UBS freezes German real estate fund amid liquidity crunch
According to Reuters, UBS has suspended redemptions for its Germany-based Euroinvest real estate fund for up to 36 months, citing insufficient liquidity to meet withdrawal requests. The fund held 407 million euros in assets as of the end of February.
The fund's decline is attributed to two distinct factors. The first is idiosyncratic: a vacancy rate of 23.2% last August, compared to a typical level below 10%, within a portfolio concentrated on office space in France, Spain, Luxembourg, and Italy. The second is systemic: German open-ended real estate funds are grappling with a combination of high interest rates, rising construction costs, and sluggish demand for office space. This environment pushed net redemptions to 7.6 billion euros last year, according to Bundesbank data reported by Bloomberg.
Other funds have taken similar measures this year, including Fokus Wohnen Deutschland and Wertgrund WohnSelect D.
The decision is part of a broader trend of withdrawal restrictions also affecting private credit in the United States, where Ares, Apollo Global, and BlackRock's HPS Corporate Lending fund have already capped redemptions at 5%.
UBS Group AG is a holding company that operates in four areas:
- wealth management (49.4% of revenues);
- investment banking (22.1%);
- retail and corporate banking (18.8%);
- asset management (6.4%);
- other (3.3%).
At the end of 2024, the group had USD 745.8 billion in current deposits and USD 580 billion in current loans.
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