SWF’s and the US Property Market

US property is becoming more popular with Sovereign Wealth Funds

After last month’s PERE Forum in New York, it seems sovereign wealth funds are making some noise in the US property market. PERE New’ Evelyn Lee reported that some of the delegates felt sovereign wealth fund capital has been distorting the market and making it risky to buy and sell real estate. PERE Research & Analytics is curious to investigate which sovereign wealth funds have been pouring capital into US real estate.

About half of the 32 sovereign wealth funds we profile have invested in the US property market. Some of the largest sovereign wealth funds include the China Investment Corporation ($653 billion), and SAFE Investment Company ($568 billion).

In recent years, China Investment Corporation has made two commitments targeted at global opportunistic real estate funds (in 2008, to Morgan Stanley Real Estate Fund VII Global, and in 2009, to Brookfield Real Estate Turnaround Consortium. In 2011, SAFE Investment Company committed $500 million to another global opportunistic real estate fund, Blackstone Real Estate Partners VII.

Another sovereign wealth fund with capital in the US property market is Australia Future Fund which has committed $400 million over three commitments since 2012. The bulk of these commitments were to opportunistic and value added funds, with the most significant commitment in recent years belongs to GIC Private Limited. It committed $1.5 billion to LoanCore Capital LP, a North American real estate debt fund, in 2008.

With a rising trend in US property, it will be interesting to see which sovereign wealth funds take a turn towards the market in 2015 and which of those, if any, are doing so for the first time.