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DEMIRE Deutsche Mittelstand Real Estate AG successfully places EUR 270 million rated, senior unsecured bond

• Successful placement with institutional investors and asset managers on international capital markets
   
• Coupon of 2.875% and term of five years (until 2022)
   
• Bond ratings from S&P and Moody's of BB+/Ba2 and company ratings of BB/Ba2
   
• Net proceeds to be used for the refinancing of outstanding liabilities of the DEMIRE Group due until 2019
   
• First step towards implementation of "DEMIRE 2.0":
  • Significant improvement in financing costs from 4.1% to 3.2% p.a.
  • Increase in annual cash flow of c. EUR 9.0 million due to reduced interest and repayment expenses
  • Increase in FFO I (after taxes, before minority interests) of c. EUR 5.6 million p.a. due to reduced interest expenses
  • Basis for achieving investment grade profile in medium term
    has been established
     

Langen, 12 July 2017 - DEMIRE Deutsche Mittelstand Real Estate AG (German Securities Identification Number (WKN A0XFSF / ISIN DE000A0XFSF0) successfully placed a rated, unsecured corporate bond (Senior Notes) with a total nominal amount of EUR 270,000,000 with institutional investors and asset managers today. The notes have a term of five years (until 2022), a non-call period of two years and an interest rate of 2.875% p.a.

The notes are governed by New York law (144A/Reg S) and are expected to be listed on the Luxembourg Stock Exchange (EURo MTF market). The net proceeds from the issue will be used for the partial refinancing of existing liabilities of DEMIRE Deutsche Mittelstand Real Estate AG and certain of its subsidiaries.

The internationally recognized rating agencies Standard & Poor's and Moody's rated the notes BB+ and Ba2, respectively. The rating from Standard & Poor's is thus one level below the investment grade rating. The two rating agencies' company ratings for DEMIRE are BB and Ba2, respectively, with a stable outlook in each case. The transaction is being supported by Deutsche Bank and Morgan Stanley as joint global coordinators and joint bookrunners, Berenberg as a joint bookrunner, and equinet Bank and IKB Deutsche Industriebank as co-lead managers.

The detailed ratings are available on the Standard & Poor's website at www.standardandpoors.com, on the Moody's website at www.moodys.com and on DEMIRE's website at www.demire.ag/en/investor-relations/bonds/rating.

First step towards implementation of "DEMIRE 2.0"

With the successful placement of the corporate bond, DEMIRE has taken the first step towards implementing its "DEMIRE 2.0" programme, which was announced during the Annual General Meeting in late June 2017, within a very short space of time. DEMIRE is hereby aiming to further optimize its financing mix, reduce its average financing costs and achieve an investment grade rating in the medium term, among other goals. DEMIRE plans to use the net proceeds from the issue of the corporate bond to refinance certain liabilities due up until 2019. The liabilities to be repaid currently bear interest at an average rate of 5.2% and have an annual repayment rate of around 1.3%. As a result of the refinancing, DEMIRE expects its annual cash flow to increase by approximately EUR 9.0 million p.a. due to lower interest and repayment expenses. After liabilities secured with land charges have been repaid, real estate assets of approximately EUR 216 million will be unsecured and free, corresponding to approximately 22% of the DEMIRE Group's total real estate assets. DEMIRE plans to gradually further increase the share of real estate assets that are unsecured.

Once the refinancing of existing liabilities is completed, average financing costs will also decrease from 4.1% to 3.2% p.a. The interest expenses saved result in a significant annual increase in funds from operations (FFO I, after taxes, before minority interests) of approximately EUR 5.6 million.

Ralf Kind, CFO of the DEMIRE Group, comments: "The early refinancing of our financial liabilities due up until 2019 with the rated, unsecured corporate bond is a strategic milestone on our path to an investment grade rating. We can now repay a substantial portion of the expensive and complex financing of the past and have successfully positioned our company on the international capital market. This is a key prerequisite for our growth strategy. In addition, we are increasing our FFO and cash flow due to a considerably lower interest rate and as a result of saving on repayments on the loans to be refinanced."

Markus Drews, CEO of the DEMIRE Group, adds: "The successful placement of the corporate bond within a very short space of time confirms our targets and the sustainable implementation of our strategic programme "DEMIRE 2.0". The very positive ratings underscore the strong appeal and stability of our business model, which we intend to expand further to more than EUR 2 billion with an attractive commercial property portfolio in secondary locations in Germany. Combined with the future measures under DEMIRE 2.0, this will further enhance the appeal and raise the profile of our share."

Disclaimer

This document and the information contained herein are for information purposes only and do not constitute a prospectus or an offer to sell, or a solicitation of an offer to buy, any securities in the United States. Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or pursuant to an available exemption from registration under the Securities Act.

This document does not constitute an offer document or an offer of securities to the public in the U.K. to which section 85 of the Financial Services and Markets Act 2000 of the U.K. applies and should not be considered as a recommendation that any person should subscribe for or purchase any securities as part of the Offer. This document is being communicated only to (i) persons who are outside the U.K.; (ii) persons who have professional experience in matters relating to investments falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the "Order") or (iii) high net worth companies, unincorporated associations and other bodies who fall within article 49(2)(a) to (d) of the Order (all such persons together being referred to as "Relevant Persons"). Any person who is not a Relevant Person must not act or rely on this communication or any of its contents. Any investment or investment activity to which this communication relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. This document should not be published, reproduced, distributed or otherwise made available, in whole or in part, to any other person without the prior consent of the Company.

This document contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information of the management of the Company. Forward-looking statements should not be construed as a promise of future results and developments and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those described in such statements due to, among other things, changes in the general economic and competitive environment, risks associated with capital markets, currency exchange rate fluctuations, changes in international and national laws and regulations, in particular with respect to tax laws and regulations, affecting the Company, and other factors. The Company does not assume any obligations to update any forward-looking statements.

Contact
DEMIRE Deutsche Mittelstand Real Estate AG
Robert-Bosch-Straße 11
D-63225 Langen
Phone: +49 (0) 6103 - 372 49 - 0
Fax: +49 (0) 6103 - 372 49 - 11
ir@demire.ag
www.demire.ag
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About DEMIRE Deutsche Mittelstand Real Estate AG

DEMIRE - First in Secondary Locations

DEMIRE Deutsche Mittelstand Real Estate AG has commercial real estate holdings in mid-sized cities and up-and-coming locations bordering German metropolitan areas. As of March 31, 2017, DEMIRE held real estate with a value of EUR 994.1 million. As of the reporting date, annualised contractual rents had been firmly agreed upon in the amount of EUR 72.1 million for an average term of 5.3 years.

DEMIRE aims to keep its corporate organisation as lean as possible, but it still believes that economies of scale and portfolio optimisation are best achieved with its own in-house asset, property and facility management. This safeguards the company's business expertise and, at least equally important, allows it to maintain direct contact with the customer.