UBS Initiates Orderly Liquidation of $2 Billion Credit Suisse Real Estate Fund

UBS has announced that it is initiating an “orderly liquidation” process for a real estate fund previously managed by its former competitor, Credit Suisse.

The fund, known as the Credit Suisse Real Estate Fund International, had assets totaling 1.88 billion Swiss francs ($2.17 billion) as of June 2023. This decision comes after significant declines in the fund’s value throughout 2023.

Background on the Fund and UBS Acquisition:

UBS acquired Credit Suisse in 2023 following a series of financial difficulties that led to Credit Suisse’s collapse.

The Credit Suisse Real Estate Fund International has faced considerable challenges, including a marked decrease in value and substantial redemptions. By the end of 2023, 36% of the fund’s total units had been redeemed.

Challenges in the Liquidation Process:

UBS stated that efforts to sell assets over the past 18 months to meet redemption demands have revealed the limited liquidity in the real estate markets.

The bank noted that fulfilling the remaining redemptions would necessitate selling the portfolio’s most liquid assets at a time when the real estate market was unfavorable.

This approach could negatively affect the remaining investors, reduce the attractiveness of the remaining assets, and potentially lead to further redemptions. UBS Fund Management (Switzerland) has indicated that these challenges are central to pursuing an orderly liquidation.