Biggest Wealth Fund Forms New Real Estate Group

Photographer: Kristian Helgesen/Bloomberg

A Norwegian national flag flies from a vessel near a deepwater oil drilling rig in Olensvag, Norway. The nation, which boasts an $800 billion sovereign wealth fund and has no net debt, mainly issues bonds to fund various government loan programs such as mortgages to state employees and export lending. Close

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Photographer: Kristian Helgesen/Bloomberg

A Norwegian national flag flies from a vessel near a deepwater oil drilling rig in Olensvag, Norway. The nation, which boasts an $800 billion sovereign wealth fund and has no net debt, mainly issues bonds to fund various government loan programs such as mortgages to state employees and export lending.

Norway’s $890 billion sovereign wealth fund, the world’s biggest, is seeking top executives for a new real estate group that will invest almost $10 billion annually in properties over the next three years.

The fund, based in Oslo, is looking to hire new chief risk, operating and administrative officers for real estate, according to job postings on its website and in newspapers.

The new executives will have “key roles in implementing a new organizational structure, and further develop our ability to invest and manage real estate assets,” the fund said.

The group is currently overseen by real estate Chief Investment Officer Karsten Kallevig, and part of the broader risk structure of the fund, headed by Chief Executive Officer Yngve Slyngstad. The fund first got approval to invest in properties in 2010 and said last month it will invest 1 percent of its assets in real estate over the next three years as it seeks to reach its 5 percent target.

Thomas Sevang, a spokesman, said the real estate group will remain part of the fund and not operated as a separate entity. As part of an expansion of the group it’s natural to “staff up on management,” he said by phone today.

In a strategy document released June 24 the fund revealed it was boosting its staff by about 60 percent over the next three years to tackle increased investments in real estate and said it’s preparing for more investments in assets “with income streams that grow in line with the global economy.”

Hiring Spree

The number of employees will grow to about 600 from 370, mostly outside Norway, including 200 for real estate, the fund said last month.

The investor owns 1.3 percent of the world’s stocks and is struggling to meet a real return target of 4 percent. Central bank Governor Oeystein Olsen, who oversees the fund, has argued it needs to expand into new assets and raise the amount of stocks it holds to 70 percent of its portfolio to raise returns.

The government of western Europe’s biggest oil producer has set limits for the fund to hold 60 percent in stocks, 35 percent in bonds and 5 percent in real estate. Since the establishment of Norges Bank Investment Management in 1998, the fund has a real annual return of 3.6 percent and a nominal return of 5.7 percent. Measured in dollars, it has generated a 6.7 percent return.

It has so far bought real estate in places such as Times Square, the Champs Elysees and London’s Regent Street. The fund has a strategy to focus on 10 to 15 cities globally and its efforts to enter Asia are about to intensify, Kallevig said in an interview in May.

“There should be a significant increase in pace just based on that,” he said.

To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net Brian Lysaght

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