Norway’s US$890b wealth fund forms new real estate group

Yngve Slyngstad, CEO of Norges Bank Investment Management, poses for a portrait at his office in London, June 25, 2014. — Reuters pic
Yngve Slyngstad, CEO of Norges Bank Investment Management, poses for a portrait at his office in London, June 25, 2014. — Reuters pic

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OSLO, July 6 — Norway’s US$890 billion (RM2.8 trillion) sovereign wealth fund, the world’s biggest, is seeking top executives for a new real estate group that will invest almost US$10 billion (RM32 billion) annually in properties over the next three years.

The fund, based in Oslo, is looking to hire new chief risk, operating and administrative officers for real estate, according to job postings on its website and in newspapers.

The new executives will have “key roles in implementing a new organisational structure, and further develop our ability to invest and manage real estate assets,” the fund said.

The group is currently overseen by real estate Chief Investment Officer Karsten Kallevig, and part of the broader risk structure of the fund, headed by Chief Executive Officer Yngve Slyngstad. The fund first got approval to invest in properties in 2010 and said last month it will invest 1 per cent of its assets in real estate over the next three years as it seeks to reach its 5 per cent target.

Thomas Sevang, a spokesman, said the real estate group will remain part of the fund and not operated as a separate entity. As part of an expansion of the group it’s natural to “staff up on management,” he said by phone today.

In a strategy document released June 24 the fund revealed it was boosting its staff by about 60 per cent over the next three years to tackle increased investments in real estate and said it’s preparing for more investments in assets “with income streams that grow in line with the global economy.”

Hiring spree

The number of employees will grow to about 600 from 370, mostly outside Norway, including 200 for real estate, the fund said last month.

The investor owns 1.3 per cent of the world’s stocks and is struggling to meet a real return target of 4 per cent. Central bank Governor Oeystein Olsen, who oversees the fund, has argued it needs to expand into new assets and raise the amount of stocks it holds to 70 per cent of its portfolio to raise returns.

The government of western Europe’s biggest oil producer has set limits for the fund to hold 60 per cent in stocks, 35 per cent in bonds and 5 per cent in real estate. Since the establishment of Norges Bank Investment Management in 1998, the fund has a real annual return of 3.6 per cent and a nominal return of 5.7 per cent. Measured in dollars, it has generated a 6.7 per cent return.

It has so far bought real estate in places such as Times Square, the Champs Elysees and London’s Regent Street. The fund has a strategy to focus on 10 to 15 cities globally and its efforts to enter Asia are about to intensify, Kallevig said in an interview in May.

“There should be a significant increase in pace just based on that,” he said. — Bloomberg

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