UBS Realty Expands Business with New Real Estate Fund

UBS Realty has recently made a significant move by launching a new real estate fund, marking a major expansion of their business.

This fund will allow UBS Realty to invest in a broader range of real estate assets, including commercial and residential properties.

The new fund is expected to provide investors with a diversified portfolio of real estate investments, reducing risk and increasing potential returns.

By expanding into new areas of the real estate market, UBS Realty is positioning itself for long-term growth and increased competitiveness.

UBS has a significant real estate and private markets business, which it's building on with a global scale and leading core capabilities.

The bank's real estate and private markets division is one of five business areas, working holistically across the bank to serve clients as one firm.

UBS has $213bn of assets invested in alternatives, such as hedge fund businesses, real estate, and private markets, and was the second-largest asset manager of sustainable investing assets for 2023.

The bank has also sold $8bn of senior secured loans to alternative asset manager Apollo as part of its efforts to sell off non-core assets from its takeover of Credit Suisse last year.

In contrast, UBS has decided to liquidate its $2 billion Credit Suisse Real Estate Fund International due to the challenges in the commercial office market, including high interest rates and reduced demand for traditional office spaces.

UBS Realty Investors has a significant presence in the private fund industry, ranking 104 out of 6900 private fund companies.

The firm's assets under management (AUM) are substantial, totaling $3.6 billion.

All of the company's assets are managed in discretionary accounts, indicating a high level of client trust and satisfaction.

UBS Realty Investors has experienced impressive growth, with its AUM increasing by 104% since the beginning of its operation.

The company's assets are exclusively managed for domestic clients, with no foreign clients on its books.

UBS has committed to expanding its real estate and private markets business, a key area of focus for the bank.

The bank's real estate and private markets division is one of five business areas, working holistically across the bank to serve clients.

UBS aims to build on its global scale and core capabilities in real estate and private markets.

The bank continues to develop new products, including those focused on sustainable investing and specialized themes like cold storage and energy storage.

UBS has a strong presence in sustainable investing, ranking as the second-largest asset manager of sustainable investing assets for 2023.

The bank has $213bn invested in alternatives, such as hedge funds, real estate, and private markets.

UBS is also expanding its multi-manager capabilities across real estate, infrastructure, and private equity.

The bank's collaboration between business divisions is critical to its strategy and a source of competitive advantage.

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UBS Group has announced plans to liquidate $2 billion of properties in its Credit Suisse Real Estate Fund International, including 12 office properties across the United States and Canada.

The fund's office-heavy portfolio has been hit hard by the rise of remote and hybrid work models, which has dramatically reduced demand for traditional office spaces. U.S. office vacancy rates reached a record 20.1% in July, up from 19.8% the previous quarter, according to Moody's.

High interest rates and fears of a possible recession are also contributing to the commercial real estate sector's challenges. Over $1 trillion in troubled real estate loans are expected to accumulate in the U.S. by the end of this year.

The fund's valuation decreased 12% between December 31, 2023, and June 30, 2024, reflecting the broader economic challenges facing the commercial office market. This trend is further shown in the rising number of investor requests to withdraw their money.

Several regional banks are increasing their provisions for credit losses to mitigate the risks associated with troubled CRE loans and an investment environment filled with high-interest rates. This decision to liquidate the fund's assets coincides with broader office space trends in the commercial real estate sector, which has been under significant pressure due to shifts in work culture.