Norway’s Government Pension Fund Global acquires property in New York

Norges Bank Investment Management has acquired a 44 per cent share in a property portfolio in New York City on behalf of the Government Pension Fund Global.

The portfolio comprises of 11 office properties, in a joint venture with Trinity Wall Street. It cost US $1.56bn (€1.47bn), with the total value of the portfolio at US $3.55bn (€3.33bn) and gives the fund a 75-year ownership interest.

The binding agreement was signed 20 November 2015 and is expected to close before year-end 2015.

The properties are approximately 94 per cent leased and total over 4.9 million square feet. They are all located in the Hudson Square neighbourhood of Midtown South in Manhattan.

Properties include 12-16 Vestry Street, 200 Hudson Street, 205 Hudson Street, 75 Varick Street, 100 Avenue of the Americas, 155 Avenue of the Americas, 345 Hudson Street, 350 Hudson Street, 10 Hudson Square, 225 Varick Street and 435 Hudson Street. The total portfolio comprises more than 30 per cent of the Hudson Square commercial neighbourhood.

The acquisition follows poor third quarter results from the fund, which saw it return NOK -273bn in the third quarter of the year due to a “slowdown” in the global economy.

For the third quarter the fund returned -4.9 per cent, or NOK 273bn, the third weakest result since the fund’s inception. Equity investments returned -8.6 per cent, while fixed-income investments returned 0.9 per cent. The return on these investments was 0.2 percentage points lower than the return on the benchmark indices. Investments in real estate returned 3 per cent.

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