A class of its own - Crosslane Student Real Estate Fund · A class of its own Public open-ended student ... Brandeaux Student Accommodation Fund Liberty Living €1.5billion Greystar

2 Crosslane Student Real Estate Fund • www.csref.de • [email protected]

[email protected]

STUDENT REAL ESTATE FUND

A class of its own

Public open-ended student real estate fund in Germany

#1

Public open-ended student real estate fund in Germany 3 #1

The Crosslane Student Real Estate Fund (the 'Fund') is a German open-ended Fund (OEF) focusing on student housing in Germany and Europe.

This Fund provides an opportunity to invest in the first public open-ended fund in the student housing asset class in Germany.

With a planned target return of 6%p.a. on equity over a medium to long-term period, the Fund will consist of standing assets in operation and development assets. These assets will be located predominantly in Germany, in major cities with globally recognised universities that attract high numbers of domestic and international students. Assets will be rented out and managed by experienced professionals whilst offering a wide range of on-site facilities to encourage high occupancy and retention.

With planned regular income and scope for continued growth, the student housing asset class offers investors seeking uncorrelated investments reliability in turbulent economic climates.

Key Benefits

“The purpose-built student housing sector looks set to continue its strong growth. Student numbers are set to increase further. With increased numbers, there is need for more supply. Investment into the sector has increased substantially this year and

looks set to continue.”

'OPEN' TO THE FUTURE

STABLE ASSET CLASS

Resilient compared to equity

investments in volatile economic

climates.

OPEN-ENDED FUND

Easy access and

improved liquidity management.

GROWTH

Under supplied student housing

market with increasing student

numbers.

DIVERSIFICATION

Diversified investment portfolios not

influenced by the same business cycles as other commercial

properties.

ATTRACTIVE YIELD

OPPORTUNITY

High occupancy and opportunity to regularly increase

rental income.

Source: (1)


[email protected]

The Fund has been established to take advantage of the growing European student housing sector. The aim is to create a portfolio of properties for the Fund in line with the principle of risk diversification.

The investment objective is to focus on acquiring European residential properties that are rented out to students generating regular income from rent received and the opportunity to achieve ongoing capital value growth.

FUND OBJECTIVE

The objectives of the Fund are:

• To provide investors with diverse investment in the student housing market across Europe, but with particular emphasis on Germany, whilst focussing investment in major university cities where demand/supply dynamics are favourable.

• To invest in a mixture of standing assets in operation, new developments and refurbishments, with the aim of providing a combination of strong rental yields, initial added capital value and anticipated long-term capital growth appreciation.

• To create quality modern, purpose-built student housing with a wide range of on-site facilities.

• To purchase assets with a target size of 150-400 beds to drive operational efficiencies.

• To plan to achieve a total annual target return of 6%p.a. on equity over a medium to long-term period, including an anticipated annual dividend of 3%p.a.

• To plan to deliver progressively increasing dividends.

To provide further diversification and risk management:

• Assets are planned to be located predominantly in Germany, in major cities with globally recognised universities that attract high numbers of domestic and international students.

• Inclusion of new build or newly refurbished student housing schemes with en-suite bathrooms (including studio flats) at higher rental levels compared to Studentenwerk.

• To utilise the skills and experience of established specialist student housing developers and managers with previous track records in the purpose-built student housing sector.

• A variety of tenancy agreements, including university leases and direct lets.

KEY FACTS

ISIN: DE000A2AGN33 WKN: A2AGN3

Fund class: Open-ended Real Estate Fund.

Dealing frequency: Weekly.

Dealing Day: Wednesday.

Dealing cut-off time: 12 noon. (CET)

NAV calculation frequency: Weekly.

Valuation date: Wednesday

Unit value: Reported & calculated rounding down to 2 decimal places.

Income distribution: Annually directly after publication of the

annual report.

External asset appraiser valuation frequency: Quarterly.

Minimum holding period: 24 months.

Redemption notice period: 12 months.

Maximum gearing: 30% of overall property value long-term

plus 10% of NAV short-term.

Minimum liquidity: 5% of fund NAV held daily.

No fund cap: No limit on the number of units issued.

No subscription limits: No minimum or maximum amount for the

purchase of units.

Fees: Details of all fees are disclosed in the Prospectus.

Initial share price: €100


UK Student Housing

The Fund believes that in order to appreciate the potential returns from the student housing asset class in Europe, it is crucial for investors to first understand the UK student housing market, which has experienced high levels of recent institutional investment, with portfolios being acquired from the initial fund vehicles that created them resulting in substantial returns for share-holders.

