(February 11, 2013) – The manager of the world’s largest sovereign wealth fund has reached a $1.2 billion agreement with TIAA-CREF to join together to in US real estate.
This deal marks the first foray into US real estate for Norges Bank Investment Management (NBIM), which runs the $656.2 billion Norway Pension Fund Global. The joint venture will focus on high quality office properties in Boston, New York, and Washington, DC. TIAA-CREF will manage the partnership, with a 50.1% stake, while Norges Bank holds the remaining 49.9%.
“This is the fund’s first real estate investment outside 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 Bank, in a statement. “We are very pleased to team up with a partner that has TIAA-CREF’s knowledge and capabilities.”
New York-based financial services firm TIAA-CREF is no stranger to direct real estate investments. It already owns more than $19 billion worth, including significant amounts of high-quality urban space in North America and Western Europe.
Norges Bank is “an excellent partner for us as we share a similar approach to real estate investing–a long-term investment horizon and an emphasis on large, high-quality assets in gateway cities,” said Tom Garbutt, head of global real estate for TIAA-CREF, in a statement. “We believe direct investment in real estate and these principles add value for our clients over time. Our relationship with NBIM extends our real estate investment platform at a time when we see compelling investment opportunities, and it allows us to further diversify our portfolio.”
In May, the TIAA-CREF announced another diversifying strategy, committing $2 billion in seed money for its new global agriculture company. The company purchases farmland in partnership with institutional investors, including the British Columbia Investment Management Corporation and the Caisse de dépôt et placement du Québec.