UBS to Liquidate Struggling Real Estate Fund Amid Market Turmoil
UBS Group AG is liquidating a flagship real estate fund due to high redemption requests, exposing the turmoil in commercial real estate markets.
Ubs Group AgCredit SuisseReal Estate FundLiquidationCommercial Real Estate MarketsReal Estate NewsAug 15, 2024
The fund, which was inherited in the takeover of Credit Suisse, was highly exposed to some of the weakest sectors, with over 80% of its 1.9 billion Swiss francs ($2.2 billion) in assets invested in office properties. The United States and Germany were its biggest markets, according to UBS.
The Swiss bank decided to liquidate the fund because outstanding redemption requests meant that it would have to sell the most liquid assets below their long-term intrinsic values. This would have weakened the fund's portfolio and resulted in significant losses for investors.
The real estate fund market has been experiencing a surge in redemption requests, forcing fund managers to sell their best assets at cut-rate prices. This has resulted in a decline in the market value of the fund's assets, with CS Real Estate Fund International losing 12% of its value in the first six months of the year.
In 2023, the fund had already lost 31% of its value compared to the prior year. The liquidation of the fund is a significant blow to UBS, which had hoped to revamp the fund's portfolio and improve its performance.
Information
UBS Group AG is a Swiss multinational investment bank and financial services company. It was formed in 1998 through the merger of Union Bank of Switzerland and Swiss Bank Corporation.
Credit Suisse was a Swiss multinational investment bank and financial services company that was founded in 1856. It was acquired by UBS Group AG in 2023.
UBS Group AG is a leading global wealth manager, with a presence in over 50 countries. It provides a range of financial services, including investment banking, asset management, and wealth management.
Credit Suisse was a leading global investment bank and financial services company, with a presence in over 50 countries. It provided a range of financial services, including investment banking, asset management, and wealth management.
Frequently Asked Questions
Why is UBS liquidating the real estate fund?
UBS is liquidating the fund due to high redemption requests from investors, which would have forced the bank to sell the most liquid assets below their long-term intrinsic values.
How much was the fund worth?
The fund had 1.9 billion Swiss francs ($2.2 billion) in assets.
What was the fund's biggest market?
The United States and Germany were the fund's biggest markets.
How much did the fund lose in value in the first six months of the year?
The fund lost 12% of its value in the first six months of the year.
How much did the fund lose in value in 2023 compared to the prior year?
The fund lost 31% of its value in 2023 compared to the prior year.
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