Student housing in the UK has evolved rapidly over the past ten years with 2015 experiencing record levels of investment and the asset class increasingly becoming a main stream investment option for many institutional investors. Source: (2) It is the Fund's understanding that prior to the 1990's many students in the UK chose to live at home with parents whilst attending a local university. As universities in major cities rose in representation, so did the need for students to travel away from home to gain a more prestigious qualification, a trend which more recently has extended beyond country borders. Enrolment emphasis for universities has transformed over the last decade as the financial potential in attracting international students from around the world became more of a focus. The requirements of more discerning international students seeking higher quality housing with safety and security integral to their 'student experience' fuelled an increase in the development of purpose-built housing.

Modern purpose-built student housing typically includes a high level of safety and security, with key fob or swipe card entry systems, 24/7 CCTV and onsite property management teams, providing students’ parents with reassurance and comfort that their children are being well looked after away from home. In addition parents are often those who are funding their children’s education, and purpose-built student housing provides budget certainty as utility bills are included within the rent and do not fluctuate throughout the student's stay. Source: (3)

Growth

The number of full time students in the UK has continued to grow despite the introduction of tuition fees in 2012 and the economic downturn of 2008.

With university applications outstripping acceptances, 25% of applicants cannot get a place on their chosen course and this oversubscribed demand for university education continues to drive demand for student housing. (Figure 1)

The opportunity for annual rent reviews to drive income growth, together with limited risk of tenant default and bad debt as a result of pre-paid contracts in advance of tenancy, makes for a reliable income stream. Figure 1: UK Applications, Acceptances and First Years

"In the UK, the (PBSH) sector now houses 32% of full-time students, or 24%

of all students in over 550,000 purpose-built

(student housing) beds."

Source: (6)

BACKGROUND

100,000

1994

2002

1998

2006

2011

1996

2004

2000

2008

2013

1995

2003

1999

2007

2012

1997

2005

2010

2001

2009

2014

20150

200,000

300,000Num

ber o

f stu

dent

s

400,000

500,000

700,000

600,000

800,000

Applications Acceptances First Year Full Time Undergraduates

Source: (4)

"The shortage in purpose-built student

accommodation means that private-

sector student housing providers

typically report term-time occupancy rates of 96 to 99 per cent."

Source: (7)

2.3million "The number of higher education students in

the UK."

Source: (5)

96% to 99%Occupancy


[email protected]

Record investment in Student Housing in the UK

2015 experienced a record level of investment in UK student housing with €7billion of transactions taking place to Q3Source: (8) as institutions, pension and sovereign wealth funds from around the globe sought to take advantage of the opportunity from the student housing asset class with a number of entire portfolios changing hands.

Examples of 2015 key investments in student housing portfolios

Buyer Origin Destination Beds Major deal Value

Canada Pension Plan Investment Board (CPPIB)

Canada UK 16,822Brandeaux Student Accommodation FundLiberty Living

€1.5billion

Greystar /PSP USA UK 2,385 Round Hill CapitalNido portfolio €780million

Goldman Sachs & Greystar USA UK 5,866

Knightsbridge/ OaktreeWestbourne portfolio

€700million

LetterOne Luxembourg/Russia UK 2,170

The Carlyle GroupPure Student Living platform

€690million

Canada Pension Plan Investment Board (CPPIB)

Canada UK 2,153 Student Castle Portfolio €430million

USAF UK UK 2,099 Ahli United Bank €350million

LetterOne Luxembourg/Russia UK 839 McLaren

Union portfolio €108million

Examples of 2016 key investments in student housing portfolios

Buyer Origin Destination Beds Major deal Value

Brookfield Canada UK 6,000 Avenue Capital Portfolio €500million

Mapletree Investments Singapore UK 5,500

Mansion Student Accommodation FundArdent Portfolio

€500million

GIC Singapore UK 4,700 Oaktree €400million

Hines investment manager USA UK 1,100 McLaren €180million

Arlington USA UK 1,450Spectrum Housing Association and Sanctuary Students

€149million

In addition, the Empiric Student Property REIT listed on LSE raised €209million of equity during 2015 rapidly growing their portfolio to 5,686 beds and a further €150million has already been raised in 2016 for further asset acquisitions taking their portfolio to 7,265 beds.

"€7billion of investment

transactions in (UK)student housing in

2015 to Q3."

"Private equity funds and finance

companies are selling their assets and

mainstream investors, insurance companies,

pension funds and investment banks are buying. This is a sure sign that the sector

has matured.”

“2015 was a record year for investment in

student housing with €13billion invested

globally in the sector.”

