Norges Bank Investment Management (NBIM) is reorganising its investment departments and will establish a standalone group to manage its property portfolio, which returned 3% in the previous quarter.
The asset manager for Norway’s NOK5.5trn (€556bn) Government Pension Fund Global will be “strengthening” the management of its real estate investments through the launch of a separate leader group – led by Karsten Kallevig – CEO Yngve Slyngstad said.
The move will help it manage a fast-growing real estate portfolio, which it recently concluded could be extended beyond Europe and the US into “global cities” in other regions and into listed property companies.
Property so far only accounts for 1.2% of the fund’s value. However, it reiterated plans to increase its stake significantly over the next three years.
“With real estate eventually accounting for as much as 5% of the value of the fund, our goal is to build a global, but concentrated, real estate portfolio,” its quarterly report said. “We expect to invest 1% of the fund each of the next three years in the private real estate markets.”
At current fund value, a 1% annual investment would amount to close to NOK55bn.
Kallevig, who joined NBIM in September 2010, will remain CIO of real estate, with Lars Dahl as chief risk officer assessing potential property holdings.
Nina Hammerstad, who took on the role of global head of real estate asset management in September 2011 (a position initially held by Kallevig), will become the department’s COO, while Mie Holstad will become its chief administrative officer.
Hammerstad was previously a partner at PwC, while Holstad has worked at PwC and Storebrand prior to joining NBIM as senior analyst in 2010.
The reoriganisation will come into effect in October.
Real estate investments outperformed the sovereign fund’s fixed income over the second quarter, generating a 3% quarterly return, with the portfolio’s significant growth over the past year apparent from rental revenue.
Rental income almost doubled compared to June 2013, to NOK1.5bn, with returns from its property portfolio to date at 5.1%.
When measured in local currency, its property portfolio returned 7% over the first six months of the year.