Deutsche Real Estate Funds (DREF) has issued its second bond in a private placement to fund the purchase and refurbishment of five student residences in Germany.
The bond with a volume of €63.5 mln has a seven-year term to maturity and bears interest at a rate of 4.5% per annum. It is secured by senior registered land charges and subscribed to by large German institutional investors.
DREF is using the proceeds of its latest bond issue to purchase and refurbish five residences comprising 1,100 units for students in Berlin, Halle, Ludwigsburg, Siegen and Stuttgart.
'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,' said Felix Bauer, CEO and CSO of Deutsche Real Estate Funds Advisor. 'The shortage of living space for students in Germany can only be reduced significantly with the aid of private investment. We are the only organisation offering institutional invstors access to this asset class. Our second bond provides further proof that capital markets can provide financing for German student accommodation.'
DREF placed its initial bond to finance student accommodation in June 2015. In the autumn of 2015, this bond was increased to €77 mln at the request of a number of investors. Since the beginning of the year, the price has fluctuated between a range of 103 to 107%.
When selecting cities and properties, in addition to the location and the basic structure of halls of residence, DREF primarily assesses the university environment, as well as the housing situation in general and for students in the relevant city. To assist in the process, DREF has developed a student accommodation price index in cooperation with the Cologne Institute for Economic Research (IW Köln). This was published for the first time to coincide with the 2016 summer semester and will be updated in the future ahead of each semester.
DREF said that its 4,000-unit portfolio makes it the leading private owner and operator of student residential housing in Germany. DREF intends to increase its portfolio to more than 6,000 units by the end of the year. The property enterprise has already secured a further 1,500 units.
DREF also agreed a line of credit of €50 mln from Chenavari Investment Managers at the beginning of the year to finance this growth. A further private placement is planned for 2016.
DREF has established an issuing platform under the administration of Hauck & Aufhäuser Alternative Investment Services, a subsidiary of Frankfurt-based private bank Hauck & Aufhäuser. DREF intends to use this platform to structure future bonds specifically tailored to the requirements of investors.
_______________________________
22 June 2016
OUTLOOK H2: Germany & European Markets
Union Investment Real Estate GmbH, Valentinskamp 70 / EMPORIO, Hamburg, 20355, Germany
9am-11.30am
The European Outlook series of events continues in Hamburg on Wednesday morning with a look at the key investment trends, both in Germany and continental Europe. How do investors see the activity in the first half of 2016 and what is the likely scenario for the second half of the year. Will we see a bounceback for Europe after the referendum in the UK? What are the strategies best suited for investors at this point in the cycle? Which sectors are likely to outperform?
Benefit from an interactive briefing on the outlook for Germany and main European markets and network with leading investment specialists including the speakers from Union Investment, Catella, DREF, Corestate and AF Advisory.
