UBS, the global bank with $65 billion of real estate assets around the world, has received nearly £200 million (€234 million; $308 million) of fresh investment for its UK flagship fund, it has revealed.
The Swiss bank has been struggling with its £682 million open-ended Triton Property Fund, with a large redemption queue and a liquidation plan blighting the book of its UK real estate investment management business. However, with new investment coming this week from three UK pension funds and the recent cancellation of a significant number of redemption requests, the bank can scrap plans to liquidate the fund, although it will continue to sell 'non-core' assets including shopping centres, the bank said. With that sales process ongoing, Triton could even be in a position to begin making fresh acquisitions once receipts are in.
The UBS Triton Property Fund is one of the longest established open-ended vehicles in the UK, having been launched in 1994, and is the best known UBS real estate fund in the country, but it ran into severe problems.
A spokesman said there was no single reason for the growth in the size of the fund's redemptions. Some were strategic and some were tactical, but the majority of redemptions were in reaction to the growing size of the queue, he noted.
As part of a recovery plan, the bank appointed Howard Meaney to the UBS Global Real Estate team in September to become portfolio manager. He told PERE that the new inflow of capital from UK pensions had changed the dynamics of the fund dramatically.
UBS had faced redemptions for about 80 percent – or £585 million – of the equity from the vehicle, prompting the bank to serve notice of liquidation, which would have become effective this August. At the same time, it told investors they should notify the bank of intended redemptions by April 30. However, UBS said only half of those anticipated redemptions requests materialized by the due date. As such, it has been forced to pay back £200 million, with another £47 million more due to be redeemed, instead of £585 million.
According to a report in Property Week, the bank is in talks to sell one asset, the 250,000-square-foot Quedam Shopping Centre, to London-based opportunistic firm Benson Elliot. However, the fund’s managers are said to reviewing the sale process.