Exchange rate from GBP to Euro of 1.2

Exchange rate from GBP to Euro of 1.3

Source: (9)

Source: (8)

Source: (10)


"With a combined student population of 20 million,

growing international enrolment and very low

provision of purpose built accommodation, Europe offers investment potential."

UK

500,000

1,00,000

1,500,000

2,000,000

2,500,000

3,000,000

Germany France Spain Netherlands

Number of international students

Number of enrolled higher education students

Purpose built student housing beds and university Halls of Residence

% national provision rate

2.3m

550K388K

2.7m

301K 290K

2.5m

300K375K

1.5m

2.5m

75K 90K

0.7m

87K 113K

The Fund believes the current under-supply of student housing across Europe’s major university cities presents similar potential investment opportunities as those previously experienced in the UK upon which the Fund intends to capitalise. But whilst the student housing sector in the UK is seen to be maturing, in contrast Europe is widely regarded by industry experts, such as Savills, as being in its infancy, representing significant untapped potential.

European student market comparison

With continually growing numbers of students across Europe, compounded by rising levels of non EU students, the view of the Fund is that the demand and supply imbalance within these countries is expected to continue to provide a compelling investment opportunity if the European student housing market follows the same trends as experienced in the UK.

46%Figure 2: European student housing provision 2016/17

EUROPEAN OPPORTUNITY

Source: (13)

"Europe dominates the globe in respect of attracting

international students. 46% of international students

study in Europe"

Source: (14)

"The attraction for investors is that mainland Europe is around 10 years behind the

UK in providing suitable accommodation for

international students and a younger market offers

more opportunities" Source: (14)

Source: (11) & (12)

“For potentially greater returns, pioneering investors

are targeting mainland Europe.”

Source: (15)

24%

11% 15%6%

16%


[email protected]

EUROPEAN OPPORTUNITY

Source: (16)

"While student housing in the UK can be considered mature, many major European cities are still in their infancy"


Germany has the greatest shortfall of student housing provision in Europe compared to the levels of students enrolling. (See figure 2 on page 6)

It is the Fund's understanding that historically domestic German students usually attended a local university close to their family home. However this situation has experienced a dynamic shift in recent years, with significantly increasing numbers of students from Germany choosing to study at universities further away from home, following the same trend as experienced in the UK.

Many German universities have focused on specialised subjects and faculties, developing a global reputation for these distinct disciplines, such as science and technology. German students recognise that achieving a degree from these widely recognised universities is likely to provide them with an advantage when entering an ever more competitive labour market. For example, a student from Hamburg who wants to study medicine is likely to be drawn to the superb reputation and facilities in Heidelberg.

In the past living away from home may have seemed daunting, but with modern transport networks and a shift in social attitude amongst a more mobile, technically aware, younger generation, this is becoming the norm, as students have an aspiration to go to a leading university or the best university their exam results will gain them access to and it is unlikely this will happen to be on their doorstep in their local city.

Previously in Germany university student housing has largely been provided by publicly funded Studentenwerk which are generally good value to rent, but relatively low quality. Modern private purpose-built student housing provides higher quality, safe and well managed student housing with a range of amenities and facilities to make their experience fun and exciting, plus an onsite management team designed to provide reassurance and remove the fear of moving away from home. Source (3)

The additional provision of this type of student housing will continue to drive the trend of domestic German students studying at top universities across Germany, where demand will be highest. Parents too will be reassured by the safety and security of modern purpose-built student housing which follows the same approach already being successfully managed in the UK by the same operators the Fund is proposing to use.

"Berlin is the most affordable student city

in Europe."

"There is an estimated shortfall of 100,000

beds across Germany."

"In the first seven months of 2016 some €350million was invested in German student property, more than double the total invested in 2015 and

nearly the same volume as the previous two years combined."

GERMAN STUDENT HOUSING MARKET

Source: (17)

Source: (18)

Source: (19)


[email protected]

• Very low or no tuition fees for undergraduates.

• Huge increase in the number of university courses being taught in English.Source: (figure 5 page 12)

• Vibrant and cosmopolitan German city centre lifestyle.

• Extended visas enable highly skilled students to gain employment in Germany following graduation.

• Extended freedom for those from strict cultural backgrounds.

Factors attracting international students to Germany

Figure 3: Levels of enrolled international students in Germany

2013-142012-132011-122010-112009-102008-092007-08

200,000

250,000

300,000

350,000

As Germany's university education becomes more globally attractive, the numbers of international students have grown increasing the demand for quality student housing.

Advantages of modern purpose-built student housing

• Social & cultural interaction - Enables students to have fun living with other students as part of the overall living away from home experience, to extend knowledge, language, culture and broaden a network of friends and colleagues.

