DREF increases bond volume to 77 million euros

- Institutional investors, including the Versicherungskammer Bayern and the Barmenia Versicherungen, subscribe to additional bond volume of 33 million euros

- Bond portfolio extended to include further student residences in Bochum, Essen and Kiel

- Additional placement planned for 2016

Bertrange, November 5, 2015 - Deutsche Real Estate Funds ("DREF") has increased the volume of its bond issued in June by 33 million euros as part of a private placement with institutional investors. The total volume now amounts to 77 million euros. The proceeds will be used for the acquisition and refurbishment of three student residences in Bochum, Essen and Kiel. The bond portfolio had previously consisted of five residences located in Berlin, Bremen, Kiel and Stuttgart. The first students moved into these objects for the 2015/16 winter semester on schedule following extensive modernisation work.

"We're delighted that we were now able to reinforce our bond volume at the request of a number of investors and to achieve our targets set for this year. This goes to show that we can also finance student accommodation in Germany via the capital market," says Felix Bauer, CEO of Deutsche Real Estate Funds Advisor. "We have now succeeded in establishing a portfolio of 2,300 student residential units within a period of two years. And we've already secured 1,700 additional units, which we plan to complete by the end of this year. By the end of 2016, our aim is to substantially boost our portfolio even further, bringing it to at least twice its current size. We plan to finance part of these additional acquisitions by means of a further bond issue scheduled for the first half of 2016."

"More delivered than promised"

The bond that has now been increased in volume has a term to maturity until the year 2020, with a coupon of 4.675 percent interest per annum. It is senior secured mortgage-backed and has an investment grade rating (BBB) from Creditreform. Again, the increased subscription was made exclusively by institutional investors within the scope of a private placement. The investors include the insurers Versicherungskammer Bayern, Germany's largest public insurer, and Barmenia Versicherungen, both of which had already participated in the original bond issue in June.

"The DREF team has delivered more than it originally promised. Not only have the students moved into the first residences on schedule; the rents are even slightly above the level originally planned. We're highly satisfied with this investment and have consequently increased our exposure once again," says Petra Nithammer, Portfolio Manager at Barmenia Versicherungen.

"For us as an insurance company, the market for student accommodation is an ideal investment opportunity. After all, it is an investment in German real estate with a reputation for stable value [and investment protection]. And, at the same time, the yields are higher than those generated by the regular housing market. On the other hand, an instrument of this kind is the perfect match for our sustainability strategy. In the process, we contribute toward easing the difficult situation in finding accommodation for our new generation of academics. We can certainly perceive making even greater investments in this market in partnership with DREF," Petra Nithammer continues.

The bond placed via the issuance vehicle Deutscher Studenten Wohn Bond I S.A. is traded at the Frankfurt Stock Exchange. The equinet Bank AG acted as sole lead manager and sole bookrunner for this transaction. Heuking Kühn Lüer Wojtek acted as legal counsel, providing consultancy services concerning the increase in the bond volume.

"This successful bond increase shows that student accommodation is also establishing itself as an asset class in this country. Its stable and projectable cash flows have always made student residences an attractive investment opportunity for insurers and pension funds. Now DREF also provides institutional investors in Germany with access to this form of investment," says Lutz Weiler, CEO of equinet Bank.

600 additional residential units in Bochum, Essen and Kiel

As one of the leading private providers in the field of student housing in Germany, DREF has over 2,300 residential units in its portfolio. In the wake of the bond increase, 600 further residential units have been added in Bochum, Essen and Kiel.

In recent years, the number of students has risen very sharply in all three university cities. The Ruhr University of Bochum and the University of Duisburg-Essen are among Germany's ten biggest universities. In Duisburg-Essen, the number of students has grown by 29 percent since 2009, to reach 41,000. The Ruhr University of Bochum has 43,000 students - up by 34 percent since 2009. According to a ranking by Times Higher Education, both universities are among the best 100 universities worldwide that are younger than 50 years.

In Kiel, the number of students has likewise almost doubled in the past 25 years. Since the former winter semester, more than 25,000 students have enrolled in Kiel (a city of 250,000 inhabitants), an all-time high. In all three cities, the accommodation quota in student residences is below the federal average of 11.3 percent.

About DREF
Deutsche Real Estate Funds (DREF) is specialised in property investments with a particular focus on student housing. DREF covers the entire value-added chain from the selection of properties through financing to modernisation and subsequent management. Further information on DREF can be found at: www.dref.de/en/.

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HERING SCHUPPENER

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Email: dref@heringschuppener.com