Norway SWF strikes €275m France deal with Generali

Following its JV with AXA REIM, Norges Bank Investment Management has formed a similar partnership with Generali whereby it has agreed to buy a 50% stake in five Paris properties from the Italian insurer for €275m.

Norway continues to expand its footprint in the French property market, this time by striking up a partnership wi
th an Italian insurance giant.

Through a joint venture with the real estate arm of Generali Group, The Norges Bank Investment Management (NBIM) has invested in five properties in Paris on behalf of its €446 billion Norwegian Government Pension Fund Global.

According to a statement issued by the Norwegian investment platform, as part of the venture NBIM will buy a 50 percent stake in the five properties, which are a mix of office and retail assets totalling roughly 38,600 square metres, from Generali Real Estate for €275 million. In turn, Generali Real Estate will maintain a 50 percent stake in the assets on completion of the transaction, which is expected by year-end, and continue to manage the properties.

The partnership will have a long-term investment strategy focused on central Paris and may over time be extended to other European markets.

Karsten Kallevig, NBIM's chief investment officer for real estate, said: “The transaction will increase our exposure to high-quality properties in central Paris.” Kallevig added that NBIM hopes “to expand the relationship” with Generali “in the years ahead”.

This marks NBIM’s second investment in French real estate. Last July, it was announced that NBIM formed a similar investment joint venture with the real estate arm of French insurance giant AXA. Through this venture, the Norwegian state fund acquired a 50 percent stake in a portfolio of seven Paris-based office properties valued at €1.4 billion from AXA France Insurance Companies and managed by AXA’s AXA Real Estate Investment Managers. The assets total 1.67 million square feet in gross leasable space.

That followed the Norwegian sovereign wealth fund’s first direct foray into property in November 2010, when it bought a 25 percent stake in London’s Regent Street from the Crown Estate for approximately €530 million. In March 2010, the Norwegian government approved a mandate to invest up to 5 percent of its total assets into real estate.

The fund has been purposefully striking up joint ventures with like-minded investors instead of investing indirectly via more conventional property funds alongside a number of limited partners. In May, Kallevig told an audience at the Reading Real Estate Foundation Annual Lecture in London that “right now opportunity funds and many closed-end funds don't serve [the fund’s] purpose” because the sovereign wealth fund needed to invest its capital in long-term assets during its formative years.

“The last thing I want to hear is someone say we will definitely get out in five years’ time,” he added. “We go into situations where there are no structural impediments to holding the asset forever.”