Investors in international real estate funds are pulling back

by Steve Randall13 Feb 2020

Investing in foreign real estate can be a lucrative venture but for one sector of the market there are growing concerns.

With the ecommerce industry growing fast and changing consumer shopping behaviour, the traditional retail sector is under pressure and this is being keenly felt in shopping centres.

Bloomberg reports that real estate funds in the United States and Europe are struggling to meet a surge in investor demand for withdrawals.

The report highlights global wealth firm UBS which attracted $25 billion to its flagship real estate fund and owns several malls in the US. But investors are having to wait to get $7 billion in cash back according to an unnamed source.

If the Trumbull Property Fund decides to sell malls to release the cash, it would be doing so at a time when buyers are hard to come by.

“If you’re the seller, you have to find someone who believes in the long-term value of those assets and can reinvest in them,” said Lindsay Dutch, an analyst at Bloomberg Intelligence.

According to a source, UBS has offered to cut fees for those that stay in the fund.

“Large investors basically invested in these funds because they were conservative,” said Michael Hirschfeld, a retail broker at Jones Lang LaSalle, adding that now the general attitude is “OK, let’s reduce exposure to retail.”

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