U.S. Real Estate is Next to Boom; Just Ask Norway

Norway’s $660 billion sovereign wealth fund, the world’s largest, plans to invest about $11 billion as it enters the U.S. real estate market.

The fund, mandated by the country’s finance ministry to eventually put 5 percent of assets in property, wants one-third of that, or 1.7 percent, to be in the U.S., said Yngve Slyngstad, chief executive officer of Oslo-based Norges Bank Investment Management, which oversees the pool. The fund held 0.3 percent in real estate, 60.3 percent in stocks and 39.4 percent in bonds as of the end of September, according to its quarterly report.

“The U.S. is the next real estate market to invest in,” Slyngstad said yesterday in an interview at Bloomberg LP’s headquarters in New York.

Sovereign wealth funds, or state-owned investment pools, are seeking to diversify their risk by expanding investments beyond stocks and bonds. China Investment Corp., which oversees about $482 billion in assets, in 2010 helped refinance a Manhattan office tower co-owned by private-equity firm Carlyle Group LP. (CG) Norway, seeking higher returns and lower risk after record losses in 2008, gave approval in 2010 for its fund to invest as much as 5 percent of its value in real estate over several years.

The fund is focusing on conservative property investments, such as large office complexes in major cities and developed malls, Slyngstad said in the interview. It has already bought commercial property in London, Paris, Frankfurt, Berlin and Sheffield in the U.K., and on Nov. 29 made its first real estate investment in Switzerland, buying a Zurich office complex from Credit Suisse Group AG (CS) for 1 billion Swiss francs ($1.08 billion).

Higher Yields

As sovereign wealth funds become more active buyers of real estate, investors such as Blackstone Group LP (BX) expect to increase sales of property holdings. New York-based Blackstone, the largest alternative-asset manager, has $54 billion of real estate assets, including office developments, shopping centers and hotel chains such as Hilton Worldwide Inc.

“The other trend that will be helpful for us to exit some of the larger things we own, particularly the higher-quality assets in the gateway cities, is the rise of the sovereign wealth fund,” Jonathan Gray, Blackstone’s global head of real estate, said last month at the Bloomberg Commercial Real Estate Conference in New York. “Sovereign wealth funds are enormous pools of capital around the world,” and real estate offers higher yields than government bonds, along with a hedge against inflation.

Largest Funds

More than 60 percent of sovereign wealth funds invest in real estate, either directly or indirectly through other funds, according to Preqin Ltd., the London-based research company. Larger government pools are more likely to make property investments, Preqin said in an April research note, with 83 percent of those managing at least $250 billion being active in the asset class.

Norway, Europe’s second-biggest oil and gas exporter, generates money for the fund from taxes on oil and gas, ownership of petroleum fields and dividends from its 67 percent stake in Statoil ASA (STL), the country’s largest energy company. The fund last month said it returned 4.7 percent in the third quarter, after a decline of 2.2 percent in the previous three months.

To contact the reporter on this story: Devin Banerjee in New York at dbanerjee2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

Source: http://www.businessweek.com/news/2012-11-30/norway-wealth-fund-to-invest-11-billion-in-u-dot-s-dot-property

Five killed in collision of two small planes over Canada

Five people were killed Saturday when two small planes collided in the air northeast of Saskatoon, Canada, officials said. Both planes involved were single-engine aircraft. 

One was en route to La Ronge from Regina with a man and woman aboard, the Royal Canadian Mounted Police said. The other was traveling to St. Brieux, Saskatchewan, where the crash occurred, from Calgary. Two men and a male juvenile were aboard, police said. 

The Transportation Safety Board of Canada is investigating the crash.

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Peace negotiator, NATO troops killed in Afghanistan

Kabul, Afghanistan (CNN) -- An Afghan official involved in setting up peace talks with the Taliban was gunned down in Kabul on Sunday as Afghanistan announced plans to take control of security over more of its territory. Gunmen killed Moulavi Arsala Rahmani while he was on his way to work Sunday morning, the Afghan interior ministry said.

Rahmani was a senator and Cabinet minister in the former Taliban government when the Islamic militia ruled most of the country, but in recent years had been a senior member of the High Peace Council. Rahmani played a key role in efforts to bring Taliban leaders to the negotiation table. Authorities were searching for the attackers, the interior ministry said.

Afghan President Hamid Karzai condemned the killing, praising Rahmani as a warrior-turned-politician "and a great pacifist." "Enemies of Afghanistan must know that every Afghan wants peace and progress in their country and, thus Mawlavi Arsala was not alone in this journey," Karzai said in a statement. The Taliban, which has been fighting government forces and U.S.-led NATO troops for more than a decade, announced recently that peace council members would be targets of its spring offensive.

But Taliban spokesman Zabiullah Mujahid said in a text message Sunday that the group did not kill Rahmani. He died the same day that Afghanistan released a new list of areas in which responsibility for security will be transferred from U.S. and allied troops to Afghan forces. Those include the city of Kandahar, the Taliban's historical seat of power and until recently one of its strongholds.

