Norges Bank Investment Management has reported a 1.5% return on its real estate portfolio for the third quarter of this year.
Real estate investments amounted to 1.3% of the fund at the end of the quarter.
The fund’s real estate investments will gradually increase to as much as 5% of the value of the fund.
The fund said it aims to build a global but concentrated real estate portfolio and expects to invest 1% of the fund each of the next three years in private real estate.
Yngve Slyngstad, chief executive at NBIM, said: “Our strategy is to invest in a limited number of cities around the world and concentrate on office and retail premises.”
New properties were purchased in both the US and Europe in the quarter.
In July, the fund invested in the office building One Beacon Street in Boston, paying $122.3m (€96.2m) for a 47.5% stake, and acquired 100% of the Le Madeleine building on Boulevard de la Madeleine in Paris for €425.6m.
In August, the fund purchased a 57.8% stake in the Pollen Estate, a portfolio of properties in London’s West End, for £343m (€435m), as well as 50% of a portfolio of logistics properties in Madrid and Barcelona through its partnership with Prologis for €50m.
Last month, the fund acquired a 49.9% stake in the Orrick Building, an office building in San Francisco, for $139.7m, in addition to entering an agreement with Boston Properties on the purchase of a 45% interest in 601 Lexington Avenue in New York, 100 Federal Street in Boston and Atlantic Wharf Office Building in Boston for a total of $1.5bn.
Through its partnership with Prologis, the fund purchased 50% of a logistics property in Enfield in the UK for £55m.
Last month, the fund bought a 94.9% stake in the shares of companies owning two office buildings in the Lenbach Gärten quarter in Munich from AM Alpha for €176.1m, including €75m of third-party debt.
Overall, the fund produced a return of just 0.1%, or NOK15bn (€1.8bn), in the third quarter of this year, with both equities and bonds underperforming their benchmarks.