Karsten Kallevig faces an unusual problem. Rather than scrounge for capital, the new real estate chief executive officer of Norway's sovereign wealth fund must contemplate how to best deploy billions annually across the globe, with his war chest only increasing.
Kallevig, who started in his new position on January 1, had previously worked as chief investment officer during a period of unprecedented growth for Norway's sovereign wealth fund.
He joined the sovereign wealth fund six years ago, along with a cast of real estate advisors including Mark Burton, the former property chief investment officer of the Abu Dhabi Investment Authority and the Abu Dhabi Investment Council. Kallevig was originally appointed head of global real estate asset strategies and then was made chief investment officer in 2011. Previously, NBIM did not have a separate chief executive officer for real estate and instead, Trond Grande, the fund's deputy chief executive officer, led the real estate business.
Prior to his time at NBIM, Kallevig worked at Grove International Partners, a global private equity real estate firm, most recently as head of Japan from May 2006 to June 2010 and earlier as a partner at the firm's European investment division.
The fund originally targeted investing up to 5 percent of its assets in global property, a mark it has been slowly working up to, with about 3 percent invested as of September 30. Since its first real estate investment in November 2010 – the purchase of a 25 percent stake in a property on London's Regent Street – the fund has purchased assets across property types in 13 countries.
There is still more to come: in November, Norges published a report saying it could triple its real estate allocation, from 5 percent up to 15 percent of its portfolio. Before matching this long-term property investing aspiration, however, Kallevig must manage his current growth strategy. To do so, NBIM reshuffled its real estate team last year, relocating existing employees to new offices, including in Tokyo. It also has targeted quadrupling personnel count from 50 to 200 worldwide by this year.
While Kallevig is overseeing the huge expansion in capital deployment, he must also manage return expectations. Last month, he cautioned in The Wall Street Journal that, due to highly priced markets, the fund will not be able to repeat the average 7 percent annual return that it achieved in real estate thus far for the foreseeable future.
“Our appetite hasn't been reduced,” Kallevig said. “But times are uncertain.”