Norwegian oil fund debuts in the US with TIAA-CREF in €1.2b office joint venture

Norwegian Government Pension Fund Global is taking a 50% share in a portfolio of office properties in the US alongside retirement fund manager TIAA-CREF.

The giant Norwegian pension fund, managed by Norges Bank Investment Management (NBIM), is paying about $600 mln (€447 mln) for its first investment in US real estate.

It follows on from a string of big ticket deals over the last two years in the UK, France, Germany and Switzerland.

The assets in New York City, Washington DC and Boston are valued at $1.2 bn. TIAA-CREF, the seller, retained 50.1% of each property and will manage the buildings on behalf of the partnership. The transaction was completed on 8 February.

'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,' said Karsten Kallevig, chief investment officer for real estate at Norges NBIM.

The properties consist of 172,450 m2 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 said. '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% in equities, 35-40% in fixed income and as much as 5% in real estate.

NBIM acts on behalf of the Norwegian Government Pension Fund Global. The fund is invested globally in equity, fixed-income and real estate markets. It held assets worth 3,723 billion kroner (€480 bn) at end-September 2012.

TIAA-CREF is a financial services organization with $502 bn in combined assets under management and is the leading provider of retirement services in the academic, research, medical and cultural fields in the US.