CNBC: Norway’s $2 trillion sovereign wealth fund intends to invest more than half a billion dollars in a New York City office building, its latest major investment in prime global real estate.
The fund, the largest of its kind in the world, is managed by Norges Bank Investment Management (NBIM) on behalf of the Norwegian population.
NBIM said on Tuesday that it would pay $542.6 million for a 95% stake in an office property at 1177 Avenue of the Americas — also known as Sixth Avenue.
The purchase will be a joint venture with real estate investment firm Beacon Capital Partners. A subsidiary of Beacon will take a 5% stake in the building, with Beacon overseeing asset management for the 1 million square-foot property.
The deal, which values the property at $571.1 million, is expected to be completed in the third quarter of this year.
NBIM and Beacon will be buying the office building from California State Teachers’ Retirement System and Silverstein Properties, who currently own it under a joint venture.
Set up in the 1990s to invest excess revenues from Norway’s oil and gas industry, the country’s sovereign wealth fund has a value of more than 19.8 trillion Norwegian kroner ($1.98 trillion).
While the fund’s main focus is global equities — with stakes in Apple, Nvidia, Tesla, German defense giant Rheinmetall and chipmaker TSMC — 1.9% of its investments are in real estate.
Its portfolio already includes more than a dozen New York buildings, with holdings in prime Manhattan property. The fund owns a 45% stake in Times Square Tower, and is invested in properties on New York City’s Madison Avenue, Broadway and one that will neighbor its new investment on Avenue of the Americas.
NBIM’s property holdings also span further across the U.S., with stakes in properties in Boston, San Francisco, Las Vegas and other major cities — but its real estate portfolio is globally focused.
As of June 30, NBIM’s real estate holdings spanned 15 countries, with 486 property investments worth more than $16 billion in the United States.
Earlier this year, it was announced the fund would invest $740 million to buy 25% of a property portfolio in London’s upmarket Covent Garden district.
NBIM also agreed to pay 240 million euros ($279 million) earlier this year for a 40% stake in AXA Lifestyle Housing, which holds a platform that owns and operates student and co-living properties in Spain and France.
In the first half of the year, the fund posted a 4% return on its unlisted real estate investments.
