Norwegian commercial real estate investors have joined the ranks of foreign U.S. commercial real estate buyers in the wake of its sovereign fund making acquisitions from New York to San Francisco. According to research firm Real Capital Analytics Inc. and statements from the wealth fund, the country has spent more than $3.2 billion on United States real estate this year (including the assumption of debt). The country is now the biggest international buyer after Canada and its total purchases are more than double the amount spent last year. At that point, Norway held the No. 6 rank for property purchases in the U.S.
Norway has a smaller population than New York and is spending billions of dollars on properties around the world. Its sovereign wealth fund, which is the largest one in the world, has set a goal to invest up to five percent of its assets in real estate. Green Advisors Inc. stated recently that in the United States, prices for Class A buildings in major markets are being pushed up by foreign funds that often are prepared to accept lower yields than domestic buyers in return for a safe place to park their money.
The country’s wealth fund began acquiring properties outside of Europe last year. As of June 30, it held $10.3 billion in property or 1.2 percent of total assets. Norges Bank Investment Management announced in June that it will be increasing staff by 60 percent over the next three years to deal with the fund’s increased investments in real estate.
Norway’s most recent transaction was the acquisition of stakes in three towers of Boston Properties Inc., the largest office real estate investment trust in the U.S. In the $1.5 billion deal, the wealth fund agreed to buy a 45 percent stake in the Atlantic Wharf Office Building and 100 Federal Street in Boston, as well as 601 Lexington Avenue in Manhattan, which was once called Citigroup Center.
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