(Bloomberg) -- Credit Suisse Group AG’s funds business cut payouts on a 3.25 billion Swiss franc ($3.5 billion) real estate pool and said some clients were seeking to pull their cash after valuations were hit by rising interest rates.

The Credit Suisse Real Estate Fund International’s net asset value is expected to drop as much as 10%, according to a statement Friday. That will likely limit distributions to investors to as low as 35 francs a share, down from 40 francs a share, it said. Investors holding about 13.3% of the fund’s shares have asked for their money back. 

Rising interest rates are hitting real estate values globally, as the cheap money era in which real asset values soared comes to an end. While publicly traded landlords saw their share prices rapidly adjust to rising borrowing costs, private market valuations have been slower to update, and some investors in real estate funds have sought to redeem their cash before writedowns feed through. 

“Global valuations were negatively impacted by rising interest rates for CS REF International in its key markets of the United States, the United Kingdom, and Germany,” Credit Suisse said in the statement. “Despite healthy rental results at attractive conditions, these were insufficient to offset the negative effects of rising interest rates.”

The fund’s top holdings include properties in Vancouver, Austin and Boston, according to a fact sheet. 

Credit Suisse isn’t the only firm seeing its property holdings suffer in a down market. In January, BlackRock Inc. suspended withdrawal requests on a £3.5 billion UK property fund, and Blackstone Inc’s $69 billion real estate trust hit a monthly redemption limit. 

Yet Credit Suisse’s fund has been struggling for a while and has underperformed all of its peers over the past five years and is down almost 5% in that period, according to data compiled by Bloomberg.

The real estate fund’s woes aren’t directly related to the broader turmoil at Credit Suisse, which is undergoing an extensive overhaul that will involve spinning out parts of the investment bank. The lender has raised $4 billion in capital, yet investor confidence is yet to return and the bank’s share price hit a record low this week. 

Read More:

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Credit Suisse Shares Hit Record Low on Outflow Claims Probe (3)

--With assistance from Steven Arons.

(Updates with context in final paragraph)

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