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Norway’s SWF Makes First Real Estate Investment in the USA

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According to the press release, “The Norwegian Government Pension Fund Global bought 49.9 percent 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, or about 6.6 billion kroner. TIAA-CREF, the seller, retained 50.1 percent 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 square feet (172,450 square meters) 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 percent in equities, 35-40 percent in fixed income and as much as 5 percent in real estate.”

Source: Norges Bank Investment Management

Properties:
Washington D.C. (representing 37 percent of the five properties’ gross rentable space): Properties located at 1101 Pennsylvania Avenue and 1300 I Street.

Boston (33 percent of gross rentable space): Property located at 33 Arch Street

New York City: (30 percent of gross rentable space): Properties located at 470 Park Avenue South and 475 Fifth Avenue

Funds and Ownership, KKR Partners with Shinhan Financial

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South Korean financial giant Shinhan Financial Group Co., Ltd. reached a preliminary agreement with KKR & Co. to form a series of global buyout funds that could raise up to 5 trillion KRW. KKR and Shinhan signed a Memorandum of Understanding (MoU) in Seoul in early October. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Norwegian Government Recommends SWF Remains at Central Bank

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There was speculation that Norway Government Pension Fund Global (GPFG) could be managed outside of Norges Bank. The Norwegian government shot down this idea and recommended Norway’s GPFG remain in Norges Bank. This recommendation came in the form of a white paper submitted to the Norwegian Parliament, Stortinget.

Norway’s Minister of Finance Siv Jensen, commented in a press release, “The Government proposes a new and modernised governance structure for Norges Bank. Moving forward, this new structure lays the foundations for the sound management of the central bank and of the GPFG.”

Some Central Bank Recommendations

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Invesco Buys OppenheimerFunds for $5.7 Billion

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Invesco Ltd. signed a deal to acquire OppenheimerFunds, Inc. from Massachusetts Mutual Life Insurance Company (MassMutual). In turn, MassMutual and the OppenheimerFunds employee shareholders will receive a combination of common and preferred equity consideration, and MassMutual will become a significant shareholder in Invesco, with an approximate 15.5% stake. This strategic transaction will bring Invesco’s total assets under management (AUM) to more than US$ 1.2 trillion. The transaction is expected to close in the second quarter of 2019, pending necessary regulatory and other third-party approvals. The transaction gives Invesco access to more third-party distribution platforms.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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