UBS and Credit Suisse: a $160bn real estate management giant in the making?

Most of the focus on Swiss bank UBS’s $3.25 billion acquisition of Credit Suisse will be on the swiftly prepared transaction’s ability to stem a banking crisis.

But there will also be implications for their two real estate investment management businesses, which combined are responsible for more than $160 billion of assets globally.

What the consequences will be for the 500-plus UBS professionals plying their trade for UBS Asset Management’s Real Estate & Private Markets business, or the 170 staff working for Credit Suisse Asset Management’s real estate platform, will be better known once an integration plan has been constructed. According to one source familiar with the matter, that could be four to six months away.

In the meantime, the private real estate market is left imagining an industry behemoth, dominating the Swiss market and competing on the international stage, too. Their combined heft would still significantly trail the world’s biggest landlord Blackstone’s $577 billion of real estate assets, or its rival Brookfield’s $263 billion, but would sit well in the chasing pack.

While the bank merger must still pass regulatory hurdles, there are likely to be governance considerations for the two banks’ real estate businesses, too, which could lead to the disposal of assets in the event conflicts are found.

PERE’s source said this is most likely the case in Switzerland, where Credit Suisse Asset Management is the biggest direct owner of property with approximately $34.5 billion of assets. UBS, meanwhile, includes Switzerland within its broader European holdings, which stood at about $38 billion as of Q4 2022.

There is plenty of common ground internationally too, even though Credit Suisse’s direct holdings are far smaller than those of UBS. Indeed, UBS’s approximately $30 billion of US assets are understood to be three times the size of Credit Suisse’s entire international property footprint.

Within their respective holdings, both manage the majority of their assets via core strategies but also have non-core strategies, listed and multi-manager offerings and are weighted most to Western markets.

PERE’s source said Credit Suisse Asset Management staff are yet to hear what happens next, and, as such, it will be a case of business as usual for now. He said until the deal closes at the end of the year, the two bank platforms remain competitors.