Photographer: Simon Dawson/Bloomberg

Brexit Triggered Fastest Property Deal for Biggest Wealth Fund

Updated on
  • Norway fund cut value of U.K. property by 5% after Brexit
  • Says London to remain ‘important’ Europan city regardless

Norway’s $875 billion sovereign wealth fund, the world’s biggest, pounced on London’s Oxford Street after U.K. voters decided to leave the European Union.

Just about two weeks after Britons unexpectedly voted to leave the EU at the end of June, the fund snapped up a retail and office property for 124 million pounds ($164 million) from the Aberdeen U.K. Property Fund.

Karsten Kallevig

Photographer: Krister Soerboe/Bloomberg

The deal “may have been the fastest transaction we’ve ever made,” Karsten Kallevig, chief executive officer of Norges Bank Real Estate Management, said in an interview in Oslo on Tuesday. The fund got a “significant discount” because the seller had liquidity pressure, he said.  

The purchase underscored the fund’s post-Brexit commitment to the U.K. and its capital, where it owns significant swathes of real estate, including large parts of Regent Street and the Mayfair district.

The fund at the end of June took the step of independently cutting the value of its massive U.K. real estate portfolio by 5 percent, or 2.3 billion kroner, after the vote. In total, it lost 1.6 percent in the second quarter on its 168 billion-krone ($20 billion) unlisted real estate holdings.

Kallevig declined to comment on the writedown and it’s current assessment of the market, while adding that U.K. logistics properties “are doing well."

The final fallout from Brexit is still unclear.

"What we do believe, is that London will continue to be an important city in Europe in the foreseeable future,” he said.

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The fund has a target of investing in large cities around the globe as it seeks to build up a portfolio to at least 5 percent of its total assets. It’s now at about 3 percent.