Norway’s bulging sovereign wealth fund, more popularly known as the “oil fund,” announced more purchases in the international real estate market last week. After spending around NOK 6 billion (USD 1 billion) in Germany, the fund still has its sights set on the US next year.
The fund paid NOK 5.8 billion (EUR 784 million) for 50-percent stakes in two retail and office buildings in Germany, one on the prestigious boulevard Kurfürstendamm in Berlin and one in downtown Frankfurt. Norges Bank Investment Management (NBIM), which manages the fund officialy known as Norwegian Government Pension Fund Global, bought the buildings in partnership with AXA France Insurance Companies from the Royal Bank of Scotland.
The fund already had teamed with AXA France to buy properties in Paris, and also has invested in commercial real estate in the UK, including prime retail property in London and in the Meadowhall shopping center.
The fund’s portfolio is now approaching NOK 20 billion and planned purchases of up to NOK 280 billion more look set to make the Norwegian state one of the world’s largest property investors as the fund diversifies out of equities. Karsten Kallevig, chief investment officer for real estate at NBIM, said the first property investments in Germany are “in line with our strategy to build our real estate portfolio by initially investing in large, well-developed markets alongside partners with alligned interests.”
He told newspaper Dagens Næringsliv (DN) that now he and his colleagues hope to start investing on the US East Coast in 2013, pending resolution of some thorny tax issues. Kallevig seems most keen on office buildings in Boston, New York and Washington DC, which he called “typical 24-hour cities” with population growth and limited real estate development.