 The rest of the list includes other volatile areas, including about half of the insurgent hotbed of Nurestan province, a third of violent Paktika province's districts and all of Uruzgan province, where departing Australian forces are active. The plan means Afghan officials will have control over more than 75% of their own territory, Gen. John Allen, the commander of NATO's International Security Assistance Force, said Sunday. And NATO Secretary General Anders Fogh Rasmussen said once the move is implemented, "transition will have begun in every one of the 34 provinces of Afghanistan, including every provincial capital."

"This is thanks to the courage and determination of the Afghan people, the Afghan security forces and ISAF, and it is a result of the progress we have already made," Rasmussen said in a statement. "Together, we are moving steadily closer to our shared goal: to see the Afghan forces fully in charge of their country's security by the end of 2014."

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Egypt's military backs transition; 11 killed in clashes

Egypt's military may hand over power to a civilian authority in the next three weeks should a presidential vote be decided in the first round, a spokesman for the armed forces chief of staff said Wednesday. "General Sami Anan said today during a meeting with political powers and parties that (the Supreme Council of the Armed Forces) looks forward to handing (over) power within the next three weeks if a president wins in the first phase of elections without runoffs," Maj. Alaa Al Iraq said. The move, he said, is meant to quash doubts of those who fear a lingering military rule and signal an intention to make good on the coming transition.

Egyptians are expected to head to the polls May 23 in what will be the first presidential election since President Hosni Mubarak's ouster. It comes amid rising political tensions as officials work to craft a new constitution and Egyptians await the June 2 verdict in Mubarak's murder trial. Protesters, meanwhile, camped outside the Ministry of Defense for a fourth day to voice their anger about the disqualification of Islamist candidate Hazem Abu Ismael from the election.

They also want to disband the presidential election commission. Abu Ismael was disqualified because of evidence that his late mother had U.S. citizenship, an assertion he has denied, prompting his followers to protest the decision by the election commission. About 10 of the 23 presidential contenders have been disqualified, the head of the election committee said this month. Assailants targeted the protesters in Cairo early Wednesday, killing at least 11, medical sources said.

At least 100 people were injured, said Hisham Shiha, the deputy minister of health. It was unclear who the attackers were, but they were not wearing uniforms, witnesses said. U.S. Ambassador to the U.N. Susan Rice said, "we're very concerned about the outbreak of violence," adding that the U.S considers it "important for elections to go forward as planned."

Fears of increased violence linger, observers say, as additional protesters marched from downtown to join the other demonstrators. The military dispatched a unit to attempt to restore calm. Protesters hurled rocks at the assailants, who responded with a steady barrage of rocks and Molotov cocktails. "Down with military rule!" the protesters chanted. Alaa Younis, who took part in the sit-in with some friends, said "dozens of military men dressed in plainclothes started pelting" them "with stones, cement blocks, and fired tear gas from rifles, so they were obviously security officers under cover."

 "We fought back with rocks until we noticed they escalated and fired birdshot. Many of us took refuge at one of two field hospitals," Younis said.

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Four players suspended in NFL bounty scandal

Four past or present New Orleans Saints players were suspended Wednesday by the National Football League for their roles in the "bountygate" scandal involving bonuses for trying to hurt opponents. The league announced that Scott Fujita, Anthony Hargrove, Will Smith and Jonathan Vilma were suspended without pay for varying lengths of time. The NFL previously suspended Saints coach Sean Payton for the 2012 season while levying an indefinite suspension on former Saints defensive coordinator Gregg Williams, who was accused of masterminding the bonus program. 

Vilma, a linebacker who is still with the Saints, got suspended for a year, and teammate Smith, a defensive end, got a four-game suspension. Fujita, a linebacker with the Cleveland Browns, was suspended for three games while Hargrove, a defensive lineman now with the Green Bay Packers, got an eight-game suspension. "It is the obligation of everyone, including the players on the field, to ensure that rules designed to promote player safety, fair play, and the integrity of the game are adhered to and effectively and consistently enforced," NFL Commissioner Roger Goodell said in a statement announcing the suspensions. 

"Respect for the men that play the game starts with the way players conduct themselves with each other on the field." The statement said evidence reviewed by the league "demonstrated that from 2009-11 Saints players of their own accord pledged significant amounts of their own money toward bounties, that players accepted payments for 'cart-offs' and 'knockouts' of injured opposing players, and that the payout amounts doubled and tripled for playoff games." Vilma was a captain of the defensive unit under Williams and assisted in creating and funding the bounty program, the NFL statement said. 

"Multiple independent sources also confirmed that Vilma offered a specific bounty -- $10,000 in cash -- to any player who knocked Arizona quarterback Kurt Warner out of the 2009 Divisional Playoff Game and later pledged the same amount to anyone who knocked Minnesota quarterback Brett Favre out of the 2009 NFC Championship Game the following week," the statement said. Hargrove "actively participated in the program" as a Saint and obstructed the league's investigation by "being untruthful," the statement said, while Fujita pledged "a significant amount of money" to the program. Smith, a captain of the defensive unit, helped Williams with the program and pledged money for it, according to the statement. 

