Past 12 Months in Direct RE, Sovereign Funds Spent Over $35 Billion

Posted on 04/03/2015

---

Increasingly, sovereign wealth funds and pensions are making more direct investments, especially in real estate and infrastructure. Instead of simply handing money to managers, wealth funds are forming strategic partnerships with commercial developers, banks, life insurers, and other pools of capital. According to SWFI’s Sovereign Wealth Fund Transaction Database, sovereign funds directly invested over US$ 35 billion in real estate (excluding fund commitments) in the last twelve months. This is an increase from US$ 21.5 billion compared to the period before the last twelve months. Sovereign funds have been lured by inexpensive financing and rising rents in global cities such as Tokyo and London. Rents in central London have risen the most since 2000 as space dwindles. Global banks are lining up to earn fees to serve institutional investor giants like the Kuwait Investment Authority, Government of Singapore Investment Corporation, Abu Dhabi Investment Authority, Norges Bank Investment Management, and CPPIB.

JP Morgan Forms Tactical Direct Investments Group

To serve sovereign wealth funds, pensions and other large institutional investors, banks like JP Morgan have been forming specialty units. In April, J.P. Morgan Asset Management formally created the Tactical Direct Investments Group within its global real assets unit. The cross-assets group will target direct and co-investment real opportunities. The direct investment team is being led by Avik Mukhopadhyay. Before joining JP Morgan in August 2014, Mukhopadhyay was vice president of investments at The CIM Group.

According to the press release, Global Head of Real Assets Joe Azelby commented, “Institutional investors are increasingly seeking to complement their real asset fund holdings with direct investments. However, for both the investor and the investment manager, direct investing is fundamentally different from fund investing.”

Bankside Quarter – Temasek Backs London Development

Earlier this week, Singapore’s Temasek Holdings joined four other partners, forming Jersey-based Bankside Quarter Ltd., to acquire two prime central London properties for £308 million (Sampson House and Ludgate House). The 5.3 acre Southbank development, adjacent to the Thames river, is slated to have four office towers, five residential buildings and retail spaces. The investor group acquired the properties on March 28th from The Carlyle Group. Amcorp estimates the value of the whole development when completed will be over £1 billion. London Mayor Boris Johnson has deemed the area as an “opportunity area” with regard to the London Plan.

Bankside Quarter Investor Group

Keywords: GIC Private Limited, Norway Government Pension Fund Global.

• Amcorp
• Infrastructure
• JP Morgan
• Kuwait Investment Authority
• London
• real assets
• Real Estate
• Singapore
• Sovereign Wealth Fund
• Temasek Holdings