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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

Deutsche Bundesbank to Slowly Add Renminbi into Foreign Reserve Mix

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Deutsche Bundesbank’s executive board made a decision to invest in Chinese renminbi in the summer of 2017 as part of its foreign currency reserves. The German central bank on January 15, 2018, confirmed it will start investing in Chinese renminbi and also consider investing in additional foreign currencies. The move mimics the European Central Bank (ECB), which already considers the Chinese renminbi as a reserve currency. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Bpifrance, CDB and Cathay Capital Launch Third Cross Border Fund

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Bpifrance, China Development Bank Capital Co., Ltd. (CDB Capital) and Cathay Capital agreed to launch Sino French Midcap Fund II. This is the second fund the group is launching after the €500 million Sino French Midcap Fund I from June 27, 2014. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Carillion Falls into Compulsory Liquidation

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U.K.-based Carillion plc, a construction and facilities management giant, has fallen into compulsory liquidation on January 15, 2018. In July 2017, the listed company issued a warning on its profits, while its CEO quit at the time. The company warned it was near a breach of debt covenants and was in need of a fresh capital injection. Carillion faced a downturn in new business, while dealing with expensive contract delays. U.K. lenders such as the Royal Bank of Scotland (RBS), Lloyds Banking Group and Barclays are facing the news of having hundreds of millions of pounds default.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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