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GIC places $430m with US property hedge fund Rosen

It steps up buying of foreign real estate assets as values plunge, growth slows

SAN FRANCISCO – THE Government of Singapore Investment Corporation (GIC) is investing in the United States property market, where values have fallen heavily in the past year.

GIC committed US$300 million (S$429.2 million) to hedge fund Rosen Real Estate Securities to invest in US real estate.

GIC also acquired a minority stake in the California-based firm run by Professor Kenneth Rosen, chairman of the University of California’s Fisher Centre for Real Estate and Urban Economics, he said in a statement.

Singapore is increasing investment in real estate companies in the US and other markets, where slowing growth and a contraction of global credit markets battered values. The Bloomberg Real Estate Investment Trust Index of 126 companies has dropped by 30 per cent in the past year.

‘US property had a huge fall last year and now would certainly be a better time to buy than last year,’ said Mr Shane Oliver, who helps manage the equivalent of US$113 billion at AMP Capital Investors in Sydney. ‘Whether we have seen a bottom remains to be seen, but there’s certainly value to be had now.’

Dr Seek Ngee Huat, president of GIC’s real estate unit, said in a statement on Monday that his company chose to invest in the fund because he has known Prof Rosen and his team for ‘a very long time’.

Prof Rosen said in an interview: ‘GIC is not in a controlling position. It has a passive stake.’

The fund invests in US real estate investment trusts, homebuilders, mortgage companies and other securities, he said.

The transaction follows GIC’s 11 billion Swiss franc (S$14.4 billion) investment in UBS, which made it the single-largest shareholder of Europe’s largest bank with a 9 per cent stake.

GIC also owns a 3 per cent stake in British Land, Europe’s largest property trust.

The latest investment adds to the portfolio of GIC, one of the world’s 10 biggest real estate investors with properties in 30 countries.

The Singapore Government’s fund manager, set up in 1981 to run the nation’s foreign reserves, holds about a 10th of its more than US$100 billion of investments in real estate.

 

Source: BLOOMBERG NEWS (The Straits Times 16 Jan 08)

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