Norway Renews US Real Estate Push | Chief Investment Officer

(January 8, 2014) — Norway’s Government Pension Fund manager has expanded its real estate portfolio after agreeing a deal to own almost half of a joint venture with Prologis.

Norges Bank Investment Management (NBIM) now owns 45% of the newly formed Prologis US Logistics Venture. The remaining 55% is owned by Prologis, one the US’s biggest real estate developers.

The deal follows an earlier agreement between NBIM and Prologis, in which a European joint venture between the two parties allowed NBIM to acquire half a portfolio of 195 Class-A logistics facilities in Europe that had previously owned solely by Prologis.

The US deal, which will see the joint venture acquire a $1 billion portfolio of 66 logistics facilities totalling approximately 12.8 million square feet across the US, was finalised at the end of 2013.

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Eugene Reilly, chief executive officer of Prologis Americas, said he expected the US joint venture to grow in 2014, “including through acquiring strategic portfolios and where appropriate, properties that complement the existing asset base”.

Norway expanded its real estate assets consistently throughout 2013. In December, NBIM bought a 25% stake in a central London building named Quadrant 3 from the Crown Estate, the organisation that looks after property owned by the UK sovereign.

In August, European regulators cleared the way for the fund to take a 50% stake in a Parisian property vehicle owned by insurer Generali, and in February it announced a joint venture with US real estate giant TIAA-CREF to invest in North American property.

NBIM has allocated 5% of its $818 billion portfolio—approximately $41 billion—to real estate.

Norway isn’t the only one keen to buy up real estate assets: Preqin data released in November 2013 found 54% of sovereign wealth funds invested in real estate.

Opportunistic and value-added vehicles were most favoured by sovereign wealth funds, with 74% and 65% respectively investing in these strategies.

Fifty-seven percent of sovereign wealth funds showed a preference for core real estate, a slight increase from the 55% of funds that showed a preference for this strategy in 2012, Preqin said.

Sovereign wealth funds also showed an increased appetite for distressed and debt real estate vehicles in 2013, with the proportion of sovereign wealth funds targeting each of these strategies standing at 57%.

(January 7, 2014) — The Dutch pension giant ABP has dropped its investments in the Tokyo Electric Power Company (TEPCO), citing public safety violations by the Japanese company.

“During and after the nuclear disaster in Fukushima, the Japanese company structurally violated our standards [of responsible investing],” the €296 billion fund said. “They have little regard for public safety. Repeated efforts by ABP have not led to a change of behavior in TEPCO and we have therefore decided to close TEPCO from the investment list.”

As of January 1, 2014, TEPCO has been added to the exclusion list that also includes Walmart, PetroChina, and 13 other global companies.

According to the list, ABP said the Japanese company “breached the United Nations Global Compact,” a policy initiative based on 10 principles of human rights, labor, environment, and anti-corruption.

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“ABP does not invest in companies that are directly involved in the manufacture of anti-personnel landmines, cluster bombs, chemical or biological weapons, or nuclear weapons made in violation of the Non-Proliferation Treaty,” the asset owner said.

The fund maintains a nine-person environmental, social, and governance team responsible for implementing an integrated responsible investing approach across all asset classes.

Despite these efforts, ABP was named in the Don’t Bank on the Bomb report, produced by peace movement IKV Pax Christi, the International Campaign to Abolish Nuclear Weapons, and economic consultancy Profundo, as a member of a “Hall of Shame.”

The report listed 298 investors with holdings of any of 27 nuclear weapon producers including Boeing, Rolls-Royce, and Safran. The Dutch pension had over $700 million invested in such companies as of July 2013.