Norway’s sovereign wealth fund is teaming up with Oxford Properties Group to purchase two Washington, DC office buildings for $560 million.
Norges Bank Real Estate Management, the real estate platform of Norway's central bank that manages the Government Pension Fund Global, and Oxford, the real estate arm of Ontario Municipal Employees’ Retirement System, purchased 1101 New York Avenue NW for $410 million, according to sources familiar with the deal. The sellers were a joint venture comprising investment bank Morgan Stanley, insurance company W.R. Berkley and private real estate investor Property Group Partners.
Tenants at the 12-story building, which is 99 percent leased, include financial media company Bloomberg, financial consultancy EY and Google parent company Alphabet.
The partners also bought 900 16th Street NW for $150 million from local developer ICG Properties and private equity real estate firm JBG Companies. JBG is selling off some of its Washington, DC-area holdings after a November merger with a spinoff of Vornado Realty Trust, a New York-based real estate investment trust, PERE previously reported. The nine-story building is 75 percent leased to law firm Miller & Chevalier.
“Adding these two high quality assets to our DC portfolio is directly in line with Oxford's US strategy of investing in core assets in core locations in well-defined markets,” Chris Mundy, Oxford’s senior vice president of investments, said in Monday’s statement.
Amenities at both buildings include outdoor terraces and fitness facilities. Oxford, which has a 51 percent stake in the joint venture, will manage the assets.
Both Norges and Oxford have previously invested in the Washington, DC market with other partners. The Norwegian investor most recently partnered with New York-based insurer MetLife to buy two properties in September, PERE previously reported. The joint venture planned to invest a total of $421.8 million for the acquisition and future development costs of Constitution Square Three and Four.
“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, previously told PERE.
Oxford owns three other Washington, DC-area properties – Washington Center, Gallery Place and 600 Massachusetts Avenue – and has a stake in an additional development project, according to Monday’s statement.
OMERS managed C$85.2 billion ($64.86 billion; €61.33 billion) in total assets, including C$24.8 billion in real estate, as of December 31, according to the pension system’s most recent annual report. Real estate returned 12.4 percent as of year-end 2016, down from 15.3 percent in 2015.