Credit Suisse Fund Lost 22% for Investors in Global Real Estate Shock

The worldwide real estate market crisis battered Credit Suisse's flagship real estate fund last year, causing investors to suffer heavy losses.

This past Wednesday, Credit Suisse released a statement explaining that their Real Estate Fund International was "unable to escape the developments on the global property markets

and consequently lost 22% of its investment capital in 2023. It reported a 31% decline in property value, to 2.52 billion Swiss francs ($2.83 billion), due to devaluations and sales.

Changing consumer and employment trends, along with increasing interest rates, have disrupted commercial real estate in the US and Europe, leading to a decrease in the office-focused fund. Some real estate investors have run out of money due to rising funding costs, which has forced them to sell their holdings at severe discounts.

Developers of real estate have been carried away by the crisis, which has hit banks hard because they have to put more money aside to protect themselves from credit defaults and have a large exposure to commercial real estate. Also impacted are asset management solutions that invest in this asset type.

Lost in the Wake of Shocks, Europe's Real Estate Investment Trusts Are in Danger from Private Markets

In 2023, the real estate portfolio of the Credit Suisse fund was reported to have decreased by seven properties, reaching 47. From a future risk and return standpoint, the firm only sold assets that no longer fit the core of the portfolio.

Dec 31 net asset value per unit was 727.16 Swiss francs ($816.2), down from 961.39 a year ago, while distribution per unit was 27 francs, down from 35.

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