COVID-19 Kills Sovereign Wealth Funds Appetite for US Direct Real Estate Investing

Posted on 10/23/2020

Direct Sovereign Wealth Fund Transactions – U.S. Real Estate Sector

Data: (SWFI Asset Owner Terminal)
Filter: Sovereign Wealth Funds. Type: Deal, New Security Issue, Open Market. No fund commitments. Sector: Real Estate. Country: United States
NOTE: For Logistics, included Industrial REITs. 2020 data is ongoing.

The coronavirus pandemic that swept across America in February and March 2020 had a material impact on direct real estate investing by sovereign wealth funds. Cash-rich sovereign investors were paralyzed in their direct investments during this time period, compared to previous years of annual growth in direct property allocations. Sovereign investors are cautious on catching a falling knife in the office and residential real estate sectors, versus the logistics sector – a key beneficiary of the e-commerce theme. A notable deal in 2020, includes GIC Private Limited’s type up with Bill Gates’ Cascade Investment, L.L.C. in becoming major investors in Columbia, Missouri-based StorageMart.

Pre-pandemic, a cadre of Asian and Gulf sovereign funds were active in a wide range of property assets in the United States. For example, on December 12, 2019, Singapore’s GIC Private Limited and NYSE-listed real estate investment trust RPT Realty formed a US$ 244 million retail joint venture. GIC spent US$ 118.3 million to purchase a 48.5% stake in five retail assets in Florida, Missouri, and Michigan and committed up to US$ 200 million of additional capital to the venture for future deals. In the same season in 2019, Marriott International Inc. sold the St. Regis New York for US$ 310 million to the Qatar Investment Authority (QIA).

Furthermore, direct deals in European properties by sovereign wealth investors has come to a near halt compared to other years.

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