• Safety & security – Provides reasurance to parents to feel more comfortable and confident to let their child travel away for their education - particularly appealing for female students who can access ensuite bathroom facilities, but share facilities with other girls of the same age, rather than renting a room in a house with another family which may have had older children of the opposite sex.

• Independence - Enables students to live away from home and learn to look after themselves in preparation for working life, but in a controlled environment where certain elements are easier (e.g. utility bills are included in the rent so students are not running up bills without any idea of how much they will be or how to pay for them).

• Quality of degree - Enables students to go to a leading or globally recognised university to achieve the best qualifications to improve career prospects.

The Fund believes there are a number of key factors attracting international students to Germany.

Source: (20)


Increasingly global mobile students

Chinese students in Germany

Years Number of students

2012/2013 27,364

2011/2012 25,521

2010/2011 24,443

Africa 21,092 | 9.6%

South and Central America 13,003 | 5.9%

North America 5,073 | 2.3%

Western Europe41,373 | 18.9%

Eastern Europe57,063 | 26.1%

Southwest and Central Asia20,742 | 9.5%

South, Southeast and East Asia59,635 | 27.2%

Australia and Oceania623 | 0.3%

Germany has become an attractive place to study for international students as figure 4 shows.

Figure 4: “In 2014 the number of international students at German universities increased by 7 percent over 2013. The German government backs this growth, and has set a target to increase the number of foreign students at German universities to 350,000 by the year 2020.”

Chinese student levels set to rise in Germany

Non EU students show the greatest increase in the number of those coming to study in Germany, with students from China driving these increased numbers, which is set to continue with figures rising each year.

Source: (22)

Source: (23)

Source: (21)

"German cities offer exceptional value for both domestic and

international students."

Source: (24)

"Germany has the third most (QS) ranked

institutions globally."

Source: (25)

Source: (26)

"Internationally mobile students

from China grew by 89% between

2007 and 2011."


[email protected]

Source: (27)

"Studentenwerk increased the number of beds in Germany by 15,000 between 2005 and 2015 with the number of students growing by 770,000 over the same period, squeezing the supply imbalance further."


The importance of international students

It is the Fund's understanding that international students have played an increasingly important role in driving demand for purpose-built student housing in the UK. In the view of the Fund as the number of overseas students attending universities in other countries increases so the demand for purpose-built student housing grows. Universities are actively driving this increase by providing more courses in English, the language of global business, as figure 5 shows.

Potential factors driving growth in international students?

• Globally high ranking and world renowned university education. • Low tuition fees. • Longer visas.• Live and study in a cultural hub. • Chance to improve language skills.• High quality university facilities & research funding. • Postgraduate courses.

For students living in another country certain criteria are more likely to be of higher importance such as security and safety, on-site management teams who can provide face to face help, all inclusive utility bills, shared common social spaces to make new friends, experiencing another country's culture and improving language skills. In the view of the Fund these are more possible for students chosing to live in modern purpose-built student housing of the kind the Fund plans to acquire.

200,000

Fran

ce

Italy

Spai

n

Switz

erla

nd

Den

mar

k

Finl

and

Belg

ium

0

400,000

600,000

800,000

1,000,000

Net

herla

nds

Swed

en

Ger

man

y

2007 2013

INTERNATIONAL STUDENTS

Figure 5:

Engl

ish

taug

ht m

aste

rs p

rogr

amm

es in

m

ainl

and

Euro

pe

Source: (28)

"For a globally mobile student

population, secure, well

managed, quality accommodation

from a trusted provider has strong

appeal to those unfamiliar with local

housing markets."Source: (29)

“Universities are providing more

courses in English, the language of global business.”

Source: (30)

"Forecast figure for number of

students to study abroad in 2025”

Source: (31)

8million


[email protected]

In the view of the Fund the 'student experience' forms an important part of any individual studying for a qualification. Students want to study, but they also want to gain other social and intellectual development through new experiences and interests.

Studying abroad offers a wealth of new opportunities for students who want to experience a different culture.

A large part of this 'experience' is living in the right housing; a place to live, with large communal social areas to engage with like minded individuals, whilst having the convenience of everything they need being in one place, removing all the hassle.

The Crosslane Student Real Estate Fund aims to invest in high quality, modern student housing which will be rented out and managed by an expert team of professionals with a track record in maximising the student experience and creating excellent shared facilities to help residents enjoy and feel comfortable in their home. Properties will be conveniently positioned close to both the university and local amenities such as bars, cafés, restaurants and shops, making student life easier and more enjoyable which in-turn creates a more desirable product.

