The Real Deal New York

Norway mulls upping sovereign wealth fund’s real estate holdings by $17B

The country’s Finance Ministry proposed raising investment limit to 7 percent
April 05, 2016 02:30PM

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, the world’s largest, plans to increase its real estate holdings by $17 billion, its Finance Ministry said Tuesday.

The country is considering raising the fund’s real estate investment limit to seven percent from five, and much of the activity in the upcoming year could be centered around New York City.

Starting in 2010, the government let the fund invest five percent of its assets in real estate, and it built a $28 billion portfolio of properties in New York, Paris and London.

In December, a proposal was floated to expand the real estate limit to up to 10 percent and expand into infrastructure projects. The Norwegian government rejected investing more in infrastructure, according to Bloomberg.

Norges Bank Investment Management, which oversees the fund, derives its funding from the country’s large oil reserves. Plummeting oil prices and global market turmoil has limited the fund’s growth, which had its worst return last year since 2011. At the end of last year, the $850 billion fund held 3.1 percent in real estate.

Norges paid Trinity Real Estate $1.56 billion for a 44 percent share in a 75-year ownership of the church’s 11-building Hudson Square portfolio. The deal valued 11 of Trinity’s buildings at $3.55 billion. In February 2015, it paid $401.9 million for a 45 percent interest in SJP Properties and Prudential’s 1.1-million-square-foot office tower 11 Times Square.

Norges’ Karsten Kallevig said in January the fund had $6 billion to spend on global real estate investments, but that there were few good opportunities.

According to a TRD analysis of the world’s five largest sovereign wealth funds, Norges’ NYC holdings total at least $4.37 billion. [Bloomberg]Dusica Sue Malesevic