The Real Deal New York

Norges RE boss sees few good investments for $6B fund

Norway’s sovereign wealth fund facing high prices, uncertainty

January 08, 2016 08:40AM

From left: Karsten Kallevig, 1 Hudson Square and 11 Times Square

From left: Karsten Kallevig, 1 Hudson Square and 11 Times Square

Norway’s sovereign wealth fund has $6 billion to spend on global real estate investments, but its head of real estate says there may just not be enough good opportunities out there.

High real estate prices in North America, Europe and Asia, as well as the need to partner with local firms, is slowing the fund’s push into the property market, Karsten Kallevig of Norges Bank Investment Management, which oversees the fund, told the Wall Street Journal.

“In the recent five years, we’ve had returns that we absolutely can’t expect over time,” Kallevig told the paper. “Property markets are highly priced.”

The sovereign wealth fund – which invests the vast majority of its $830 billion asset pool into stocks and bonds – has sought to expand its real estate holdings in recent years. But that drive has slowed due to market conditions, according to Kallevig, who was named to his position last month.

“It’s natural for us to proceed at a slightly slower pace,” he told the Journal. “Our appetite hasn’t been reduced. But times are uncertain.”

Back in November, the fund entered into contract to buy a 44 percent stake in an 11-building Hudson Square portfolio from Trinity Real Estate, paying $1.56 billion.

The Real Deal looked at the impact of sovereign wealth funds on the real estate market in its January issue. In August, The Real Deal took a look at real estate companies that have gobs of cash, but have trouble finding investments with big upsides. [WSJ]Ariel Stulberg