A positive experience is more likely to encourage students living at the property to give a positive referral to other students, which is more likely to drive higher occupancy levels and improved returns for investors.

Crosslane has many years of experience in acquiring, developing and operating purpose-built student housing, with extensive knowledge in achieving returns for investors. This expertise includes managing student housing properties in Germany, where historically annual rent increases have been successfully implemented, whilst also maintaining full occupancy and improving customer satisfaction. It is the intention that this approach would also be adopted for properties owned by the Fund.

On-site Gymnasium

High speed Wi-FI

On-Site Management &

Maintenance

24/7 Digital CCTV

Social Areas

Secure Door Entry System

THE PRODUCT

Study Room

The Fund intends to invest in modern purpose-built student

housing which includes facilities such as;


Income

In the experience of Crosslane, who have operated student housing contracts for many years in the UK and Germany, rents are generally paid in advance and guaranteed by students’ parents, who typically want to ensure that their children complete their educational studies. This means rental income should be more reliable with comparatively little risk of tenant default. With typical short-term leases, student housing provides opportunity to regularly increase rental income.

Resilient asset class

It is the Fund's understanding that in previous economically volatile times the student housing market received an increase in student numbers worldwide as those already in work decided to up-skill themselves to remain valuable as employment opportunities became more limited and highly competitive. In addition, more students decided to continue further education and complete a degree course as an alternative to entering an extremely challenging job market to improve their career prospects with enhanced qualifications in the future when the economy might have improved. Socially there is also an increasing ambition amongst the younger generation across the world to obtain higher education and qualifications that lead to improved career opportunities. The emergence of a new ‘middle class’ in developing non EU countries has also resulted in a growing pool of potential overseas students who desire qualifications from more established globally recognised universities and in the view of the Fund, this is driving an increase in overseas students to European universities.

The student housing asset class has historically performed well in economically, turbulent times, providing stability and reliable returns.

STABILITY AND RESILIENCE

Increase in student enrolment (school leavers defer job

seeking/workers up-skill).

Higher occupancy from increase in demand creating

reliable income.

Why student housing is a stable asset class in an economic downturn

Demand for student housing rises.

High demand creating full occupancy provides potential

for increasing rents.

An increase in rents increases total asset income.

An increase in rental income increases the net asset value

of the property.

Increase in Fund share price

135

120

105

130

115

Enro

lmen

t gro

wth

Inde

x 20

06/0

7 =

100

Figure 6: Higher Education Enrolment Growth France Germany Netherlands Spain UK

100

125

110

95

2006/07 2008/092007/08 2009/10 2010/11 2011/12 2012/13 2013/14

Continued growth in student

numbers during

recession period

Introduction of tuition fees

in the UK

Source: (32)


[email protected]

Figure 7: Brandeaux Student Accommodation Fund (invested in UK properties between the dates below) - Demonstrating the resilience of the asset class.

The following chart shows how other student real estate funds have performed with continuous yields during periods of economically turbulent times, such as the 2008 market crash.

"Student property has performed exceptionally well

as an asset class compared to traditional investments.

In fact, it has outperformed every other commercial

property class and delivered consistent returns throughout the economic

downturn."

Source: (35)

12%

4%

2%

2001 2002 2003 2004 2005 2007 20092006 2008 2010 2011 2012

10%

0%

8%

6%

5%

3%

ave 9.51%

Source: (33)

Past performance is no indication of future performance.

Source: (34)

“Student accommodation in the UK has delivered

solid and consistent returns throughout every year of the recent economic downturn,

thereby attracting significant volumes of international equity and institutional debt into the sector. The

positive demand for student accommodation has been reinforced year on year by

the increase in overseas students, a trend that is being

replicated across the world.”


In the view of the Fund the future of the student housing asset class remains very favourable as the demand for quality student housing increases in correlation with the global increase of mobile international and increasingly aspirational domestic students.

The growth in the number of students looking to live and study in another country is anticipated to continue to increase and be a major part of the undergraduate experience.

With Germany offering free or virtually no cost tuition for undergraduate courses, it has become a world leader in attracting international students, but housing provision for these students is extremely under-supplied which therefore presents considerable opportunity.

OUTLOOK

Many industry experts expect the purpose-built student housing sector in Europe to progress from its current relative point of infancy, to become more established, with experienced purpose-built student housing developers from the UK seeking to extend their experience in other European countries and potential appetite from those who have already invested in UK student housing looking to expand their portfolios further.

"All the major higher education destination

countries offer routes to employment for foreign

graduates."

262million"The number of higher education students is anticipated to grow to

262million globally by 2025."

