Norway Oil Fund Buys $1.6 Billion Stake in Industrial Real Estate Portfolio

   By Charles Duxbury 
 

Norway's sovereign-wealth fund said Thursday it has made another investment in property, buying a half share in a portfolio of industrial properties from Prologis (PLD) for 1.2 billion euros ($1.6 billion) as the fund pursues a strategy to shift some of its $680 billion investment portfolio into real estate and away from fixed income.

The central bank-run fund said Prologis, an owner, operator and developer of industrial real estate, will retain the other half of the portfolio and manage the properties on behalf of the two owners.

The portfolio consists of 195 properties in 11 European countries including France, the U.K., Spain, Poland and Italy.

"The agreement marks the fund's first investment in industrial real estate and is in line with our strategy to build a high-quality portfolio that's spread over different countries and sectors," said Karsten Kallevig, the fund's head of real-estate investment in a news release.

Norway's sovereign-wealth fund, also known as the oil fund, has previously invested in property in the U.K., France, Switzerland and Germany.

Its latest deal was a 1 billion Swiss franc ($1.1 billion) deal to buy and lease back Credit Suisse AG's (CSGN.VX) Zurich offices late November.

In October, the oil fund bought a 50% stake in properties in Frankfurt and Berlin and a stake in the U.K.'s Meadowhall Shopping Centre. It also owns real estate on London's Regent Street and Paris's Avenue Des Champs-Elysees.

The oil fund was set up in 1990 to safeguard the proceeds from Norway's oil industry. Its move into property comes after it received a mandate in 2010 to invest up to 5% of its assets in real estate.

At the end of September, only about 0.3% of the fund was invested in real estate.

The fund's Mr. Kallevig has estimated it might take four to eight years for the 5% goal to be reached.

-Write to Charles Duxbury at [e-mail]