The Norwegian wealth fund, which has made headlines in recent weeks after reporting a profit of $ 111 billion in the first half of 2021, intends to increase its investment in real estate, the Bloomberg news agency reported this week. , Are made in the capital market (stocks and bonds), but it also invests in real estate, whether through stock exchanges or through non.listed investments, such as mutual funds and joint ventures.
According to reports, the significance of the increase in investment in the field symbolizes the expectation of a recovery in the commercial real estate sector after the corona plague, especially in the US. “We still see less real estate purchasing activity in the area of indirect investments in our portfolio,” the fund’s real estate director, Maya Holstad, said in an interview with Bloomberg, “but we have some offers in the pipeline, and we anticipate a larger expense.” Experts noted that this is a change in trend on the part of the world’s largest wealth fund, “which has made a U.turn, and is now looking for real estate investments around the world.“
As part of the increase in investment, the fund last week invested about $ 400 million for a 47.5% holding in a joint venture with American insurance company MetLife to purchase the One Memorial Drive office complex in Cambridge, Massachusetts. “This is a great example of our investment in the private market,” the director of real estate investment in the United States said in an interview with the News Agency. He said this is expected to be the biggest deal this year, “at least until the next few weeks”.
The Norwegian Wealth Fund, or officially named Norges Bank Investment Management, has invested about $ 32 billion in the last decade in commercial real estate, logistics centers and offices. The return on investment so far this year ranges from 4% to 12%, depending on the type of investment. Through the capital market or in private investments). In total, real estate investments accounted for about 4.2% of the fund’s investments in the last six months, compared to a target of 5%. The two executives said in an interview that the fund operates a “selective policy” regarding proposals that flow into it.
“With the growth of the fund, we will allocate more and more capital to the field in the coming years,” Holsted promised, “We are going to be a significant player in the real estate field.“
The fund was established by the Scandinavian state in the 1990s with the aim of preserving part of the oil and gas profits, which are responsible for about a quarter of the state’s revenue, for future generations. A special investment committee is responsible for the fund’s investment mix: equities, bonds and real estate. Globally, the fund holds shares in about 9,500 companies.
Since 1996, when the first caravan was deposited in the fund, the government has been limited – by practice only – in the use of funds, and it can receive from the state budget only part of the annual return on the mountain of money deposited in it. In the past, the guaranteed return to the government in favor of the budget was 4%, and about two years ago it was reduced by the center.right government that controls Norway to only 3%.