Norway’s sovereign wealth fund agreed to buy a 50 percent stake in seven properties in and around Paris for 702 million euros ($1 billion) from Axa SA, as it seeks to add at least $25 billion in real estate assets to boost returns.
The $570 billion Government Pension Fund Global will form a joint venture with Axa that will manage the properties, the Oslo-based investor said today in an e-mailed statement. The transaction is expected to be completed in the third quarter.
“The investment is in line with our strategy to initially invest in the biggest European property markets before expanding into other regions,” said Karsten Kallevig, chief investment officer for real estate at Norges Bank Investment Management, which manages the fund. “It also reflects our preference to form partnerships with investors that both own and operate properties.”
The fund last year got approval to put 5 percent of its capital in real estate, moving away from bonds to help it meet a 4 percent annual return target. It earlier this year said the next property purchases would be in France and Germany after completing a 452 million-pound ($723 million) deal for a 25 percent stake in the London Regent Street shopping area.
Returns on French property investment were 9.97 percent last year -- about the same as the 10-year average -- after two years of losses, according to an index from Investment Property Databank Ltd. The residential market is stalling as buyers are deterred by record prices following two years of gains that outstripped London and New York. Home values in the French capital rose about 20 percent last year, the biggest increase since at least 1991, the Paris Chamber of Notaries estimates.
Norway’s oil fund said in April it’s no hurry to build its property portfolio as it anticipates better deals after 2013. The fund is mandated to hold 60 percent in equities, 35 percent in fixed-income and 5 percent in real estate. It has been taking on more risk since its initial capital infusion in 1996, adding stocks in 1998 and emerging markets in 2000.
Norway, a nation of 4.9 million people, generates money for the fund from taxes on oil and gas, ownership of petroleum fields and dividends from its 67 percent stake in Statoil ASA, the country’s largest energy company.
A sovereign wealth fund is a state-owned fund with assets such as stocks, bonds and real estate.
Source: www.bloomberg.com
The $570 billion Government Pension Fund Global will form a joint venture with Axa that will manage the properties, the Oslo-based investor said today in an e-mailed statement. The transaction is expected to be completed in the third quarter.
“The investment is in line with our strategy to initially invest in the biggest European property markets before expanding into other regions,” said Karsten Kallevig, chief investment officer for real estate at Norges Bank Investment Management, which manages the fund. “It also reflects our preference to form partnerships with investors that both own and operate properties.”
The fund last year got approval to put 5 percent of its capital in real estate, moving away from bonds to help it meet a 4 percent annual return target. It earlier this year said the next property purchases would be in France and Germany after completing a 452 million-pound ($723 million) deal for a 25 percent stake in the London Regent Street shopping area.
Returns on French property investment were 9.97 percent last year -- about the same as the 10-year average -- after two years of losses, according to an index from Investment Property Databank Ltd. The residential market is stalling as buyers are deterred by record prices following two years of gains that outstripped London and New York. Home values in the French capital rose about 20 percent last year, the biggest increase since at least 1991, the Paris Chamber of Notaries estimates.
Norway’s oil fund said in April it’s no hurry to build its property portfolio as it anticipates better deals after 2013. The fund is mandated to hold 60 percent in equities, 35 percent in fixed-income and 5 percent in real estate. It has been taking on more risk since its initial capital infusion in 1996, adding stocks in 1998 and emerging markets in 2000.
Norway, a nation of 4.9 million people, generates money for the fund from taxes on oil and gas, ownership of petroleum fields and dividends from its 67 percent stake in Statoil ASA, the country’s largest energy company.
A sovereign wealth fund is a state-owned fund with assets such as stocks, bonds and real estate.
Source: www.bloomberg.com
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