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Norges, MetLife JV to invest $422m in DC offices

The partners bought one completed office building and one under construction from a Walton Street Capital joint venture.

Norway’s sovereign wealth fund has again teamed up with MetLife to buy two Washington, DC office properties, the groups said Thursday.

The joint venture expects to invest a total of $421.8 million for the acquisition and future development costs of Constitution Square Three and Four. The duo purchased the properties from a partnership comprising developer StonebridgeCarras and private equity real estate firm Walton Street Capital, according to real estate data provider Real Capital Analytics (RCA).

Norges Bank Investment Management (NBIM), the part of Norway's central bank that manages the Government Pension Fund Global (GPFG), has a 47.5 percent interest in the properties, and MetLife, which will manage the office buildings, has a 52.5 percent stake. A spokeswoman for NBIM declined to comment on the purchase price for the properties.

Constitution Square Three, built in 2013, is a 349,000 square foot tower with ground-floor retail, and Constitution Square Four, currently under construction, will be a 493,000 square foot office when it opens in the fourth quarter of 2018, according to an NBIM spokeswoman. Both spaces are leased to the US General Services Administration for the Department of Justice.

“Constitution Square in Washington, DC, represents the opportunity to add a high-quality, fully leased asset in a core market to our joint portfolio with Norges Bank Real Estate Management,” said Robert Merck, MetLife’s global head of real estate investments, in Thursday’s statement.

The two properties are part of a 2.6 million square foot development project at Constitution Square for which StonebridgeCarras and Walton Street began construction in 2008, according to the firms. The project also includes a luxury apartment building, hotel and another completed office building that was sold to Northwestern Mutual in October for $305 million, according to a statement at the time.

NBIM, which manages NKr 7.3 trillion ($874 billion, €784 billion) on behalf of GPFG, has invested in Washington, DC since February 2013, according to RCA. The world’s largest sovereign wealth fund’s first Washington deal was the purchase of 49.9 percent stakes in two office buildings from TIAA-CREF as part of a larger five-property portfolio acquisition with additional assets in Boston and New York City, according to RCA.

Since NBIM began investing with MetLife in 2013, the duo have picked up two properties in Boston, one in Washington, DC and one in San Francisco, according to MetLife.

Last month, PERE reported that NBIM purchased two minority interests in San Francisco office buildings for $452.9 million. The 44 percent stakes in 100 First Street and 303 Second Street were acquired from real estate investment trust Kilroy Realty, which valued the buildings at $1.2 billion.

“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 at the time.

NBIM managed NKr 221 billion in real estate investments as of June 30, according to Thursday’s statement. MetLife manages $67.7 billion in real estate, according to its website.