real assets

USAA Sells Industrial Portfolio to Middle East Sovereign Wealth Fund

In April 2014, USAA Real Estate Co., the real estate investment unit of USAA, launched a search to find a buyer for its 14 million square feet of warehouses scattered across the southern region of the United States. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Pension and Wealth Fund Capital Invests in LaSalle Asian Fundraise

LaSalle Investment Management, a subsidiary of Jones Lang LaSalle, announced a US$ 1 billion close for its LaSalle Asia Opportunity Fund IV L.P. and two other separate accounts. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Norway Sovereign Wealth Fund Looking for Real Estate Strategies Professional

As Norway’s Government Pension Fund Global (GPFG) augments activity in direct real estate investments, the need for internal resources is growing. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Qatari Diar to Own Seef Lusail Real Estate Development

Qatar-based Masraf Al Rayan is selling its 50% stake in Seef Lusail Real Estate Development Company to its joint venture partner which is a unit of Qatari Diar. The remaining 1% was sold to Qatari Diar Real Estate Investment Company. Masraf Al Rayan, Qatar’s largest Islamic bank by market value, had owned the development equally with Qatari Diar Infrastructure Company.

Seef Lusail is a 600,000 square meter mixed-use waterfront development.

Qatari Diar is a sovereign wealth enterprise of the Qatar Investment Authority.

Qatar Sovereign Wealth Finalizes Deal in Moscow Real Estate

Gazing North, Qatar’s sovereign wealth fund has been making larger inroads into Russia. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

UPDATE – Deal Canceled – on Meguro Gajoen

UPDATE – July 11, 2014

GIC Private Limited has backed out of buying the Tokyo property due to a dispute between two other groups involving land. Lone Star Funds was close to selling the property to the Singapore sovereign wealth fund.


Singapore sovereign wealth fund, GIC Private Limited, beat out other institutional investors to acquire Meguro Gajoen from Dallas-based Lone Star Funds for around 134 billion JPY (US$ 1.3 billion). Meguro Gajoen is based in central Tokyo and is comprised of an office tower, hotel and banquet hall. The key tenant is Amazon Japan, the Japanese unit of Amazon.com Inc.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Friday SWFI News Roundup, July 11, 2014

Illinois State Board of Investment Terminates William Blair for Bad Performance

The Illinois State Board of Investment terminated a US$ 580 million active U.S. midcap growth equities mandate being managed by Chicago-based William Blair & Co. William R. Atwood, executive director of the pension entity, stated it was due to performance reasons. The fund proceeds were migrated to a Russell midcap Growth index fund, managed by State Street Global Advisors – adding to a total of US$ 1.31 billion. Atwood will keep the assets with State Street Global Advisors and not underwrite another search for a replacement active manager.

Bumi Gives More Equity to the CIC

Bumi Resources, Indonesia’s biggest coal producer by volume, confirmed that it moved a 19% stake in Kaltim Prima Coal to the China Investment Corporation (CIC). This transfer is part of a debt-to-equity deal bartered on October 2013. Bumi owes the CIC US$ 1.99 billion in the form of a principal loan, deferred interest and make-whole costs. The transfer deal has reduced CIC’s exposure to US$ 1.04 billion.

Malaysia Airlines May go Private

The scandal-plagued Malaysia Airlines is facing a major restructure. The disappearance of flight MH370 has affected the airlines financials. Controlled by Khazanah Nasional, the airlines may delist from the exchange. The national carrier of Malaysia is working with CIMB Investment Bank on a restructuring plan.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Wealth Funds Plow Money into Chinese Logistics

sovereign wealth fund center asia

The Norwegian, Singaporean and Chinese sovereign wealth funds are not the only big institutional investors moving capital into logistics properties and warehouses. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Sovereign Funds a Key Driver of Institutional Real Estate Demand

More and more sovereign wealth funds and foreign pension investors are buying up core real estate. Core markets are being saturated with yield-hungry investors, thus lowering cap rates. Public pension funds are looking to regional cities again, targeting high-income producing properties. For example, the Alaska Permanent Fund, through LaSalle Investment Management, bought the Golden Square Shopping Centre in Warrington for £141 million. Investment shifts are not limited to regions, but transitions from core to value-add real estate strategies. In March 2014, the Florida State Board of Administration made the move to allocate up to US$ 600 million to non-core real estate strategies.

Sovereign Wealth Funds Seek Core Real Estate

According to data from the Sovereign Wealth Fund Transaction Database (SWFTD), in the past 24 months, ending the second quarter of 2014, sovereign wealth funds directly invested over US$ 37 billion into institutional real estate. The majority of that capital funneled into tier cities like London, New York, San Francisco and Sydney. For Europe, Asian capital whether from sovereign wealth funds, pensions or high-net worth are pushing asset prices higher in the region.

Sovereign Wealth Funds Seek Core Real Estate

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See Which Sovereign Wealth Fund Invested in a Former Facebook Office

facebook-sovereign-wealth

Sovereign wealth funds and other foreign institutional investors have plowed capital into London, New York and San Francisco core real estate. Analyzing yield options, institutional property investors are reengaging the suburbs, especially areas with a technology-focus such as Austin, Texas and the Bay Area (California). Conveniently located within the Stanford Research Park, 1050 Page Mill Road, a 285,000 square feet office and warehouse complex, was the location of one of Facebook’s core offices. Facebook subleased the property in 2009 from Beckman Coulter, a medical device manufacturer. Facebook outgrew the property and moved itself into a massive office park in Menlo Park.