Source: (37)

"Growing international student numbers

secure the market for premium purpose-

built student housing product."

Source: (39)

Source: (36)

Source: (38)

"Student enrolment numbers are set to

increase by a further 32million by 2024."


[email protected]

Source: (40)

"As a stable income-producing asset with counter-cyclical characteristics, student housing is well placed to benefit from increased investor appetite in times of market and economic uncertainty – both in the UK and the rest of Europe."


Berlin One of the most affordable student cities in Europe Source: (42).Berlin's multicultural and vibrant city centre is attracting students from around the world.

German University ranking: 4 Source: (43)

World University ranking: 57 Source: (44) Students: 117,517 Source: (45)

Heidelberg Heidelberg is a town on the Neckar River in southwestern Germany. It’s known for venerable Heidelberg University, founded in the 14th century. German University ranking: 2 Source: (43)

World University ranking: 43 Source: (44)

Students: 37,600 Source: (45)

Frankfurt Frankfurt, is a major financial hub that's home to the European Central Bank. Currently, around 6,800 students from more than 100 nations are enrolled at Frankfurt University. Source: (46)




Munich

The third largest city in Germany. Munich is currently ranked the world’s joint 11th best city for students, tied with Zurich. Source: (41)




Dresden The Dresden University of Technology is one of the 10 largest universities in Germany and part of the German Universities Excellence Initiative.Source: (47)




Tübingen Tübingen is a traditional university town in central Baden-Württemberg, Germany.




Based on thorough market research into the student population, growth in student numbers, shortage of accommodation, achievable rents and ranking of top institutions, the Crosslane Student Real Estate Fund is actively seeking asset acquisitions in a number of target locations:

TARGET LOCATIONS


[email protected]

Source: (48)

"Germany is a highly affordable country in which to live and study, a factor that has sustained enrolment growth. Domestic student numbers have grown 39% in the last decade."


Development

Refurbishment

CREATING VALUE

• Rental income from the assets.• Capital appreciation of the assets.

• Rental value growth.• Development profit.

Crosslane Student Real Estate Fund offers investors access to the robust student housing sector with diversification of assets across Germany and other countries within the European Economic Area.

The Fund aims to generate performance from 4 key drivers.

Any assets acquired by the Fund are categorised into 1 of 3 areas :

Development Refurbishment Operational

i Land purchase - The land is purchased, with planning permission, at a discount to open market value. The profit made on acquisition is then fed through to the Fund.

ii Construction - The student housing property is built and completed with a valuation being provided to the Fund by two separate external, specialist student housing valuation agents. Growth in the value of the development is reflected in the share price.

iii Operational - Once the property is fully let it is likely that there will be a further uplift in value as verified by the independent valuation agents.

These are assets that are purchased by the Fund with full planning permission already in place, to develop into fully operational student housing. They are divided into 3 stages of potential growth opportunities.

Operational

• The Fund benefits from the existing and ongoing income stream.

• There may be some minor refurbishment required, however this can be completed during academic breaks in the year so as to avoid any disruption to the income stream. By completing minor refurbishment the Fund is able to enhance the rental profile, reflecting improvements in the quality and standard of the property to tenants. These

improvements make the property more attractive to students ensuring high occupancy levels, which together drive an income uplift.

• The Fund can also benefit from development of new areas of the acquired operational property. This could be to increase the number of rooms by better utilising existing space (e.g. basement or loft space) or by adding an extension which, again, should reflect in the capital value.

These are existing student housing properties which are already fully operational and creating rental income that are purchased by the Fund:

These are existing properties that are purchased by the Fund with the intention of upgrading, refurbishing or converting them shortly after acquisition into modern student housing:

• These could be existing student, residential or commercial sites in mainland Europe that are suitably located near a university and where change of use permissions or planning consent is available.

• These assets are generally purchased at a discount to market value due to their poor condition or alternative use, which require internal overhaul to create high quality, modern student housing.

• The Fund share price will increase from buying a discounted property that can be converted to modern student housing at a relatively low cost, adding considerable value to the property.


[email protected]

"Purpose-built student housing provision is generally low, particularly in relation to growing numbers of international students who demand one-stop quality accommodation"Source: (49)


The current legal environment makes risk and liquidity management of open-ended real estate funds highly regulated and has created a long-term approach, more fitting with the nature of real estate investments through the introduction of:

• A longer term initial holding period (24 months) and a long-term notice period for redemptions (12 months). This means open-ended real estate funds can no longer be perceived and used as quasi-cash liquid investments, in the same way other funds (like security funds) are, where access to value can be realised instantly.

