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World's Largest Sovereign Wealth Fund Buying British

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Tesco  Jones Lang LaSalle  Financial Times  prime real estate assets  Norwegian oil fund  Primark  Metric Property Investments 

World's Largest Sovereign Wealth Fund Buying British

By - Monday 10 June 2013

Norway's oil fund has purchased a GBP 250m portfolio of suburban warehouses in the U.K. as it moves forward with plans to increase its property assets. The Norwegian Pension Fund Global, the world's largest sovereign wealth fund, is buying 11 warehouses to be used as distribution centres for retailers such as Tesco, Primark and the Co-op, according to the Financial Times.  

The warehouses, which are being bought from LondonMetric - a property group merged between London & Stamford and Metric Property Investments - have a total floor area of 2.4 million square feet.  

The purchase is the latest move for the oil fund, which recently made headlines by increasing its focus on property. Fund managers say they want five percent of the fund's assets in property. 

In this endeavour the fund is to partner with US landlord ProLogis to buy the properties, which are expected to yield more than prime real estate assets because of the reduced competition they face.

Industrial property in the U.K. is expected to deliver an average annual total return of 6.4 percent between 2013 and 2016, according to data from Jones Lang LaSalle.  In contrast, yields for many office blocks in the City of London and West End have dropped below four percent, according to the FT.  

The Norway fund is still in buying mode. Even with the latest purchase, it is still only at one percent, the FT reports. 

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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.

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