In Signs of RE Rebound, Singapore SWF Offers $1.5 Billion for Bankrupt Resorts

(February 15, 2011) — The Government of Singapore Investment Corp. (GIC), which manages more than $100 billion of Singapore’s foreign reserves, has offered $1.5 billion for a group of bankrupt resorts owned by investors that include the hedge fund Paulson & Co, Bloomberg has reported.

The purchase by the GIC, ranked as the world’s seventh-largest state investment company by Sovereign Wealth Fund Institute, reflects renewed confidence in real estate investments and heightened faith in a rebound in travel demand following the recession.

According to Bloomberg News, the Singapore fund plans to purchase five resorts, which include Grand Wailea Resort Hotel & Spa in Maui, Hawaii, and the Doral Golf Resort & Spa in Miami that hosted guests including Tiger Woods, Joe DiMaggio and Greg Norman. The resorts filed for bankruptcy on February 1.

In September, the GIC reported that it had recovered most of its losses caused by the 2008 financial crisis, and has said it will increasingly focus on emerging markets as they trump developed economies. “…We expect high growth in the emerging economies to continue, with expanding domestic demand offsetting slower growth in export demand,” group chief investment officer Ng Kok Song said in GIC’s annual report.

Other institutional investors have recently revealed flocking to property in hopes of a rebound. Earlier this month, the head of one of Canada’s most active global investors said that it is eyeing US commercial property. David Denison, chief executive of the Canada Pension Plan Investment Board (CPPIB), which oversees $140 billion in assets for Canada’s national pension plan, told the Wall Street Journal that he has witnessed a spike in the availability of commercial real estate in the US, and that he is expecting that trend to continue.

Also this month, the California Public Employees’ Retirement System (CalPERS) reported that it is expected to revamp its $15.4 billion real estate portfolio, targeting mainly domestic, core or stable income-producing real estate, run by managers in separate accounts. The $226 billion fund reported that it is looking to allocate around $2 billion to real estate deals in 2011 with a new strategy of more reasonable returns after its real-estate portfolio lost nearly half of its value — more than $10 billion — from July 2008 to June 2009. The move reflects a trend among funds to pursue real estate more conservatively after dismal property returns in recent years.