• Lower levels of gearing/leverage and higher levels of liquidity requirements. This means the management of such funds have more control and flexibility to manage cash flow and can focus on investment decisions producing strong returns over the medium to long-term.

• A more rigorous asset valuation process. This includes the obligation to use different external independent valuation agents to value assets at acquisition, to those used in the ongoing re-valuation. These valuation agents are used on rotation to add increased levels of diligence. In addition, increasing the frequency of valuations ensure the NAV and therefore the share price is an accurate reflection of the value of assets held in the pool.

• Lower levels of maximum currency exposure by limiting capital to currency hedging risk.

• Increased transparency with funds required to provide more information to investors.

In the past many institutions and private investors alike included units in German open-ended real estate funds as part of a balanced investment portfolio and these funds performed well, providing solid returns.

As a result of the German real estate crash of 2003 and the Global economic crisis in 2008, large institutions who held units in open-ended real estate funds, needing cash to pay, inter alia, monthly pensions, redeemed large volumes of these units as they were at liberty to do so at any time with daily dealing and without any notice period. Consequently, many open-ended real estate funds were forced to suspend redemption and sell assets quickly, below market value, to create sufficient liquidity in order to satisfy high redemption volumes they received. This significantly reduced the fund value, or in some cases resulted in the termination of the fund management and as a result, the liquidation of such funds.

Recognising these issues, the German legislative changed the legal framework, putting new rules and regulations in place to increase transparency, stabilise open-ended funds, improve risk protection and shield particularly small retail investors from a repeat of the previous issues. The new legislative regulation which has come into effect modifies inter alia risk and liquidity management of regulated investment fund management companies (KVGs).

WHY AN OPEN-ENDED FUND?


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WHY AN OPEN-ENDED FUND?

It is also worth remembering open-ended funds have the following protection measures for investors in place:

• Only regulated investment fund management companies (KVGs) supervised by the BaFin are allowed to manage open-ended real estate funds and they must have a minimum capital of €300,000 and meet special internal organisation requirements.

• Fund's assets are controlled by a depositary, which also protects investors' rights and interests with all payments for the fund being made to and from an account held and controlled by the depositary.

• Before acquiring a property, the open-ended real estate fund must obtain an independent expert's property valuation and the acquisition can only proceed if the purchase price does not exceed the valuation price.

Target market • Traditional income-orientated investors, who are not a 'cycle' investor

Product • Prime high quality assets in strategic markets and locations

Lease terms • Favour long leases, long-term income generation with low vacancy and strong covenants

Gearing/Leverage

• Long-term loan to value should not exceed 30% of overall property value plus 10% of NAV short-term

• Typical gearing is usually lower

• Preference for easily tradable assets and markets

Liquidity • A minimum 5% and a maximum of 49% of the fund value

Currency exposure• Restricted currency exposure at 30%.

• Up to 100% non-euro fund allocation is allowed if fully hedged

Open-Ended Fund characteristics


This investment bears the following risks:

Market risk/real estate risks: Locations may become less attractive over time, so that the level of rents realizable is less than is currently realizable due to a decline in rental demand. Reduced rental income may result in declining real estate values which adversely affect the investment outcome and reduce the value of the unit certificate. Items of real estate may themselves be damaged by fire, storm or other events. Their value may also decline due to unforeseen residual contamination or structural defects. Construction measures implemented for ongoing maintenance of the real estate portfolio may entail higher costs than initially assumed.

Credit rating risk of the main tenant: All of the Fund’s properties will be rented to a main tenant. The credit rating of the main tenant may deteriorate, in particular, due to the changes outlined above in the realizable rental income. This may result in the main tenant’s insolvency.

Placement risk: In the event that it is not possible to raise the envisaged volume of equity within the placement period, it will not be possible to purchase any real estate for the Fund. The Fund will subsequently be liquidated. This may entail costs for the investor.

Externally financed real estate: If real estate items of the Fund are financed by means of a loan, their fluctuations in value will have a stronger effect on the price of the units in the Fund (so-called “leverage effect”). This applies for increases in value as well as for losses in value.

Liquidity risks: Unlike equities, for instance, it is not always possible to dispose of real estate at very short notice. If a very large number of investors wish to return units at the same time, in exceptional cases the redemption of units may be suspended because the Fund first needs to sell off properties in order to establish a sufficient volume of liquidity.

Operational risks: The Fund may suffer losses due to human or technical failure, either within the scope of the Fund or externally, and also other events (e.g. natural disasters or legal risks).

Please refer to the Prospectus for a detailed description of the risks. Please note that payments are not guaranteed.

