Real Estate

Norway’s SWF May Purchase Interests in Two U.S. Buildings Worth $915 Million

Norges Bank Investment Management (NBIM), which manages Norway’s Government Pension Fund Global (GPFG), is in discussions to acquire interests in two U.S. office buildings worth US$ 915 million. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

CPPIB Invests in Parking Garages in Belgium and Germany

car cppib

The Canada Pension Plan Investment Board (CPPIB), through CPP Investment Board European Holdings S.àr.l, has signed an agreement to invest approximately €376 million for a 39% stake in Interparking Group S.A./NV. This deal was announced on July 18, 2014. Brussels-based Interparking is one of Europe’s biggest car parking management companies. Founded in 1958, Interparking has a massive portfolio of 657 car parks spread among 350 cities. However, most of the property assets are in Belgium and Germany. Increasingly, long-term public investors are making bids on real assets that offer stable cash flows.

The CPPIB is buying the stake from AG Real Estate, part of AG Insurance. AG Real Estate is the largest real estate group in Belgium with a diversified portfolio approaching a valuation of €6 billion. The future ownership model for Interparking is: AG Real Estate at 51%, CPPIB at 39% and PARKIMO at 10% ownership.

“We are pleased to make our first investment in the European car parking sector through this excellent opportunity to invest in a first-class car park platform alongside AG Real Estate and PARKIMO,” said André Bourbonnais, Senior Vice-President, Head of Private Investments, CPPIB in a press release. “Interparking is a good fit with our infrastructure program because of the relatively stable, predictable cash flows available through its geographically diversified portfolio of high quality car parks, and this aligns well with CPPIB’s exceptional long-term investment horizon.”

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. ]

Bidders for South Korea’s Parnas Hotel Line Up

Gangnam district in SeoulInstitutional investors are bidding for a majority stake in South Korea’s Parnas Hotel Co Ltd. [ 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. ]

CalPERS and CalSTRS Post Annual Returns Above 18%

The California Public Employees’ Retirement System (CalPERS) returned 18.42% for the fiscal year that ended on June 30th. CalPERS defeated its custom benchmark of 17.98% and surpassed last fiscal year’s return of 13.2%. The private equity portfolio of CalPERS generated 19.99% returns, just 3.31% shy of the benchmark. The asset classes of real estate and fixed income beat their respective benchmarks.

Despite the good news, CalPERS is only 76% funded.

See CalPERS Profile | See CalSTRS Profile

CalSTRS

Looking toward the other Sacramento pension giant, CalSTRS posted 18.66% for the fiscal year that ended on June 30th.

The CalSTRS global equity portfolio posted 24.73% in returns. CalSTRS private equity posted 19.61% in returns.

“I give tremendous credit to our outstanding investment staff for making the right moves and hiring the right investment managers to help us outperform,” said CalSTRS Chief Investment Officer Christopher Ailman in a press release. “Our returns this year and last have put us at the top quartile of pension plans in the U.S. For a second year we outperformed our peers and even large university endowments. Four out of six asset classes outperformed their benchmarks.”

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.

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. ]

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

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Largest Sovereign Wealth Fund Makes Strategic Changes

Yngve Slyngstad

Yngve Slyngstad, CEO of NBIM

Norway’s Government Pension Fund Global (GPFG) released its 2014-2016 strategy report, highlighting significant changes in how it will invest sovereign wealth assets and manage risk. After studying other asset owners and institutional investors like the CPPIB, Singapore’s GIC Private Limited and the New Zealand Superannuation Fund, the fund is adopting some attributes of the opportunity cost model. The Norwegian sovereign fund plans to utilize a reference portfolio. By increasing allocation to less liquid markets and leveraging dynamic allocation, Norway’s usage of index replication is losing steam.

Learn more about the reference portfolio and opportunity cost model

Overall, the sovereign fund will target 100 external mandates by 2016.

The report states, “The starting point for our management of the fund is to construct a tailor-made reference portfolio. We will continue to develop and refine alternative weighting schemes to support the long-term objective of the fund.”

Asset Allocation and External Manager Shifts

With the implementation of a reference portfolio, the sovereign wealth fund will have an expanded universe of asset classes and geographic sectors. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Friday SWFI News Roundup, June 13, 2014

Aabar Sells Shares in Arabtec Holding

Abu Dhabi-based Aabar Investments PJSC has chopped its interest in Arabtec Holding Co., a Dubai builder, down to 18.85% from 21.57%. This is being confirmed from the Dubai Financial Market.

US$ 500 Million Committed to Waterton Residential Property Venture XII from CalSTRS

The California State Teachers’ Retirement System (CalSTRS) has recently committed US$ 500 million to Waterton Residential Property Venture XII. This property value-added fund will acquire underperforming multi-family properties in the United States. The management team at Waterton Associates specializes in renovating and helps in the repositioning of apartments.

Kuwait Investment Authority Goes to Greece and Hungary

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Korea’s National Pension Service Hires Townsend for Asian Real Estate Portfolio

Korea’s National Pension Service (KNPS) has hired Cleveland-based Townsend Group to build and manage a US$ 400 million bespoke Asia real estate portfolio. The KNPS has been investing in international properties since 2006, mostly in Europe and the United States. In September 2010, the KNPS committed US$ 300 million toward U.S. distressed real estate by allocating capital in a separately managed account with the Townsend Group.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Invesco Real Estate Asia Fund Attracts U.S. Pensions

The California State Teachers’ Retirement System (CalSTRS) has embarked on its first commitment to Asian core real estate by allocating US$ 200 million to Invesco Real Estate Asia Fund. [ 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.”

Temasek Holdings Adds 3 to its Board

Singapore’s Temasek Holdings has added three new directors to its board, pushing up to 13 members. Robert Ng Chee Siong, Bobby Chin Yoke Choong and Peter Robert Voser will join the board. Robert Ng is the current chairman of Sino Group in Hong Kong and vice chairman of M+S Pte Ltd. Bobby Chin is a retired managing partner of KPMG Singapore. Peter Voser, who will join the board on January 1, 2015, is the former CEO of Royal Dutch Shell plc.

See Temasek’s Key Executives and Board Members

“I am very pleased to welcome each of them to our Board. They are all experienced business builders and corporate leaders in regional and international arenas, who will add depth and useful perspectives to our Board deliberations,” said Temasek Chairman Lim Boon Heng in a press release.

Other recent appointments to Temasek’s board include Robert Zoellick and Lucien Wong back in 2013.

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.

Invest AD Renews Ties With Sberbank on Asset Management Cooperation

Invest AD, part of the Abu Dhabi Investment Council, and Sberbank Asset Management CJSC signed a Memorandum of Strategic Cooperation during the recent St. Petersburg International Economic Forum in Russia. This is a continuation of a strategic relationship in which they signed a similar document back in December 2012. OAO Sberbank is Russia’s largest lender and owns Sberbank Asset Management CJSC.

Both of these entities will seek to cooperate in asset management in the regions of Russia, CIS and the Middle East. Legal support and the sharing of market research enables the two organizations greater transparency when investing. Invest AD had worked with Sberbank as far back as 2009, when Invest AD joined Sberbank and invested in Mountain Carousel ski resort near Sochi, in the Krasnaya Polyana region.

David Sanders, chief investment officer of Invest AD, commented in a press release: “Invest AD has a long history of investing in the Middle East & Africa and in providing quality investment opportunities to clients. We are confident that our deepening partnership with Sberbank Asset Management will allow Russian investors excellent access to investment opportunities in the Middle East & Africa and allow Invest AD and Sberbank Asset Management to collaborate on innovative investment products.”