Norway's giant government pension fund saw the market value of its real estate portfolio climb almost by half in the first three months of 2013 following a series of major deals.
Norway's giant government pension fund saw the market value of its real estate portfolio climb almost by half in the first three months of 2013 following a series of major deals.
Norges Bank Investment Management (NBIM) - manager of the Norwegian Pension Fund Global - reported that the market value of the real estate portfolio stood at NOK 37 bn (€4.8 bn) in the first quarter of this year. This marked a 48% increase on the total of NOK 25 bn for the fourth quarter of 2012.
However, the fund's investments in real estate returned -0.3% in the first quarter, down from a positive 0.49% for the previous quarter. In contrast, equity investments (62% of the fund's overall holdings) returned 8.3%, while fixed-income investments (37%) returned 1.1%.
NBIM said rental income and value appreciation of the properties contributed a positive 1.5% to the overall return, while foreign exchange adjustments contributed most negatively with -1.6%. Transaction costs for deals in the US and Germany, as well as European logistics portfolio also weakened the return.
Property made up just under 1% of the value of the €550 bn oil-fuelled fund by end-March this year, and NBIM said it remained confident that it could achieve its target of 5% within a few years.
The growth in the value of the portfolio came after the fund revved up its property acquisition programme in the latter part of 2012. A number of massive deals in Europe and the US saw the value of the portfolio climb from NOK 11 bn in the first nine months of 2012 to NOK 25 bn by the end of the year.
In Europe, the fund's joint venture with AXA Real Estate acquired two properties in Germany from RBS for €400 mln. The Norwegian fund also purchased a 50% stake in a portfolio of 195 logistics properties in 11 European countries for €1.2 bn from Prologis.
