The world’s largest sovereign wealth fund has revised up the worth of its UK property portfolio after slicing it days after the vote to go away the EU.
Norway’s $890bn oil fund had written down the worth of its properties — principally retail and workplace area in London’s West Finish — by 5 per cent on the finish of the second quarter, simply after the Brexit vote on June 23, because of the uncertainty out there.
However Trond Grande, the fund’s deputy chief government, stated that it had now marked up the market worth of its UK property to “roughly the identical” degree because it was earlier than the write down. “We really feel safer with the valuation than we did on the finish of the second quarter,” he added.
The oil fund is among the largest house owners of property in London proudly owning stakes in most of the capital’s prime addresses from Regent Road and New Bond Road to Savile Row and Conduit Road. It additionally owns half of Sheffield’s Meadowhall buying centre in addition to a portfolio of logistics buildings within the UK.
Mr Grande informed the Monetary Occasions that the fund had few investments within the Metropolis and none in Canary Wharf because it was extra targeted on the West Finish. “So, for us, we don’t actually see that we’ve got a really huge publicity to Brexit in our actual property portfolio within the UK,” he added.
It determined to pre-emptively mark down its UK portfolio as its property valuers couldn’t estimate the impression of Brexit on the finish of June. That led its international actual property portfolio to return minus 1.four per cent within the second quarter, whereas the revision within the third quarter helped property belongings return 2.four per cent.
The oil fund has reiterated that it “stays an extended-time period investor within the UK” with about 10 per cent of its fairness portfolio in British corporations and a barely decrease proportion of bonds. “We don’t have a view on … the remoted impact on the UK” of Brexit, Mr Grande added.
His feedback got here because the fund had its greatest return because the finish of final yr, gaining four per cent within the third quarter.
Equities returned 6 per cent and bonds zero.9 per cent, in accordance with the fund’s preliminary outcomes.
Norway’s authorities is taking extra money out of the fund than it’s placing in for the first time in its historical past. Within the third quarter NKr30bn ($three.7bn) was withdrawn and the federal government estimates it’ll take out NKr121bn subsequent yr, up from NKr96bn this yr.
The oil fund has stated the withdrawals — though occurring sooner than anticipated — are undramatic as they are often coated by its money circulate from dividends and coupon funds of near NKr200bn a yr. However some politicians in Oslo worry that the withdrawals are getting near the purpose the place they might have an effect on the fund’s technique. A authorities fee is about to difficulty a report on whether or not the fund ought to make investments greater than its present 60 per cent in equities, probably on the expense of bonds.