Norway’s Wealth Fund Buys 50% of U.K. Mall for $560 Million

Norway’s $650 billion sovereign wealth fund bought a 50 percent stake in the Meadowhall Shopping Centre in northern England for 348 million pounds ($560 million), its second U.K. acquisition.

The fund purchased the stake from London & Stamford Property Plc and Green Park Investments, Norges Bank Investment Management said in a statement today. The transaction values the mall at 1.53 billion pounds including debt, according to the bank, which manages the Norwegian fund. The net yield is 5.09 percent at that price.

“The purchase gives us exposure to one of the largest and most dominant shopping centers in the U.K.,” Karsten Kallevig, chief investment officer of Norges’ real estate division, said in the statement.

The Norwegian sovereign wealth fund’s first U.K. deal was the 448 million-pound purchase of a 25 percent stake in London’s Regent Street in November 2010. During the past two years, the fund has also acquired properties in Paris in partnerships with the real estate asset management arms of Axa SA and Generali Assuricazioni SpA.

The Norwegian fund, which gets its revenue from taxes on oil and gas, ownership of petroleum fields and dividends from a 67 percent stake in Statoil ASA, got the go-ahead from the finance ministry to start investing in real estate in 2010.

U.S. Plans

The fund plans to make its first real estate investments in the U.S. by the end of next year, Trond Grande, deputy chief executive officer at Norges Bank Investment Management, said in an interview last month.

British Land Plc, the U.K. real estate investment trust that owns the other 50 percent of Meadowhall, will manage the mall for the Norwegian fund, according to the statement. Meadowhall has about 25 million visitors each year and has 141,000 square meters (1.52 million square feet) of retail space that can be leased to tenants.

London & Stamford and Green Park Investments acquired the 50 percent stake in the mall in February 2009 for 170 million pounds and 418 million pounds in assumed debt. London & Stamford’s smaller share in the venture with Green Park meant that its stake in the Meadowhall was 16 percent.

The sale means it generated a 32 percent annual return on its 48 million-pound cash investment, said Keith Crawford, an analyst at London-based broker Peel Hunt LLP. Crawford reiterated his buy rating on London & Stamford’s shares.

London & Stamford declined 0.6 pence to 115.40 pence at 10:06 a.m. in London.

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