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Norway’s government pension fund inks first US property investment with $1.2bn deal

11 Feb 2013

The Norwegian Government Pension Fund Global has made its first propery investment in the US with the acquisition of a 49.9 per cent stake in five office properties, through a joint venture with fellow institutional investor TIAA-CREF.

The assets in New York City, Washington D.C. and Boston are valued at $1.2bn, or about NOK6.6bn. TIAA-CREF, the seller, retained 50.1 per cent of each property and will manage the buildings on behalf of the partnership. The

“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,” said 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.”

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, NBIM said.

“As the world’s largest real estate market, the US will be an important part of the fund’s long-term property portfolio,” Kallevig added. “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 per cent in equities, 35-40 per cent in fixed income and as much as five per cent in real estate. It currently has no allocation to private equity

NBIM held assets worth about $650bn at the end of September 2012.

TIAA-CREF is a financial services organisation with $502bn in combined assets under management and is provides retirement services in the academic, research, medical and cultural fields in the US.

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