Norway’s $660 billion sovereign wealth fund, the world’s largest, plans to invest about $11 billion as it enters the U.S. real estate market, according to the chief executive officer of Norges Bank Investment Management, which oversees the pool.
The fund, mandated by the country’s finance ministry to eventually put 5 percent of assets in property, wants one-third of that, or 1.7 percent, to be in the U.S., said Yngve Slyngstad, CEO of Oslo-based NBIM. The pool held 0.3 percent in real estate, 60.3 percent in stocks and 39.4 percent in bonds as of the end of September, according to its quarterly report.
“The U.S. is the next real estate market to invest in,” Slyngstad said Friday in an interview at Bloomberg’s headquarters in New York.
Sovereign wealth funds, or state-owned investment pools, are seeking to diversify their risk by expanding investments beyond stocks and bonds. China Investment Corp., which oversees about $482 billion in assets, in 2010 helped refinance a Manhattan office tower co-owned by private-equity firm Carlyle Group LP. Norway, seeking higher returns and lower risk after record losses in 2008, gave approval in 2010 for its fund to invest as much as 5 percent of its value in real estate over several years.
The fund is focusing on conservative property investments, such as large office complexes in major cities and developed malls, Slyngstad said in the interview. It has already bought commercial property in London, Paris, Frankfurt, Berlin and Sheffield in the U.K., and yesterday made its first real estate investment in Switzerland, buying a Zurich office complex from Credit Suisse Group AG for 1 billion Swiss francs ($1.08 billion).
Norway, Europe’s second-biggest oil and gas exporter, generates money for the fund from taxes on oil and gas, ownership of petroleum fields and dividends from its 67 percent stake in Statoil ASA, the country’s largest energy company. The fund earlier this month said it returned 4.7 percent in the third quarter, after a decline of 2.2 percent in the previous three months.
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