New Institute Connects
Global Public Investors
It’s funny what a little economic crisis can do. By now, we all know
that volatility has become a part of daily life in the new global
economy. As a result, many institutional investors and their consultants have “muddled through” over the past four years in a
kind of dreamy world where reality often has intruded in a swift
and harsh manner.
Now one of the leading players in the institutional world is,
once again, attempting to connect public institutions to help
them make more informed real estate investment decisions. Call
it the global band of brothers.
In a bid to streamline the global conversation, sovereign wealth
funds, which now control some $5 trillion in assets under management worldwide, are establishing a new Institute Council of
other governmental entities. Initial members include some of the
most senior names in the public investor industry.
The new ICI, formally launched in April at the Institute
Fund Summit 2012 held in Dana Point, CA, is designed to be a
neutral body. Its general purpose is to sponsor a series of interactive forums to provide education, research initiatives and
As Sovereign Wealth Fund Institute president Michael Maduell
put it, “Collaborating among public investors needs to be con-
ducted on a global basis. It is paramount to have a diverse range
of public institutional investors who have different opinions, to
prevent one-sided moves among investors.”
The impetus for more global coordination comes at a time
when the growth and power of sovereign wealth funds is very
much on the rise. According to the SWF Institute, the appetite for
commercial real estate also continues to grow among the funds.
As with many institutional investors, the sovereigns are more than
ever looking to real estate as an alternative investment to help
The list of top sovereigns investing in real estate is dominated by
familiar Middle Eastern and Asian funds. According to London-based researcher Preqin, the Abu Dhabi Investment Authority tops
the list with $47 billion invested in real estate, followed by the Qatar
Investment Authority, with $25 billion, and the Government of
Singapore Investment Corp. with nearly $25 billion.
To be sure, these are sophisticated and experienced investors,
and some 85% of sovereigns invest directly in real estate.
According to Preqin, average allocations to real estate were 7.5%
in 2011, up from 7% in 2010.
The global dialogue is in much demand as sovereigns become
larger players and seek to expand their global CRE connections.
By Ben Johnson
As an example, in early May, the Bank of Montreal said it
would open an office in Abu Dhabi, as the Canadian lender
seeks a strong foothold in the Middle East and access to the
region's sovereign wealth funds. The Toronto-based BMO has
about $107 billion in global assets under management, and
$600 million of that is from clients in the Arab Gulf region.
BMO says it wants to grow its share of Middle East assets to
between 5% and 10% of the bank's total assets under management in the next five years.
The new ICI joins a number of sovereign initiatives. An
International Forum of SWFs was founded in 2009, which meets
once a year to exchange views on shared interests. Member coun-
A global dialogue is in demand as SWFs
become larger players and seek to
expand their global CRE connections
tries include Australia, Azerbaijan, Bahrain, Botswana, Canada,
Chile, China, Equatorial Guinea, Iran, Ireland, South Korea,
Kuwait, Libya, Mexico, New Zealand, Norway, Qatar, Russia,
Singapore, Timor-Leste, Trinidad & Tobago, the United Arab
Emirates and the United States. Presently that group is chaired by
Mr. Jin Liqun, chairman of the board of supervisors of the China
Investment Corp., which ranks fourth on the list of top sovereigns
investing in real estate.
But, importantly, the ICI is more expansive than previous
efforts, since it includes major public pension funds and governmental entities.
Other groups are also organizing institutional players. In April,
the Council of Institutional Investors elected Anne Sheehan,
director of corporate governance at the California State Teachers’
Retirement System, as its chairperson. The CII is a nonprofit association of pension funds and other employee benefit funds,
endowments and foundations, and is an advocate for transparent
corporate governance and strong shareowner rights.
What does it all mean? For US-based owners and financiers,
closely monitoring this global connection trend should become a
top priority in the months to come. ◆
Ben Johnson is a contributing editor to REAL ESTATE FORUM and GlobeSt.com. He may be contacted at email@example.com. The views expressed here are the author’s own.