The Real Deal New York

Norway now second-largest buyer of US commercial real estate

Sovereign fund bidding for Blackstone's $2.25B 1095 Sixth Avenue; bought 601 Lex for $1.5B

September 24, 2014 02:10PM

Norway’s sovereign wealth fund plans to invest as much as 5 percent of its overall portfolio in the private real estate market in each of the next three years.

Norway’s sovereign wealth fund plans to invest as much as 5 percent of its overall portfolio in real estate.

Norway, surprisingly, now ranks second among foreign U.S. commercial real estate buyers, topped only by Canada.

The sovereign fund that manages the country’s substantial oil wealth made a play for Blackstone Group’s 1095 Sixth Avenue just last week, in a deal that is expected to fetch up to $2.25 billion. The move followed the Norges Bank Investment Management’s purchase of a 45 percent interest in 601 Lexington for $1.5 billion. In total, the country has spent over $3.2 billion on U.S. real estate so far this year, according to data from research firm Real Capital Analytics cited by Bloomberg News.

The push comes as Norway looks to invest as much as 5 percent of its assets in real estate.

“There’s an element of perceived safety in a hard asset in the United States, in New York City, that is harder to replicate in other alternatives,” Michael Knott, managing director at Newport Beach, Calif,-based Green Street told Bloomberg. Such investments offer the Norwegian fund “the ability to hold indefinitely and probably not be troubled at all by a low going-in yield.”

In New York City, foreign investors account for between 20 and 30 percent of all commercial real estate transactions, Bloomberg reported. [Bloomberg News]Julie Strickland

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