Norges Bank Real Estate Management (NBREM) has made its second UK property investment since the Brexit vote.

The investor is buying a retail and office development on London’s Oxford Street from Great Portland Estates (GPE) for £276.5m (€320.8m).

The real estate arm of Norges Bank Investment Management (NBIM), which runs Norway’s NOK7.3trn (€804bn) sovereign wealth fund – the Government Pension Fund Global (GPFG) – said it was buying a 100% interest in the property at 73-89 Oxford Street.

The asset is still being built, with completion expected in the second quarter of next year.

The purchase price reflects a net initial yield to the buyer of 3.2%.

The development is pre-let to New Look and Benetton, as well as the group, with a WAULT (weighted average unexpired lease term) of 17 years.  

On completion, the rent on the property will be £9.7m a year, subject to final measurement, GPE said.

The Norwegian former oil fund made an initial payment of £205.2m in the deal, signed and completed yesterday, with the balance due on completion of the building next June.

NBIM said the asset was unencumbered by debt and that there was no financing involved in the transaction.

The price NBREM is paying allows for a deduction in lieu of interest on its initial capital outlay until practical completion at a rate of 3.2% a year and an allowance for tenant rent free periods.

When finished, the property will have 87,100 sqft of space, consisting of two retail units totalling 44,100 sqft and four floors of offices totalling 43,000 sqft.

This is the second UK real estate investment the GPFG has made since the Brexit vote at the end of June this year, having bought a 59,000 sqft retail and office building – also on London’s Oxford Street – for £124m from Aberdeen Asset Management in July.

Immediately after the referendum, in which UK people voted in favour of leaving the EU, NBIM wrote down the valuations of its UK investments by 5%.

In the third quarter, however, it marked them back up to around the levels they had been at before the shock vote.

Toby Courtauld, chief executive of GPE, said: “Oxford Street has been an exceptional project for us, and this sale continues our strategy of recycling capital out of assets where we have created significant value.”

The sale crystallised to a whole life capital return on the asset of 75% and an annualised unlevered IRR of 28.4%, he said.