All four players can appeal the suspensions and would be entitled to a hearing and representation by counsel, the statement said. DeMaurice Smith, executive director of the NFL Players Association, said the organization would help the players fight the suspensions. "After seeing the NFL's decision letters, the NFLPA has still not received any detailed or specific evidence from the league of these specific players' involvement in an alleged pay-to-injure program," Smith said in a statement. "We have made it clear that punishment without evidence is not fair. We have spoken with our players and their representatives and we will vigorously protect and pursue all options on their behalf."

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Myanmar's Suu Kyi takes oath of office

Myanmar opposition leader Aung San Suu Kyi was sworn in Wednesday as a lawmaker for the first time, a key step in the country's recent shift toward democracy after decades of repressive military rule. Suu Kyi, a pro-democracy campaigner who spent years under house arrest, traveled to the parliament in the capital, Naypyidaw, to take up the seat she won in elections last month.

 She and 33 other newly elected members of her party, the National League for Democracy, took an oath of office for the lower house of parliament that they had initially refused to accept because of its wording, which called for protection of the country's constitution. The NLD considers the constitution undemocratic and has said it wants to change it.

 The party had asked the Myanmar authorities to adjust the wording of the oath to say that lawmakers would "abide by" the constitution rather than "protect" it. Suu Kyi and the other recently elected NLD members delayed their debuts in parliament over the issue, but the government of President Thein Sein, a former military official, made no sign of moving to accommodate the request. On Monday, Suu Kyi and the NLD backed down from the demand to have the wording changed, ending the impasse. Suu Kyi said she would take the oath "for the country and for the people."

She added that her decision had been encouraged by voters, parliament members and representatives of Myanmar's ethnic minority groups. Myanmar's authoritarian military rulers are loosening their grip on power after decades of stifling dissent and limiting freedoms. In the past 12 months, the government has pardoned hundreds of political prisoners, secured a cease-fire with Karen rebels and agreed to negotiate with other ethnic rebel groups.

 The success of Suu Kyi and her party at the by-elections last month -- the NLD won 43 seats, 34 of them in the lower house -- was welcomed by the United States and European Union as a sign of progress toward democracy. Her presence in parliament Wednesday illustrates the pace at which Myanmar is changing: She was released from house arrest less than a year and a half ago. Control of parliament will not change, but the entry of the NLD members nonetheless gives the party a notable presence.

Myanmar's legislature has 664 seats, more than 80% of which are still held by lawmakers aligned with the military-backed ruling group, the Union Solidarity and Development Party. Many Western governments have taken steps to ease sanctions on Myanmar, also known as Burma, in response to its political reforms. But international officials have also cautioned that the country still has a long way to go.

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Official: Steps being taken to combat body-bomb threat

Steps were being taken to guard against a new threat of "body bombs" planted inside passengers aboard flights heading to the United States from overseas, a government official with knowledge of the threat said Tuesday. Authorities have increased aviation security, especially on air carriers heading to the United States from the United Kingdom, other parts of Europe and the Middle East in the days surrounding the one-year anniversary of the death of al Qaeda leader Osama bin Laden, said the official, who asked not to be named because of the sensitivity of the information and to protect the specifics of how the risk came to light. 

ABC reported on Monday officials fear al Qaeda may soon attempt to explode United States-bound aircraft with the body bombs. The body bomb threat has surfaced before, but the renewed concern is based on new information originating overseas, the official said. Details of the threat have been shared among intelligence agencies in the United States and the United Kingdom within the past two weeks, the official said An FBI official declined comment on the information, but said, "the FBI takes all threat stream information seriously and runs it down to the best of our ability with all available resources." Department of Homeland Security spokesman Peter Boogaard said Monday authorities have "no indication of any specific, credible threats or plots against the United States tied to the bin Laden anniversary." Navy SEALs killed bin Laden during a raid on a Pakistani compound on May 2, 2011. 

"DHS will continue to monitor intelligence reporting and respond appropriately to protect the American people from an ever-evolving threat picture, and as always, encourage the public and our partners in law enforcement and the private sector to remain vigilant in promptly reporting any suspicious activities," he added, declining comment on the ABC report. 

Speaking before the ABC story was published, a separate law enforcement official claimed not to know of any security increases but said each locality makes its own decision. The official, who spoke on the condition of anonymity, similarly said that there is "no intelligence to indicate a credible threat" of attack to coincide with the anniversary of bin Laden's death. Body bombs gained worldwide attention in 2009 when al Qaeda's chief bomb-maker, Ibrahim al-Asiri, built a device containing around 100 grams of PETN, a difficult-to-detect powdery explosive, that was designed to be inserted inside the rectum of a suicide bomber.

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