OSLO (Reuters) - Norway’s $1 trillion sovereign wealth fund has made its first real estate investment in Asia by acquiring a 70 percent stake in five properties in Tokyo and hopes to do more property deals in the Japanese capital, it said on Friday.
The fund has long wanted to make an Asian real estate investment, highlighting Tokyo and Singapore as its targets, but has waited until now as it felt the properties on offer were not at the right price.
“We have looked at Asia, and in Tokyo in particular, for a couple of years,” Karsten Kallevig, Chief Executive Officer of Norges Bank Real Estate Management, told Reuters.
“We looked at transactions and either the asset, the partner or the price ... those boxes have not been ticked. With this one, it is pretty interesting ... It is a fair price.”
The fund will pay 92.75 billion yen ($823.20 million) for its stake, valuing the portfolio at 132.5 billion yen, while partner Tokyu Land Corporation will acquire the remaining 30 percent, the fund said.
Three properties are in the shopping district of Shibuya while the two others are in the upmarket area of Omotesando.
“I hope we can do more together,” said Kallevig. “I think they (the partner) are of a quality that we would like to do more. Now we still need to find opportunities that fit their strategy and our strategy,” he said.
The fund invests the revenue from Norway’s oil and gas output in stocks, bonds and unlisted real estate abroad. At the end of the third quarter, unlisted property accounted for 2.7 percent of the overall value of the fund.
The fund’s long-term goal is to raise it toward 7 percent.
One of the cities the fund would like to invest in is Singapore, but it has yet to make a deal there.
“There are some great companies (we can partner with in Singapore),” said Kallevig. “(But) there has to be assets that fit our strategy, at a price we can live with.”
The fund has tended to buy upscale office and retail properties in the world’s biggest cities, such as on the Champs-Elysees in Paris or London’s Regent Street, focusing on 10 global cities.
But it has also bought logistics centers, as companies must have efficient supply chains that deliver goods to customers quickly.
“There is nothing stopping us from doing logistics in Japan as well. It is not something that we are looking at right now. (But) it is an interesting market for logistics,” he said.
Editing by Terje Solsvik and David Evans