Unlisted Real Estate Investments

Norges Bank Real Estate Management's (NBREM’s) activities and risks relate to unlisted real estate investments and differs from fixed income instruments and listed securities. This policy outlines the framework and special considerations for investing and managing unlisted real estate investments.

Issued 1 November 2010
Last updated 17 January 2020


The purpose of this policy is to outline principles and requirements related to investing and managing unlisted real estate investments.


The investments in unlisted real estate shall be governed by investment mandates, boards and committees and follow a structured investment and approval process. Asset management of the properties is key to maximise the return on the investments and to control the associated risks. The fund invests directly with or indirectly via high quality partners regarded as local experts, or by itself in less resource-demanding assets. The fund invests and manages the portfolio in a focused, responsible and environmentally sustainable manner.

Investment mandates

  • The investment mandates for unlisted real estate shall define investment universe, investment restrictions, investment approval limits and other specific investment rules as applicable.
  • The investment mandates shall be approved through the reporting line and shall be subjected to annual review.
  • All investment mandates shall be subjected to review and monitoring for adherence to risk limits and mandate-specific investment rules and restrictions.

Investment process

  • When considering an investment opportunity, the fund shall assess and make assumptions about rents, capitalisation rates, vacancy periods, lease terms, refurbishment costs and other costs.
  • A due diligence process shall take place prior to the execution of new transactions. The due diligence shall identify and assess critical aspects, including market, liquidity, credit and counterparty risks, operational, financial, legal, tax, fraud including corruption, technical and environmental risks. All processes shall be well documented.
  • Real estate investments shall be made through subsidiaries to ensure sound risk management and to protect Norges Bank and the fund's assets.

Investment decisions

  • The decision process for real estate investments shall be governed by job descriptions, investment mandates, boards and committees.
  • All significant investments and transaction costs shall be considered by boards and committees consisting of internal and external advisors. 

Asset management solutions

  • The fund shall manage the unlisted real estate portfolio through four different asset management solutions:
    (i) Joint venture properties managed by the joint venture partner.
    (ii) Joint venture properties managed by an external third-party asset manager.
    (iii) Wholly-owned properties managed internally.
    (iv) Wholly-owned properties managed by an external third-party asset manager, or  where the fund has an asset management advisory agreement with a third party.
  • For joint venture assets, the fund shall review and approve business plans, budgets, the signing or renewal of major leases, significant works and capital expenditure including major sustainability initiatives, and other material matters for each property. This shall ensure control over major decisions and alignment of strategy and expectations in the management and operation of the investments. 
  • For wholly-owned assets, the fund shall develop and implement business plans, manage leasing to ensure stable cash flows and the right tenant structure, identify and implement accretive asset management initiatives, and supervise works or redevelopment projects.
  • The fund shall communicate sustainability expectations to partners and asset managers, and hold a dialogue with them to discuss major sustainability plans and initiatives affecting the investments.

Asset management performed by joint venture partner

  • The fund shall seek to partner with well-known and respected investors with a local presence, long-term capital to deploy and a long-term investment horizon, whose interests are aligned with those of the fund.
  • When choosing partners, the fund shall attach importance to finding investors with a good knowledge of specific markets as this enables them to take responsibility for asset management.

External asset management

  • External asset management shall be utilised both for joint venture partnerships and wholly-owned properties.
  • When choosing external asset managers, the fund shall seek to find a professional and reputable asset manager with good knowledge of specific markets and local presence, and with a good track record of managing assets in the relevant market.
  • The fund shall seek to minimise asset management costs and include flexible contract termination provisions.

Internal asset management 

  • The fund shall as a main principle manage its wholly-owned properties internally. Complex or intensive asset management shall be outsourced to an external third-party asset manager, or an asset management advisory agreement shall be set-up with a third party.

Environmentally sustainability management 

  • The fund shall base its responsible investment practices on internationally recognised standards.
  • The fund shall ensure all investments are included in the Global Real Estate Sustainability Benchmark annually. The fund shall seek to collect data on energy and water consumption, waste generation, and carbon emissions for all investments and consider it in the management of its investments.
  • The fund shall aim to increase the share of its portfolio of large office and retail buildings that have obtained a green building certification.

Download the policy (pdf)