Norges inks SF office deals for $452.9m

The world’s largest sovereign wealth fund began investing in San Francisco in 2014.

Norway’s sovereign wealth fund has picked up two minority stakes in San Francisco office buildings for $452.9 million, according to a Tuesday filing with the Securities and Exchange Commission.

Norges Bank Investment Management (NBIM), the part of Norway's central bank that manages the Government Pension Fund Global (GPFG), bought 44 percent stakes in 100 First Street and 303 Second Street (pictured) from real estate investment trust Kilroy Realty, according to the SEC filing. The deal values the buildings at $1.2 billion. Kilroy bought the buildings in 2010 for a combined $427.6 million, according to real estate data provider Real Capital Analytics (RCA).

Both buildings are Class A properties with amenities including rooftop terraces and coffee shops. The 100 First Street deal closed on Tuesday, and the 303 Second Street acquisition is expected to close in the fourth quarter, the filing said.

“We have four target cities in the US that we have a long-term strategic focus on: New York, Washington DC, Boston and San Francisco. We are always looking for good investment opportunities in these cities,” Line Aaltvedt, a Norges spokeswoman, told PERE.

NBIM, which manages NKr 7.4 trillion ($890 billion, €790 billion) on behalf of GPFG, has invested in San Francisco since January 2014, according to RCA. The world’s largest sovereign wealth fund’s first Bay Area deal was the purchase of a 47.5 percent stake in 425 Market Street, a 38-floor office building, from MetLife in a deal that valued the building at $495 million.

NBIM’s most recent San Francisco acquisition was a joint venture with TIAA Global Asset Management to buy home-sharing platform Airbnb’s headquarters at 888 Brannan Street for $310 million in September 2015, according to RCA. NBIM took a 49.9 percent stake in the five-story building, which was 97 percent leased to Airbnb and other technology-focused companies as of the purchase date.

San Francisco has been a popular target for international capital, even as the city’s real estate prices have climbed to record highs across property types. In the past year, foreign investors purchased 38 properties for $3.7 billion, making the city the fourth most popular destination for foreign capital, behind Manhattan, Los Angeles and Chicago, according to RCA.