EUROPE - Norges Bank Investment Management has entered into a joint venture with AXA Real Estate Investment Managers (AXA REIM) to invest in Paris offices - another example of sovereign wealth funds turning to joint ventures to give them more investment control.
Under the terms of the deal, Norges Bank - manager of the Norwegian Government Pension Fund Global - will acquire a 50% interest in seven assets from AXA REIM's Paris office portfolio, currently valued at about €1.4bn.
The properties, together providing a total lettable area of roughly 156,000 square meters, are located in either the western or central business districts of the French capital.
AXA REIM, which will handle asset management for the JV, said the deal would allow AXA France Insurance Companies to rebalance their exposure to large Paris office properties and diversify by reinvesting across Europe, particularly in Germany and the UK.
The joint venture will include 12-14 Rond Point des Champs-Elysées, Paris 8e; 1-3/2 rue des Italiens, Paris 9e; 16 avenue Matignon, Paris 8e; 24-26 rue Le Peletier, Paris 9e; Meudon Campus, 92 Meudon; OPUS 12, 92 La Défense; and 31-33 rue de Verdun, 92 Suresnes.
Karsten Kallevig, real estate CIO at Norges Bank, hailed the deal for providing the Norwegian investor with "a significant exposure" to the Paris office market - "one of our key European target markets".
Norges Bank only made its first real estate investment for the Norwegian Government Pension Fund Global last November, acquiring a 25% stake in The Crown Estate's Regent Street portfolio in London.
The NOK2.8trn (€342bn) sovereign wealth fund confirmed it would invest in the asset class - for the first time in its history - in March 2010, and that the £448m (€509m) Crown Estate deal would be its first step toward reaching its 5% allocation target.
Effectively a joint venture with the state, the deal cost the fund £452m in return for 25% of the properties' net rental income.