Credit Suisse cuts property fund payouts as withdrawals mount
CREDIT Suisse Group cut payouts on a 3.25 billion Swiss franc (S$4.7 billion) real estate fund, as clients sought to pull their cash after valuations were hit by rising interest rates.
The Credit Suisse Real Estate Fund (CS REF) International’s net asset value is expected to drop as much as 10 per cent, according to a statement on Friday (Feb 24). That will likely limit distributions to investors to as low as 35 francs a share, down from 40 francs a share, it said. Investors holding about 13.3 per cent of the fund’s shares have asked for their money back.
Rising interest rates are hitting real estate values globally, as the cheap money era in which real asset values soared comes to an end. While publicly traded landlords saw their share prices rapidly adjust to rising borrowing costs, private market valuations have been slower to update, and some investors in real estate funds have sought to redeem their cash before writedowns feed through.
“Global valuations were negatively impacted by rising interest rates for CS REF International in its key markets of the United States, the United Kingdom, and Germany,” Credit Suisse said in the statement. “Despite healthy rental results at attractive conditions, these were insufficient to offset the negative effects of rising interest rates.”
The fund’s top holdings include properties in Vancouver, Austin and Boston, according to a fact sheet.
Credit Suisse isn’t the only firm seeing its property holdings suffer in a down market. In January, BlackRock suspended withdrawal requests on a £3.5 billion UK property fund, and Blackstone Inc’s US$69 billion real estate trust hit a monthly redemption limit.
A NEWSLETTER FOR YOU
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Yet Credit Suisse’s fund has been struggling for a while and has underperformed all of its peers over the past five years and is down almost 5 per cent in that period, according to data compiled by Bloomberg. BLOOMBERG
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Property
Abu Dhabi builder plans US$6.8 billion luxury housing project
JTC to sell hospitality project being built in Punggol Digital District
Mapletree Logistics Trust posts 2.5% drop in Q4 DPU; manager warns of further headwinds
Abu Dhabi developer Aldar posts 88% in Q1 leap
Without a game changer, Sentosa Cove condos will continue underperforming
Church to tackle US housing crisis