Sunday, October 13, 2013

Norway Takes Manhattan

Norway Takes Manhattan
Early last month, Norway’s sovereign wealth fund announced it would invest $684 million in a 45 percent stake of Boston Properties’s Times Square Tower.
No small achievement, the investment is the Norwegian Government Pension Fund’s second real estate play in the United States in a span of just eight months as it seeks to rev up its portfolio to as much as 5 percent of total assets under management.
The uptick in activity, prompted in part by the fund’s desire to reduce its exposure to the bond market, is a welcome development for real estate’s largest institutional players now seeking to realize gains on investments made during the past decade and to deploy capital in other sectors of the market.
But while Abu Dhabi, China and Kuwait have all invested heavily in U.S. property over the past decade, it is Norway–with approximately $750 billion in state oil money, the world’s largest sovereign wealth fund–that has made the biggest splash across New York City’s robust real estate market.
Partnering with established New York real estate owners Boston Properties and TIAA-CREF, Norway is snapping up stakes in trophy towers like no other as the dollar values of foreign transactions creep ever higher.
“We are moving into the larger denomination transactions,” Phil McAndrews, head of global real estate transactions and joint ventures at TIAA-CREF, said. “It’s a strong indicator that the U.S. economy is regarded highly around the globe, and real estate is a desirable asset class.”

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