GIC, Singapore’s $390 billion sovereign wealth fund, has released its 2017–2018 annual report, indicating it continues to deliver steady, long-term returns while it remains cautious in this low-return environment. The annual real rate of return for the GIC portfolio was 3.4 percent during the past 20 years through March 31, 2018 (or 5.9 percent per year in U.S. dollar terms), which is above the global inflation rate between April 1998 and March 2018.
In the past 10-year period ending March 2018, the GIC portfolio returned a lower 4.6 percent per year in U.S. dollar terms, given poor market performance due to the global financial crisis and the European debt crisis, and including the subsequent recovery from ensuing monetary-policy intervention. During the past five years to March 2018, the GIC portfolio returned a higher 6.6 percent per year in U.S. dollar terms, given the run-up in global financial assets on the heels of higher market valuations due to aggressive, unconventional monetary policies.
Currently, “in view of the high asset valuations, the increased risk of monetary policy tightening across different jurisdictions and the elevated uncertainty, we maintain a cautious investment stance,” Lim Chow Kiat, GIC’s CEO, states in the report. “Nevertheless, we remain ready to take advantage of potential dislocations. The jump in market volatility experienced in early 2018 offered an indication of potentially bigger market turbulence and opportunities in the future.”
Real estate comprises one of six assets classes in GIC’s policy portfolio, which represents the sovereign wealth fund’s long-term asset allocation strategy as well as the risk/return potential of the GIC portfolio across changing economic conditions. Real estate represents 9 percent to 13 percent of GIC’s portfolio policy and stood at an actual allocation of 7 percent at the end of first quarter 2018. Such investments include traditional private real estate (brick-and-mortar assets), public equities, REITs and real estate–related debt instruments. GIC’s real estate assets cover multiple property sectors, including office, retail, residential, industrial and hospitality.
Some of GIC’s most recent property deals around the global include the following:
GIC sells London office for £1b
GIC and Rockwood Capital in venture to acquire and develop office portfolio in Playa Vista, Calif.
GIC, GMT sell New Zealand office portfolio to Blackstone
Frasers Property, GIC, JustCo invest $177m to develop Asian co-working platform
CPPIB, GIC venture acquires office property in Seoul’s CBD for $380m
GIC enters $300m Latin American JV
GIC forms $800m North American data center JV
GIC JV acquires German student housing portfolio for over €330m
CPPIB, GIC and Scion JV buys US student-housing portfolio
Cortland Partners, CPPIB and GIC form U.S. multifamily JV
GIC acquires office stake in Tokyo for $558m
GIC sells Paris hotel for €550m
GIC buys office in Brisbane for $281m
GIC acquires majority stake in new innovation precinct in Melbourne
GIC and Vicinity swap stakes in Sydney shopping malls worth A$1.1b