Created in the 1950s by Stanford University, the Stanford Research Park is experiencing low vacancy rates due to a renewed technology boom. Companies like VMware and Netflix have helped lower vacancy rates on the Peninsula.

Sovereign Wealth Money

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Islamic Development Bank Launches Mega Infrastructure Fund

The IDB Infrastructure Fund II is the largest private equity infrastructure fund aimed at the 57 member countries of the Islamic Development Bank. A core focus of the fund will lie with the larger member countries of Indonesia, Saudi Arabia and Turkey. All infrastructure sectors will be considered, but the infrastructure fund will mostly focus on energy and power, transportation infrastructure and telecommunications.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Alaska Permanent Fund Spends Money on Golden Square Shopping Centre

The Alaska Permanent Fund Corporation (APFC) gave a £250 million mandate to LaSalle Investment Management toward UK properties – seeking properties in the range of £50 million to £150 million. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Qatari Diar Acquires Majority Interest in Barwa Commercial Avenue Co for $2.5 Billion

Doha-based Barwa Real Estate is selling its 95% interest in Barwa Commercial Avenue Co to Qatari Diar, the real estate sovereign wealth enterprise of the Qatar Investment Authority, for US$ 2.5 billion. In June 2013, Barwa announced it was selling a portfolio of assets worth US$ 7.1 billion to Qatari Diar over a series of transactions. Labregah Real Estate Co, a subsidiary of Qatari Diar, will be the holder of the interest in Barwa Commercial Avenue Co.

Future Fund and DEXUS Create Industrial Development JV

DEXUS Property Group, an Australian real estate group, has teamed up with Australia’s Future Fund to create a new partnership (50:50) called the DEXUS Industrial Partnership. The partnership will be seeded with the purchase of Quarrywest at Greystanes, consisting of 25.64 hectares of industrial development in Western Sydney. The land is located on Reconciliation Road and sits opposite of Quarry at Greystanes, an industrial state owned by DEXUS and another partner.

DEXUS has worked with a number of large institutional investors. In 2014, the Canada Pension Plan Investment Board (CPPIB) committed US$ 1.5 billion and invested 50% in joint bid trust called DEXUS Office Trust Australia, which acquired 100% of the units in the Commonwealth Property Office Fund (CPA).

Thames Water Seeks Institutional Investors for Supersewer Project

The United Kingdom is keen on attracting more infrastructure funds, sovereign wealth funds and pensions to invest in developmental infrastructure projects. According to the Sovereign Wealth Fund Transaction Database, the UK was able to attract more than US$ 20 billion in direct sovereign wealth fund investment in 2013. Thames Water, the largest water company in the UK, has attracted sovereign funds like the Abu Dhabi Investment Authority and the China Investment Corporation as company investors. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Hines and Qatari Diar Can Move Forward on Conrad Washington, D.C.

Qatari Diar, the real estate sovereign wealth enterprise of the Qatar Investment Authority (QIA), is one of the organizations behind the development of Conrad Washington, DC. The hotel is part of the massive 10-acre real estate project CityCenterDC. The proposed 370-room luxury hotel will be operated by Hilton Worldwide and be operational by early 2018.

In a Hines press release, Group Chief Executive Officer of Qatari Diar Khaled Mohammed Al Sayed commented, “Conrad Washington, D.C. is Qatari Diar’s second significant investment in the U.S. property market. As we move into the construction of the hotel, we remain committed to the execution of unique international real estate projects that demonstrate Qatari Diar’s deep-rooted belief of upholding quality and sustainability within the global community.”

Qatar-Backed Braeburn Estates Gets the Go Ahead

Canary Wharf Group Plc and Qatari Diar Real Estate Investment Co., a sovereign wealth enterprise of the Qatar Investment Authority (QIA), received permission to begin construction of 877 homes and approximately 75,000 square meters of office space at Royal Dutch Shell Plc’s London headquarters. Their joint venture called Braeburn Estates was supposed to start in 2013 but received some push back on how the development could impact the views of Big Ben and the Houses of Parliament. This is one of central London’s largest property developments.

The 1.45 million square foot development is in London’s Waterloo district, on the banks of the River Thames. The development approval was from Communities Secretary Eric Pickles. The project will take six years to complete.

Australia Draws Food Security Institutional Investors

Bydand Global Agriculture and UBS Global Asset Management are partnering to create an Australian and New Zealand farmland platform, offering institutional investors exposure to the illiquid asset class. The initial focus of the vehicle will target meat and grain sectors, particularly sheep. Bydand Global Agriculture is backed by Michael Gordon, a farm manager and agribusiness banker, who also bought and made public ASX-listed Peppercorn Management Group. Gordon sold Peppercorn, a childcare services company, to ABC Learning Centres.

The Macquarie Pastoral Fund valued at A$ 670 million in 2012, bets on Asia’s appetite for high-quality red meat.

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Singapore Sovereign Wealth Centers on North American Infrastructure

Singapore’s GIC Private Limited is expanding its North American infrastructure team in New York, hoping to add four to five professionals. The infrastructure team is part of GIC’s Special Investments arm. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Nigerian Sovereign Wealth to Work With GuarantCo to Assist Infrastructure Shortfall

Nigeria Sovereign Investment Authority

Uche Orji, CEO of the NSIA

The Nigeria Sovereign Investment Authority (NSIA) has entered into an arrangement to explore the possible creation of a Nigerian Credit Enhancement Facility (NCEF). By partnering with GuarantCo, a local currency development finance fund, the facility would provide credit enhancement for domestic infrastructure projects by improving their credits ratings toward investment grade. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]