A week ago, it would have seemed inconceivable, but UBS is taking over fellow Swiss banking giant, Credit Suisse, after a weekend of frantic talks designed to limit the risk of a systemic banking crisis.
Real estate investment houses will be analysing events on Monday from the perspective of what this means to overall business confidence, bank lending, and ultimately the volume of transactions for the rest of the year at a time when confidence is already fragile.
But there is also the competitive landscape angle as UBS seems set to become an enlarged global real estate player.
According to PropertyEU’s Top 100 Ranking published last year, UBS is the 10th largest owner of European real estate in the world. A combination with Credit Suisse could see it shoot further still up the pecking order.
UBS’ real estate platform is housed within UBS Asset Management and has around €44.1 bn of European RE AUM.
Credit Suisse, meanwhile, calls itself the largest real estate investment manager in Switzerland and among the top 15 largest worldwide with global RE AUM of around CHF 40 bn (€40.5 bn) as of March 2022.
Counting all global real estate, its Index Solutions and Brazilian real estate business, the figure for RE AUM is closer to €59 bn.
Head of UBS global real estate and private markets is Joseph Azelby, who joined the firm in 2019 and was formerly of JP Morgan.
Credit Suisse Asset Management’s (CSAM) head of global real estate is Rob Rackind, who only joined the company last year having been at EQT Real Estate.
As well as contemplating what impact the forced takeover might have on the wider real estate investing community, some firms will be contacting Credit Suisse to ask about the status of current joint ventures or transactions. For example, in 2021 MARK announced a €1 bn JV with Credit Suisse to acquire and manage small-scale city centre residential properties.
In another example, Qatar Investment Authority has a JV company with Credit Suisse, Aventicum Capital Management, which has a boutique real estate investment platform.
UBS is a larger bank than Credit Suisse. A rush of customer withdrawals at Credit Suisse last week followed in the wake of three US bank failures – including SVB in California. That led to Switzerland’s central bank providing a €54 bn credit line to Credit Suisse, but that wasn't enough and so it asked UBS to step in and buy its rival. The purchase price is $3.25 bn with a further €100 bn made available to both banks.
Switzerland’s central bank said the liquidity outflows on Friday and market volatility showed that ‘it was no longer possible to restore the necessary confidence and that the swift and stabilising solution was absolutely necessary. This solution is the takeover of Credit Suisse by UBS.’
