UBS Asset Management wins €400m Zurich mandate

The Swiss investment bank plans to invest the capital primarily in Italy and secondarily in the wider Eurozone.

UBS Asset Management has emerged as the winner for a €400 million core investment mandate by Zurich Insurance, the Swiss investment bank said Wednesday.

The mandate comes as Zurich plans to grow its real estate assets by $1 billion this year to increase its exposure to the asset class. PERE reported in March that the insurer was also issuing a $200 million Asian market mandate.

The mandate has been called UBS (I) Zurich Italy – Real Estate Fund (UBS-ZIREF) and it carries a 15-year duration. UBS plans to invest capital from the fund primarily in Italy and secondarily across the Eurozone in office, retail and industrial assets with a view to capturing stable rental returns, according to the firm’s Wednesday statement.

UBS, which manages about €67.3 billion in real estate worldwide, established an Italian platform last year and the UBS-ZIREF fund is its first Italy-focused mandate to be publically announced. Zurich chose the southern country for diversification purposes and for what it said was its good mid-term growth prospects. PERE understands that Italy will be the primary market for the fund and investments elsewhere in Europe will be selected on a case-by-case basis with an eye toward diversification.

“The establishment of this fund underlines the trust we have in the Italian real estate market and in the Eurozone,” said Riccardo Cobianchi, Zurich’s head of southern Europe real estate, and Matteo Riccardi, Zurich’s chief investment officer in Italy, in the Wednesday statement. “We aim to invest on core assets in major cities by selecting prime properties.”

At this year’s MIPIM conference in Cannes, Zurich’s head of group real estate, Cornel Widmer told PERE that the insurer’s real estate strategy for the year included targeting multifamily residential, retail and logistics assets. He said he expected US and European markets to figure prominently in its transactional activity and, to a lesser extent, investments in developed markets in Asia would also form part of the strategy.

“We think the US is two years ahead of Europe. There, we will be very selective with our strategies and we will have a particular focus on 24-hour cities on the West and East Coasts,” Widmer said.