5%	5%-7%	10%-13%	Fee Based

Asset & Property Management

Fundraising, Reporting, Risk Management, Financing etc.

Semi Institutional		Institutional		Retail
(>300)		(>100)		(>70.000)

Significant underallocation to (German) Real Estate: currently 9.8%, target between 11-13%2

Integration of AFS balances our equity range and helps expand our debt business

1 After costs. The returns are based on average performance from the past. All figures are preliminary and only represent forecasts that are not guaranteed;	10
2 Research as of 2019.

Strong Synergies Unlocked Through Acquisition

1. HFS Fund Expansion
2. Cross Sell Products
3. Cost Rationalization

▪ Combination with AFS will accelerate fund raising for HFS mezzanine funds and whole loan with new target fund size of

• 2 bn+

▪ The joined platform will significantly diversify the current debt value chain from the mezzanine business of HFS on the product side

▪ Complementary investor bases with ability to cross sell products

▪ AFS will substantially expand the client base at Corestate (access to additional corporate and real estate clients) with a wide range of synergy effects

▪ More than 80% of AFS clients will be new to Corestate

▪ AFS deals create additional asset management opportunities

▪ Operational cost savings across combined business

Identified annual run rate synergies of at least € 10 m within the next three years

11

Significant Growth in Corestate's Debt Funds through AFS Integration

Mezzanine Funds Showing Strong Organic Growth

(in bn€)

2,3
										c 2,1+
2,1									c 2,0
1,9								c 1,8
1,7							c 1,6
1,5								Post AFS
						c 1,3	integration
					1,25
1,3
			1,11	1,16
1,1
		0,96
0,9
0,7	0,76
2015	2016	2017	2018	2019	2020E	2021E	2022E	2023E	2024E

Acquisition of AFS Accelerates our Real Estate Debt Strategy

• Grow mezzanine funds size/volumes to € 2 bn+
• Increase customer base for mezzanine financings and structuring and increase overall pipeline by € 400 m
• Increase investor base in mezzanine fund
• Addition of lower risk AFS mezzanine fund
• Existing HFS fund could continue to act as shorter term and also as a bridge product to new lower risk mezzanine fund
• Launch of whole-loan fund in 2021

12

The Combination Creates Value for Shareholders with a Compelling Business Rationale and Financial Impact

Business

Growth

Financial

• Adds scale and diversification through new real estate debt advisory and structuring business line
• Access to additional counterparties and investors to cross sell all Corestate products
• Further development and diversification of the successful real estate debt and

mezzanine business with new product opportunities, complementary services	✓
and regional expansion
▪ AFS has a licence under Section 32 of the German Banking Act, for the issuing,
proprietary trading and placement of financial instruments
▪ AFS founders Johannes Märklin and Sebastian Ernst will become members of the
management board at Corestate and members of board of directors at HFS with a
long-term commitment
▪ Ability to increase HFS and mezzanine funds with new investor capital	✓
▪ Large pipeline of transactions for new financings secured in 2021 and beyond
from existing customer base
▪ Identified annual run rate synergies of at least € 10 m1 benefitting all shareholders	✓
▪ Highly accretive on earnings per share in first full year
▪ Improved credit profile as acquisition comes without debt

1 Annual run rate synergies expected to be achieved within the next three years.

13

Fundamental Value of AFS in Excess of € 170 m

					Financial Rationale
Shares	8.5 m	+	1.5 m	=	10 m
		Over the next		✓ Expansion of Corestate debt product
		three years

			€ 10 m
			synergies
		+ c 50%1	✓
AFS's	€ 20 m
EBITDA
2021E	€ 15 m		✓
Guidance
			✓

2021E EBITDA	Earnout EBITDA	2023E Pro forma EBITDA
		post-synergies

Earnings accretive

€ 10 m of annual run rate synergies2

Supportive for deleveraging

1 From midpoint of 2021E EBITDA; 2 Annual run rate synergies expected to be achieved within the next three years.

14

Outlook on Corestate's Operations: 2021 Upswing Driven by Fundamentals and a Prosperous Private Debt Sector

Long-term Market Trends Intact and Highly Supportive for Organic Growth Prospects

• Real estate markets will gain momentum through 2021 on the backdrop of more visibility on post-COVIDscenarios and further increasing investment pressure
• General trends like urbanization and demographic changes remain in place
• Focus remains on core/core+ assets amplified by opportunistic deals esp. from repricing in sub-sectors
• Catch-upeffects in transaction pipeline
• Performing real estate mezzanine business
• Further organic AuM growth of at least 5-10%

With AFS a New Chapter in the Company's History is Ready to Get Opened

• Benefiting from banking regulation: advantageous position of AFS due to reduction in traditional banks' lending business post-COVID, giving AFS the potential to undertake more deals at higher fees
• Strong AFS pipeline for 2021 to support growth: 14 mandated deals and 9 further potential projects in the pipeline for early next year
• New business lines arising from extended license to support additional income
• Expect strong growth of the external client base
• Increase of HFS fund size by c € 500 m by 2023 accelerated by AFS
• Annual run rate of at least € 10 m revenue and cost synergies within the next three years

15

Appendix: The Competitive Advantage of AFS

• Structure individual financing solutions for each transaction
• Experience with promissory notes,

	bonds, bank loans and private debt				▪ Guide financing parties through
▪ Ability to combine senior loans,					entire financing process
	mezzanine financing and (preferred)				▪ Legal expertise to ensure regulatory
	equity	Structuring-	Experience	compliance
		expertise
					▪ Banking license enabling to
							provide a wide range of
		Direct			Resources	offering
				▪ Provision of expertise and
		Access to				and	resources to clients
▪		Investors	Aggregate Financial	Network
Direct access to diverse	Services	▪ Management of entire
	investor community						financing process

Real

Independence Estate

• AFS acts independently

• Specialist experience in financing project acquisitions, real estate developments and existing portfolios
• Design financing solutions for entire life cycle

16

IR Contact and Financial Calendar 2021

Investor Contact

Financial Calendar 2021

Dr. Kai G. Klinger

Chief Markets Officer

Phone: +49 69 [e-mail]

24 February

24 March

28 April

19 May

11 August 10 November

Publication preliminary results for FY 2020

Annual financial report 2020

Annual General Meeting

Publication results for Q1

Publication results for H1

Publication results for first nine months

Please note that these dates may be subject to change