Norway’s former oil fund, the Government Pension Fund Global (GPFG), reported a 1.3% loss on its real estate investments in the first three months of this year, with listed investments and currency movements dragging the return down.

In its report for the first quarter, Norges Bank Investment Management (NBIM), which manages the NOK7.08trn (€768m) sovereign wealth fund, said its real estate investments finished the period being worth NOK223bn, down from NOK235bn at the end of December.

Investments in unlisted real estate, which make up the bulk of the asset class for the fund, made a 1% loss between January and March, while investments in listed real estate lost 2.2%.

NBIM said the return on its unlisted real estate investments depended on rental income, net of operating expenses, changes in the value of properties and debt, movement in exchange rates and transaction costs for property purchases.

It said the 1% loss on unlisted property was due two main factors, which brought down the 0.9% net profit the fund’s properties made in ongoing rental income.

The net change in the value of properties in the portfolio and debt reduced the return by 0.4 percentage points, and currency movements reduced it by 1.5 further points, NBIM said.

Karsten Kallevig, chief executive at Norges Bank Real Estate Management, which manages the unlisted part of the GPFG’s property investments, told a news conference: “There was a small value adjustment down, and a lot of that came in the UK, where there’s a change in the stamp duty, and that hits the valuation right away.”

The impact of the stamp duty change was expected to be a one-time time effect, he said.

Overall, the GPFG made a 0.6% loss on investments in the first quarter, with the 1.3% loss on real estate adding to a 2.9% loss on equities, and both these losses being partly offset by a 3.3% positive return on fixed-income investments.

The fund made no new unlisted real estate investments in the first quarter, but sold two logistics properties in Spain in partnership with Prologis.

Kallevig also said his unit would now do an increasing amount of unlisted property investments on its own rather than be part of a 50/50 joint-venture, as most of its investments have so far been.

He said it had been a very important part of the fund’s strategy to invest alongside an “aligned” partner to provide external help with the asset management.

“At the same time, we are seeing these types of partners are limited in number and they’re not everywhere,” he said.

Over the last few years, the fund has bought more and more assets without a partner.

“This allows us to look at everything we like and gives us obviously more control because we can decide on our own,” he said.

Looking ahead, he said he expected the fund to do both types of deal to some extent.

“I still think we have benefited enormously from having these very solid partners we’re invested with throughout the world, but I also think we will do more and more by ourselves,” Kallevig said.

The fund’s management would obviously need more resources to do this, he said, adding that it had already started this process.

“The 100% assets we bought have generally been fairly straightforward assets in very good location,” he added.