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UBS Focuses on Rebuilding U.S. REIT Practice

05/16/2012 | By Carisa Chappell

UBS Focuses on Rebuilding U.S. REIT Practice
International financial services company UBS is working to rebuild its real estate investment banking franchise following a series of departures in senior management.

Peter Baccile is joining the Zurich-based firm in the newly created role of joint global head of real estate, leisure and lodging within the investment banking division of UBS. He'll manage the real estate, leisure and lodging practice along with Jackson Hsieh, vice chairman of the investment banking group. Baccille was previously a vice chairman with J. P. Morgan. UBS also hired Ken Cohen, formerly with Lehman Brothers, to run its commercial mortgage-backed securities (CMBS) business.

Real estate has long been a significant part of UBS's investment banking arm, Hsieh said in an interview with REIT.com.

"In the past, it's been the third-largest industry sector contributor to the division's revenues," said Hsieh, adding that with the new partnership with Baccile, UBS plans to re-establish the firm's position within the marketplace.

Hsieh said Baccile is already recognized by Wall Street as a leader in real estate investment banking.Both Baccile and Hsieh have provided advice on large real estate transactions within the industry. For example, the two individually advised the board of mall REIT General Growth Properties (NYSE: GGP) through its $37 billion bankruptcy. Each also played a role in the recapitalization and sale of $9.4 billion Centro Properties to The Blackstone Group L.P.

The global co-head model for the real estate, leisure and lodging group was Hsieh's vision in an effort to provide additional banking coverage in the United States and abroad. Hsieh said investor's growing interest in REITs helped prompt the firm to ramp up its activity in the real estate sector.

"Investors are showing lots of interest in REIT securities, particularly U.S. REIT securities," explained Hseih, who noted that the U.S. REIT sector currently boasts strong premiums on valuations relative to net asset value. However, he added that taking initial public offerings of REITs to market still remains challenging.

Hsieh's expects that REIT performance for the remainder of the year will continue to resemble 2011, with select financing and acquisitions.

"Maybe an IPO or two or three, continued sale of non-core assets and maybe a merger or two," he said.