EUROPE NEWS: Europe’s most powerful LP

Calling all heavyweight property professionals: have you got what it takes to become Europe’s most powerful LP?

Ultimately reporting to Norway’s central bank, you will be responsible for leading a team investing part of Norway’s $300 billion government pension fund – formerly known as the Petroleum Fund – in unlisted property funds, joint ventures and segregated accounts as well as direct property and equities and other real estate instruments.

It sounds like a dream job for any ambitious real estate professional, (and almost too good to be true), but for one individual it will become reality.

According to a spokeswoman at the Norges Bank Investment Management (NBIM), the operational manager of Norway’s Government Pension Fund – Global, it is in the process of recruiting the leader of the real estate investments team. “We will announce the new leader in due time. The process is getting close to a conclusion,” she said on 8 March. 

The leader will represent a fund that is destined to become one of the most powerful investors in Europe. Only last month there was a significant development in Norway’s ongoing plan for its oil fund, as the government set out rules governing how it would invest up to 5 percent of its portfolio – or $22 billion – in property. Small teams in Oslo and London have already been put into place.

In 2007, NBIM appointed Paul Golding, the former Merrill Lynch real estate investment banker in Europe and the Middle East, to prepare the oil fund, as it is dubbed, for property investment in international markets pending a firm decision.

The spokeswoman for NBIM would not confirm that Golding would be staying on or whether he would be a contender for the top job. She confirmed, however, that the real estate team was already “established” except for the head, and that there were no other “vacancies” for now. That said, the team would probably expand in the future, she added. 

Exactly how the new leader of real estate investing and his or her team will invest will become clearer when a strategy document is produced, possibly this month.

Some details have already emerged though, thanks to the recent rules. The real estate leader and the team will have scope to invest in several different ways in a variety of countries outside Norway, but private equity real estate seems to be the primary route. On 1 March, NBIM said the majority of the fund’s investments would be in “private equity” as opposed to listed securities.

The oil fund is expected to adopt a strategy of indirect investments alongside local operators who will be responsible for managing the assets. The real estate leader and the team can decide to invest via funds as well as joint ventures and separate accounts targeting funds established in OECD countries or countries with which Norway has a tax treaty with or other countries Norway has other tax agreements with.

They will typically choose to make $50 million to $250 million investments in real estate vehicles. According to NBIM, the real estate team is primarily considering fund managers and property companies with assets greater than $250 million that operate in the UK, Sweden, France and Germany in the first instance. There will also be ceilings on how much can be invested in emerging markets, debt and listed securities, and assets under development.

Sigbjørn Johnsen, Norway’s finance minister, said last month the fund would eye traditional real estate in mature markets to reduce risks and avoid heavy write downs. The ultimate success of the leader of the real estate team will be benchmarked against the Investment Property Databank Global Property Benchmark, which recorded ungeared total returns to direct property investment of -10.1 percent in 2008.
Surely whoever gets the top job will do better than that.