DREF raises €63.5m through private placement

German student housing specialist Deutsche Real Estate Funds (DREF) has raised €63.5 million through the private placement of a euro bond. The bonds have been placed with large German institutional investors, the firm said.

The seven-year bond has an interest rate of 4.5 percent per year. The bond is DREF’s second through a private placement.

The proceeds of the bond issue will fund the purchase and refurbishment of five student accommodation blocks, located in Berlin, Halle, Ludwigsburg, Siegen and Stuttgart.

DREF placed its initial bond to finance student accommodation in June 2015. The bond was increased to €77 million at the request of a number of investors in autumn 2015.

The firm said that it is planning another private placement by the end of this year. 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 also agreed a credit line of €50 million from Chenavari Investment Managers at the beginning of the year to finance its growth.

“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 DREF.

“The shortage of living space for students in Germany can only be reduced significantly with the aid of private investment. We are the only organization offering institutional investors access to this asset class. Our second bond provides further proof that capital markets can provide financing for German student accommodation.”