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UBS to Sell $5B Worth of Assets from Troubled UBS Trumbull Commingled Fund

San Francisco

By Jon Peterson

UBS is in the process of setting up a sale of roughly $5 billion of assets that are currently held in the real estate manager’s UBS Trumbull Property Fund, according to a document from the Marin County Employees’ Retirement Association.

Some of the assets that are earmarked for the portfolio sale could be in either the San Francisco Bay Area or Seattle markets. According to an email from the pension fund, the Trumbull Fund has around 38 percent of its portfolio located in the western region of the country as of the end of 2019. The remaining allocations of the portfolio are split up between 33 percent in the east, 16 percent in the south and 13 percent in the midwest.

UBS did not respond to an email for this story.

The assets up for sale will total 45 properties and are considered to be non-strategic assets. The management of this part of the portfolio and its sale will be overseen by Mario Maturo, who currently serves as a portfolio manager for the Trumbull fund. The goal will be to sell the assets as soon as possible, but it could take the manager two to three years for this to happen, as stated in a pension fund board meeting document.

UBS is making plans to sell that portion of the portfolio as a way to satisfy a large exit queue of investors who are looking to withdraw their investment from the fund. The amount of the exit queue was at $7.2 billion at the start of April. This included 194 investors who wanted to take 100 percent of their capital out of the fund totaling $6.4 billion, and 45 investors who wanted to partially redeem some capital out of the fund totaling $742.2 million.

The fund’s performance in 2019 was not in line with what the rest of the industry was achieving. In the fourth quarter of 2019, UBS Trumbull Property Fund had a return of negative 0.15 percent, and for the year it was down 2.88 percent, according to the pension fund document. At the same time, the NFI-ODCE Index showed a positive gain of 1.3 percent for the fourth quarter of 2019, and it was 5.18 percent for the full year.

UBS was not paying out any redemptions at the end of the first quarter, and payments will likely be very small for the second quarter. The estimated payouts for the entire 2020 year by UBS are projected to be $1.5 billion.

UBS will be holding on to $14 billion of the existing assets in the Trumbull fund. These 294 properties are considered to be long-term strategic assets. Paul Canning, a senior portfolio manager for UBS, will continue to manage these assets. The fund manager has a history of mostly investing in a mixture of office, apartments, retail and industrial properties.