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UBS forms Aussie JV with $10bn goal

The Zurich-based investment manager has made its first foray into the Aussie real estate market with the tie-up of a joint venture with a domestic developer, to be led by John Fraser and Daniel Grollo.

Zurich-based UBS Global Asset Management, the alternatives investment arm of Swiss bank UBS, has made its first investment in the Australian real estate market with the formation of a joint venture with domestic developer Grocon, according to a joint statement.

The joint venture, UBS Grocon Real Estate, will function as a subsidiary asset management platform under the UBS umbrella. It will be anchored in Grocon’s development pipeline, which currently adds up to about A$2 billion (€1.3 billion; $1.8 billion), with the first right of refusal over the entire pipeline. But the platform also has the option to acquire third party assets in the open market. While Grocon is considered the “originator” of institutional-grade real estate, UBS will add its asset management and capital raising capabilities to the venture. At this point, UBS has not bought any assets from Grocon yet.

“The combined enterprise is about delivering a full-service real estate asset management platform in Australia,” Cooke said. John Fraser, chief executive and chairman at UBS, will chair UBS Grocon RE, while Grocon chief executive Daniel Grollo will act as a non-executive director. The rest of the board will be appointed in the coming months.

“This is an important building block in our global growth strategy,” Thomas Wels, UBS head of global real estate, said in the statement. “More and more of our growth will stem from partnering with best-in-class real estate developers to bring the best investment opportunities to our global client base.”

Cooke told PERE that the joint venture will source, raise and manage its own capital, but will have the benefit of UBS’s global distribution platform. The plan is to raise blind-pool funds in due course, but the platform will also manage segregated accounts.

“Our goal is to be a $10 billion platform inside of five years,” Cooke said. From now on, all UBS real estate investments in Australia will be made through this platform.

At the moment, UBS Grocon’s pipeline primarily consists of residential and office assets. However, Cooke added that he sees the platform eventually investing in all major sectors of real estate in Australia.

With CHF588 billion (€481 billion; $633 billion) assets under management globally, UBS Global Asset Management has about $64 billion invested in real estate specifically. To date, however, only 17 percent of that has been committed to the Asia-Pacific region, according to the firm.