NBIM buys $1.5bn of US offices

The manager of Norway's sovereign wealth fund has cut a deal with Boston Properties to acquire a 45 percent stake in three assets in two major cities.

Norges Bank Investment Management (NBIM) has flexed its considerable financial muscles once again, this time buying a 45 percent interest in 601 Lexington Avenue in New York, 100 Federal State in Boston and the Atlantic Wharf Office Building, also in Boston.

The acquisitive manager of Norway's $873 billion sovereign wealth fund, which is growing its in-house real estate capabilities alongside its portfolio, has acquired the interest from Boston Properties for around $1.5 billion.

As the state-backed entity has frequently done in the past, NBIM is forming a joint venture with a real estate investment firm to own a large position in multiple properties while the owner retains a stake and continues to manage it. In this case, Boston Properties will retain property and leasing management rights.

The three properties are large-scale buildings. 601 Lexington is a 1.67 million square foot property in midtown Manhattan stretching 59 stories up and also comprising a lower-rise six-story office and retail building. It is 99 percent leased and has a $716.7 million mortgage attached to it.

The Atlantic Office Building in Boston, meanwhile, is a 791,000 square feet office along Boston Harbor waterfront rising 31 stories. It was developed by Boston Properties in 2011 and is 100 percent let.

Lastly, 100 Federal Street measures 1.32 million square feet over 37 stories and is positioned in Boston's main financial district. That building is 91 percent leased and has no debt.

It was only a few days ago that NBIM said that it had made its first real estate investment in San Francisco. It said on September 5 that it had acquired a 49.9 percent interest in The Orrick Building also known as Foundry Square II in a joint venture with TIAA-CREF.

Three days prior to that, NBIM said it had acquired a portfolio of eight buildings in Madrid and Barceolona that are logistics properties via its existing joint venture with Prologis.

That deal was signed on August 22 and the fund paid €242 million for its 50 percent stake. Prologis will perform asset management duties.

In August, it acquired a £343 (€430 million; $576 million) London portfolio having acquired a 57.8 percent stake in the Pollen Estate, a portfolio if 43 buildings located principally between London’s popular Regent Street and Bond Street. The seller of the stake was the Church Commissioners for England, an institution that invests on behalf of the Church of England.