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June 12, 2013

Oil-Fueled Norwegian Fund Buys 2.4 MSF Industrial Portfolio in UK

By Alex Girda, Associate Editor

LondonMetric Property Plc, a real estate investment trust, has recently completed the sale of its stake in a large distribution portfolio to a joint venture between U.S.-based Prologis’ European branch and Norges Bank Investment Management. The JV purchased the eleven industrial properties that comprise the portfolio for a fee of around $380 million, reflecting a net initial yield of 6.25 percent.

The industrial portfolio totals 2.4 million square feet of space, with 10 of the properties being held by LondonMetric in a 50 percent joint venture with Green Park Investments. The remaining Focus Distribution Centre at Tamworth, was wholly owned by the British REIT. According to a press release, after repayment of debt and fees, LondonMetric made a $105 million profit.

The seller will continue to activate in the distribution market, with its current 1.4 million-square-foot assets being leased to retailers such as Primark, the Co-op and Tesco, the latter through its joint venture with Green Park Investments.

Norway’s oil fund, Norwegian Pension Fund Global, the world’s largest sovereign wealth fund and the entity responsible for the major industrial acquisition, is reportedly ramping up its investments in various sectors of diverse real estate markets around the world. The fund is currently at the start of a shopping spree, which would see it become one of the largest property players in the world.

With a current property portfolio worth around $6.5 billion, according to the Financial Times, the fund is a long way from having any financing trouble in its endeavors, as it totals a reported $720 billion. Its initiative to create a new joint venture alongside TIAA-CREF that would facilitate its entrance on the U.S. property market is also reportedly set to see a number of major office acquisitions in the immediate future.