Return on Investment
Real estate investments returned 11.8 percent for Norway’s $840 billion sovereign wealth fund in 2013, the fund’s manager announced today.
In the fund’s second-best year ever, the Government Pension Fund Global returned 15.9 percent, or $115 billion, overall, according to the Norges Bank Investment Management. The fund’s equity investments returned 26.3 percent, while fixed-income investments returned 0.1 percent.
Norges Bank Investment Management, the manager of Norway’s sovereign wealth fund, is maintaining a steady flow of U.S. property deals in early 2014. Last week, NBIM announced it would invest two additional U.S. office properties as part of its joint venture with MetLife.
The two properties, in Washington D.C. at 555 West 12th Street and San Francisco at 425 Market Street, are the second and third investments made by the joint venture since it formed in early December. The first deal was an investment in One Financial Center in Boston.
2013 Owners Magazine
Norges Bank Investment Management, the manager of Norway’s $800 billion sovereign wealth fund, and MetLife have formed a joint venture to invest in Class A office properties in key U.S. office markets. It is the third such venture formed by NBIM in the past year as the wealth fund looks to boost its real property holdings.
The joint venture’s initial investment is in One Financial Center in Boston. NBIM has acquired a 47.5 percent share of the asset from Beacon Capital. Concurrently, MetLife increased its ownership share in the property to 52.5 percent.
Early last month, Norway’s sovereign wealth fund announced it would invest $684 million in a 45 percent stake of Boston Properties’s Times Square Tower.
No small achievement, the investment is the Norwegian Government Pension Fund’s second real estate play in the United States in a span of just eight months as it seeks to rev up its portfolio to as much as 5 percent of total assets under management.
The uptick in activity, prompted in part by the fund’s desire to reduce its exposure to the bond market, is a welcome development for real estate’s largest institutional players now seeking to realize gains on investments made during the past decade and to deploy capital in other sectors of the market.
Norway’s sovereign wealth fund, the Norwegian Government Pension Fund Global, has agreed to acquire a 45 percent interest in Times Square Tower from Boston Properties for $684 million in cash.
The acquisition agreement, signed on September 6, values the entire building at $1.52 billion. Following the close of the sale, Boston Properties will retain management and leasing responsibilities.
Though not a traditional owner-operator, TIAA-CREF has begun to draw the attention of the real estate industry in recent months for a bevy of deals, including its acquisition of a stake in the Frank Gehry-designed building at 8 Spruce Street and a joint venture with Norges Bank Investment Management.
The asset management firm’s steady persistence in the real estate market during the downturn has led to a realization of gains, and recent deals could lead to the redeployment of capital in key markets going forward, said analysts familiar with the firm’s strategy going into 2013.
“TIAA is one of the investors that was pretty active in the depths of the market in 2009 and 2010, and some of those investments have turned into significant home runs,” said Dan Fasulo, managing director and head of research at Real Capital Analytics.