RISKS


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"The purpose-built student accommodation sector looks set to continue its strong growth. Student numbers are set to increase further. With increased numbers, there is need for more supply. Investment into the sector has increased substantially this year and looks set to continue."Source: (1)

RISKS


SOURCE INDEX(1) Savills World Research Student Housing - Spotlight UK Student Housing 2015 (page 12)

(2) Savills World Research Student Housing - Spotlight UK Student Housing 2015 (page 04)

(3) All 17 purpose-built student housing properties managed by Crosslane via Prime Student Living representing 3,343 beds include utility bills within the rent students pay to live in these properties.

(4) Savills World Research Student Housing - Spotlight UK Student Housing 2015 (page 06)

(5) Savills World Research Student Housing - Spotlight World Student Housing 2015/16 (page 16)


(7) Financial Times - https://www.ft.com/content/a312d242-08ad-11e2-b37e-00144feabdc0?ftcamp=rss

(8) CBRE UK Student Accommodation Market View February 2016 (Page 1, Figure 1, Exchange rate from USD to EUR of 0.910451)

(9) Savills World Research Student Housing - Spotlight UK Student Housing 2016/17 (page 03)



(12) Savills World Research Student Housing - Spotlight World Student Housing 2016/17 (page 14 & 17)


(14) Knight Frank Report - International Student Property 2012 (page 2)



(17) Savills World Research Student Housing - Spotlight World Student Housing 2014 (page 19)



(20) German Academic Exchange Service (DAAD) Via source: http://www.iie.org/Services/Project-Atlas/Germany/International-Students-In-Germany#.WDMEg3ecaek

(21) http://wenr.wes.org/2015/10/rise-chinese-students-german-universities

(22) Bildungsausländer enrolment by global region, 2013/14. Source: DAAD

(23) http://monitor.icef.com/2015/06/german-student-mobility-continues-to-increase/









(32) Savills World Research Student Housing - Spotlight World Student Housing 2015/16 (page 11) ESA, Destatis, INSEE, Ministerio de Educación, Rijksoverheid.nl, National Center for education Statistics, Department of Education and Training

(33) Reuters; Brandeaux Student Accomodation Fund

(34) Knight Frank Residential Research Student Property Report 2012 (Page 2)

(35) Knight Frank Residential Research Internatiohnal Student Property Report 2012 (Page 2)

(36) Savills World Research - European Investment Spotlight Housing Summer 2013 (page 04)





(41) www.topuniversities.com - http://www.topuniversities.com/university-rankings-articles/qs-best-student-cities/munich

(42) http://www.topuniversities.com/university-rankings-articles/qs-best-student-cities/most-affordable-cities-students-2016

(43) https://www.timeshighereducation.com/world-university-rankings/2017/world-ranking#!/page/0/length/25/locations/DE/sort_by/scores_overall/sort_order/asc/cols/stats (2016/17 results)

(44) https://www.timeshighereducation.com/world-university-rankings/2017/world-ranking#!/page/0/length/25/sort_by/scores_overall/sort_order/asc/cols/stats

(45) www-genesis.destatis.de (2015/16 results)

(46) https://www.timeshighereducation.com/world-university-rankings/johann-wolfgang-goethe-universitat-frankfurt-am-main#ranking-dataset/589595 (2016/17 results)

(47) https://www.timeshighereducation.com/world-university-rankings/technische-universitat-dresden#ranking-dataset/589595




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Fund Manager

Custodian

Property Advisor and Real Estate Manager

PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft Tax Consultant & Auditor

Property Lettings and Operational Manager

Real Estate Developer

SOURCE INDEX

IMPORTANT NOTICE

Details information regarding the Fund, in particular regarding the risks associated to the Fund and an investment in the Fund are described in the current prospectus, the general and specific fund rules (Allgemeine und Besondere Anlagebedingungungen), the KID as well as in the (semi-) annual reports (if available). All documents mentioned before are available in German language free of charge at www.hansainvest.com or www.csref.de. Only those documents are the basis for an investment decision in the Fund. Neither this brochure nor the content thereof might be seen as a recommendation or an investment advice. Further they do not replace an individual investment or tax advice. This brochure was designed and produced by Horizon Global Investors Limited with the due diligence. However, Horizon Global Investors Limited does not grant that the information therein are current, correct and complete, in particular in case the information is based on third party sources. Horizon Global Investors Limited, 3rd Floor, 207 Regent Street, London, W1B 3HH, Financial Conduct Authority (FCA) reference number: 774842. This brochure is for marketing purposes only.


STUDENT REAL ESTATE FUND

www.csref.de [email protected]

04/04/17

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