UBS (NYSE:UBS) is walking down the road that other troubled financial companies have already gone. The Swiss bank is selling its 49% stake in a Park Avenue tower near the Waldorf-Astoria in New York City, according to the New York Post. Selling parts of real estate holdings to stay afloat is nothing new: Citigroup Inc. (NYSE:AIG) and American International Group Inc. (NYSE:AIG) have recently done it.
It's no secret that UBS is in financial trouble because of its heavy investments in toxic mortgages. While announcing that it would have a big second-quarter loss last week, UBS said it would raise about Sfr3.8 billion ($3.5 billion) by selling additional shares. The company resorted to a capital-raising because it said it expects a big loss in the second quarter. For UBS, the potential sale comes at a bad time because prices for Manhattan commercial real estate have sunk since their peak two years ago. The upside for the property, the Post reports, is that the building is fully leased until 2018.
"It's like buying a bond. It will go for under $700 a square foot, and you'd have a 7-plus cap rate going it," an anonymous dealmaker told the Post. - Gerald Magpily
See New York Post article
See Dealscape: AIG sells headquarters, Transatlantic stake
See CoStar article
