Government Fund Weekly News Roundup — A Real Estate Spree

September 24, 2015 by Loch Adamson

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The Tokyo skyline

Government-backed funds agreed real estate deals in London, Paris and Tokyo this week. Temasek demonstrated its confidence in Chinese bank stocks. And Alaskan residents are set to receive a record payout from the Permanent Fund.

SWFs Snap Up Trophy Real Estate Assets

After years of trying to invest in Japanese real estate, the $35.7 billion State Oil fund of the Republic of Azerbaijan (SOFAZ) has finally sealed its first big deal. SOFAZ teamed up with Tokyo-based financial services firm Mitsubishi UFJ Trust and Banking Corp. to buy a retail property in the Japanese capital’s fashionable Ginza shopping district for 52.3 billion yen ($435.7 million). SOFAZ has been scouting for Japanese real estate deals since late 2013, when it came close to landing the landmark Tiffany & Co. building in Ginza. On that occasion, the fund was narrowly outbid by billionaire Masayoshi Son, who paid ¥32 billion.

SOFAZ wasn’t the only fund to buy trophy real estate this week. Norges Bank Investment Management (NBIM), the arm of the central bank that oversees Government Pension Fund Global, Norway's $820 billion sovereign wealth fund, announced it bought a retail and office property above London's Bond Street underground railway station for £240 million ($272.5 million). The building comprises the West One shopping center and 45,000 square feet of office space. The seller was London-based real estate firm Orchard Street Investment Management.

In Paris, a joint venture between Ivanhoé Cambridge, the real estate unit of $195 billion Canadian pension fund Caisse de Dépôt et Placement du Québec, and Houston-based developer Hines Interests has won planning permission for its €700 million ($779 million) project to build two office towers. The approval represents something of a coup for La Caisse: The towers are the first the Parisian authority has approved since it voted to allow the construction of high-rise blocks above 121 feet in the city's 13th arrondissement in 2010.

Temasek Bullish On Chinese Financial Stocks

Many international investors have sold their investments in Chinese banks in recent months, spooked by the wider volatility in the Chinese stock markets. Not Singapore’s $194 billion Temasek Holdings: This week the state investor spent HK$131 million ($18 million) to raise its stake in Beijing-based Industrial and Commercial Bank of China’s Hong Kong-listed stock.

In a statement, Temasek spokesperson Jeffrey Fang confirmed the move reflected the organization's confidence in the long-term prospects of the Chinese economy. Temasek is also likely to invest in the Beijing-based Postal Savings Bank of China next week, according to reports in the local media.

Alaska’s SWF Pays Out Bonanza Dividend

The $52.8 billion Alaska Permanent Fund Corp. will distribute $2,072 to each of the state’s approved residents this year. That’s up from the $1,884 checks Alaskans received last year. The increased dividend speaks to the Permanent Fund’s shrewd management of its assets: The dividend is linked to the fund’s investment returns, not oil revenues.

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