Norway SWF Scales Back Private Properties, Allows Listed Real Estate
Norges Bank’s executive board adopted main points in real estate investment strategies.
First, Norway’s GPFG should target a real estate portfolio of 3% to 5%.
The sovereign fund’s property portfolio should comprise both listed and unlisted real estate investments and there is no specific limit for the proportion of listed real estate investments.
This is a shift, as listed real estate was originally not included in the fund’s property allocation when the fund decided to carve out a 5% initial allocation to real estate.
As stated in the letter, “With a limited portfolio of unlisted real estate and a desire to integrate listed and unlisted real estate,
the Executive Board finds that it is no longer appropriate to organise the management of unlisted real estate separately.”
The big winner of this shift is listed real estate vehicles such as real estate investment trusts (REITS).
The real estate portfolio should be broadly diversified, and the strategy shall be simple, with cost considerations and efficiencies being a key weight on decisions. The board also permitted the fund to look at special investment opportunities that may arise in the unlisted real estate market, thus value-add and opportunistic real estate strategies could be considered.
Norges Bank’s executive board decided to shut down Norges Bank Real Estate Management, the separate unit that managed unlisted real estate investments. The real estate unit will be integrated into Norges Bank Investment Management, effective April 1, 2019.
SWFI – Sovereign Wealth Fund Institute