NBIM Makes First Ever US Investment

The largest sovereign wealth fund in the world, Norges Bank Investment Management has decided to buy a 49.9% stake in 5 US based office properties from TIAA-CREF. This marks the fund’s first ever investment in the real estate sector of the largest economy in the world. The Oslo based fund will be paying around $600 million for purchasing these assets in New York, Boston and Washington. The news was released through an official statement by the fund. Incidentally, TIAA-CREF, a seller and retirement accounts manager will be retaining the remaining 50.1% of each of these properties and therefore will continue to maintain the portfolio.

According to Norges Bank’s Chief Investment Officer of Investment Management division, Karsten Kallevig, this journey from Oslo to US has been a long one. Karsten added that they have a total allocation of around 5% of the fund and it is continuously growing. Karsten commented further that the company has been able to round around $700 billion over the last 30 days. Karsten thinks that this joint venture may start investing in the shopping malls of US by buying the shares in the listed real estate investment trusts, however, nothing on this regard has been confirmed as of yet.

The Norwegian fund already has made investments in several European cities such as Paris, Zurich, London, Frankfurt, Berlin, Sheffield etc. The fund is currently more focused on the conservative investments such as large office complexes and developed malls in the major cities all over the world.

In last October, Norges Bank Investment Management or NBIM, purchased 50% stake in the Meadowhall Shopping Center based in Sheffield and the deal was worth $546 million. Around 2 years ago, it made its first UK deal of 448 million Pounds as it acquired 25% stake in the Regent Street in London. The very same year, the fund regained the required permission for investing in the real estate sector.

NBIM is expected to make further investments in US through insurance companies and pension funds. They are looking for large investors with long term view and expertise in management or operating business, as stated by Karsten. The 2nd biggest gas and oil exporter in the world, Norway, generates the money for the fund by putting taxes on oil and gas. The fund also has 67% stake in the biggest energy company in Norway, Statoil ASA.