UBS Exiting Mitsubishi Venture in Japan

Switzerland’s largest bank is selling its joint real estate venture with Mitsubishi to an investment firm.

UBS announced it is exiting a 20-year joint real estate venture in Japan, agreeing with its partner Mitsubishi to sell its Mitsubishi Corp.-UBS Realty Inc. (MC-USBR) to investment firm KKR, UBS said in a statement released Thursday.

UBS said it expects to book a gain in asset management and a CET1 capital increase of $900 million upon finalization of the transaction which is expected to be in April of this year.

The joint venture between Mitsubishi and UBS Asset Management Real Estate & Private Markets was formed in 2000 and has since grown into one of the largest real estate asset management companies in Japan.

MC-UBSR manages two Tokyo Stock Exchange-listed J-REITs, the Japan Metropolitan Fund Investment Corporation (JMF) and the Industrial & Infrastructure Fund Investment Corporation (IIF), with assets under management of around $15 billion.

The sale does not mean that UBS is exiting the Japanese real estate market, UBS Asset Management President Suni Harford said.

The Japanese market remains a cornerstone of our Real Estate & Private Markets business in Asia Pacific, and we remain focused on serving the needs of our clients and capturing growth opportunities in this strategically important region. Through our rapidly growing real estate investment unit, UBS Japan Advisors, we will continue to advise our clients on Japanese property investments, Harford said.

UBS’s  said that its asset and wealth management divisions along investment banking businesses operating in Japan are not affected by the sale