The Norwegian Government Pension Fund Global bought 49.9% of five office properties in the US, its first investment in the world's largest real estate market, through a joint venture with TIAA-CREF. The assets in New York City, Washington D.C. and Boston are valued at $1.2 billion (approx. 0.9 billion). TIAA-CREF, the seller, retained 50.1% of each property and will manage the buildings on behalf of the partnership. The transaction was completed on Feb. 8.
"This is the fund's first real estate investment outside of Europe and is in line with our strategy to build a high-quality, global property portfolio," says Karsten Kallevig, chief investment officer for real estate at Norges Bank Investment Management (NBIM), the fund's manager. "We are very pleased to team up with a partner that has TIAA-CREF's knowledge and capabilities, and look forward to jointly developing the venture."
The properties consist of 1.9 million ft² (approx. 172,450 m²) of rentable space. Two of the properties are located in New York City, two in Washington D.C. and one in Boston. The joint venture will seek to acquire additional office properties, primarily in these three cities.
"As the world's largest real estate market, the US will be an important part of the fund's long-term property portfolio," Kallevig says. "We will initially seek to invest in key east-coast cities."
The fund made its first real estate investments in 2011 in office and retail properties in London and Paris. It is mandated to hold 60% in equities, 35-40% in fixed income and as much as 5% in real estate.
About the properties:
Washington D.C. (representing 37% of the five properties' gross rentable space): Properties located at 1101 Pennsylvania Avenue and 1300 I Street.
Boston (33% of gross rentable space): Property located at 33 Arch Street
New York City: (30% of gross rentable space): Properties located at 470 Park Avenue South and 475 Fifth Avenue
Norges Bank Investment Management (NBIM) safeguards and builds financial wealth for future generations as the manager of the Norwegian Government Pension Fund Global. The fund is invested globally in equity, fixed-income and real estate markets. It held assets worth 3,723 billion kroner (approx. 505 billion), at the end of September 2012.
Source: Norges Bank