Student housing manager Deutsche Real Estate Funds (DREF) has raised €63.5m through a bond issue.

DREF, in which Internos Global Investors and family office The Somerston Group jointly hold a 27% stake, said a number of large German institutional investors had subscribed to the seven-year bond.

The issue is the company’s second bond in a private placement and will fund the purchase and refurbishment of five student residences.

The bond, which bears interest at an annual rate of 4.5%, is secured by senior registered land charges.

DREF placed its first bond to finance student accommodation in June last year.

The €44m bond was increased to €77m in late 2015.

Felix Bauer, chief executive at DREF, said: “We intend to at least double the size of our portfolio of student residential units by the end of the year, and the proceeds from this issue will help us to achieve this objective.

“The shortage of living space for students in Germany can only be reduced significantly with the aid of private investment.”

The company said it was planning another private placement by the end of the year.