The Biggest Gorilla in the Room

In late spring 2010, Liv Hugen returned to her native Scandinavia to relax before assuming responsibility over the real estate portfolio for her government’s sovereign wealth fund. The fund’s composite portfolio was expected to grow to approximately $500 billion in the near term and to $1 trillion over the next 10 years. The proceeds were to be invested to benefit the peoples of Scandinavia, a broadly defined objective including, among other things, health care services, social security, and social services. In March 2010, the fund received approval to invest up to 5 percent of the portfolio in real estate. Hugen essentially had a tabula rasa for the real estate program. She needed to finalize investment guidelines for the program, a long-term and short-term investment strategy, and equally important, an implementation plan for what would ultimately be one of the world’s largest real estate portfolios. This case explores the information Hugen gathered and what issues she considered.