NEW YORK CITY — Norway’s vast oil fund has made its first investment in U.S. real estate as part of a $1.2 billion joint venture with locally based financial services firm TIAA-CREF. Norges Bank Investment Management (NBIM), manager of the Norwegian Government Pension Fund, and TIAA-CREF will invest in five office properties in Boston, New York and Washington, D.C., marking NBIM’s first foray into U.S. real estate.
“This is the fund’s first real estate investment outside 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 NBIM. “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, which total 1.9 million square feet, are located at 33 Arch St. in Boston; 470 Park Ave. S. and 475 Fifth Ave. in New York City; and 1300 I Street in Washington D.C. TIAA-CREF owns a 50.1 percent share and will manage the joint venture, while NBIM holds the remaining 49.9 percent share.
“NBIM is an excellent partner for us as we share a similar approach to real estate investing — a long-term investment horizon and an emphasis on large, high-quality assets in gateway cities,” says Tom Garbutt, head of global real estate for TIAA-CREF. “Our relationship with NBIM extends our real estate investment platform at a time when we see compelling investment opportunities, and it allows us to further diversify our portfolio.”
Norway gave permission for its $665 billion national pension fund to invest in property starting this year. NBIM said it could target up to $11 billion in the U.S. At the end of the third quarter of 2012, the pension fund held less than 1 percent of its assets in real estate, well below its 5 percent targeted goal. Norwegian officials predicted it would take years before it would reach the planned level of offshore real estate investments. The fund is forecast to grow to $1.1 trillion by 2020, indicating it could hold $55 billion in real estate by then.
TIAA-CREF directly owns more than $19 billion in net assets in the office, retail, industrial and multifamily sectors across the United States, Canada and Western Europe and manages $502 billion in assets.
— Rachel Goff