Swiss-based investment bank UBS Group is closing down a major real estate fund acquired from Credit Suisse in 2023.
The decision comes as the commercial real estate market faces significant challenges due to investor withdrawals.
Credit Suisse Real Estate Fund International held 83% of its CHF 1.9 bn (€2 bn) in assets in office properties, primarily in the US, Germany, and Canada. However, it has suffered substantial losses due to declining property values.
With investors demanding their money back, UBS is forced to sell the most liquid assets at discounted prices to meet 2023 redemption requests. The CS Real Estate Fund International suffered a 12% decline in market value during the first six months of the year, adding to the 31% loss incurred in 2023.
Several factors have contributed to the real estate market downturn. The rise of remote work has reduced demand for office space while increasing interest rates have made real estate investments less attractive. As a result, investors are pulling their money out of real estate funds across Europe.
UBS anticipates a lengthy process to liquidate the fund and distribute proceeds to remaining investors due to the sluggish real estate market.
