July 5 (Bloomberg) -- Norway’s $600 billion sovereign wealth fund agreed to buy stakes in five properties in Paris from Italy’s Generali Group as it expands its real estate portfolio in the French capital.
The wealth fund, known as the Government Pension Fund Global, will buy 50 percent stakes in five properties for 275 million euros ($341 million), it said in a statement today. The Oslo-based fund will also form a joint venture with Generali Real Estate, a unit of the Trieste-based insurance company, for property investments in central Paris, it said.
“The transaction will increase our exposure to high-quality properties in central Paris,” said Karsten Kallevig, Norges Bank Investment Management’s chief investment officer for real estate. Generali will own the other 50 percent stakes in the buildings on completion of the deal, giving the joint venture initial assets valued at 550 million euros.
The Norwegian sovereign wealth fund in 2010 got approval from the government to invest 5 percent of its capital in real estate. The fund gets its revenue from taxes on oil and gas, ownership of petroleum fields and dividends from Norway’s 67 percent stake in Statoil ASA, the nation’s largest energy group.
The five Paris properties, which are used as office and retail premises and have a total surface area of about 38,600 square meters, are located at 100 Avenue des Champs Elysees, 3-5 Boulevard Malesherbes, 15-17 Rue Scribe, 11/13/15 Rue Pasquier, and 183-185 Avenue Daumesnil.
Kallevig said the fund isn’t in a hurry to make further purchases, though it’s ready to step in should an opportunity present itself. The fund considers the Paris property purchase a long-term investment, he said.
The joint venture with Generali is the fund’s third such agreement in two years after deals with the U.K.’s Crown Estate in 2011 in London and France’s Axa SA in Paris. The transaction is the fund’s third investment in Paris after it last year bought stakes in seven Paris buildings from Axa for 702 million euros and then in November acquired another 290 million euros worth of Paris property, together with Axa.
The partnership with Generali will have a long-term investment strategy focused on central Paris and may over time be extended to other European markets, the fund said.
“Like with our previous partners, I really like the strategic part of this transaction,” Kallevig said by phone from Paris. “Certainly with Generali as with Axa, I would hope we could do more with them, whether it’s in Paris or elsewhere.”
To contact the reporter on this story: Josiane Kremer in Oslo at Jkremer4@bloomberg.net
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