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Norwegian oil fund makes first foray into German real estate

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EUROPE - Norway's sovereign wealth fund says it will step up acquisitions in 'core' Europe after entering the German real estate market via a joint venture with AXA REIM. 

The German acquisition comprises two assets - one primarily retail asset in Berlin and a second combining office and retail in Frankfurt's central business district.

The partners acquired the assets from RBS for €784m.

A spokeswoman at Norges Bank Investment Management (NBIM), which manages the NOK3.6trn (€480bn) Norwegian Government Pension Fund Global, said the German market would form an important long-term focus for its real estate portfolio, alongside the UK and France.

"We've said from the beginning that we view Germany as one of the three main European property markets to invest in," she said in an email.

She added that the fund's first assets in the German market reflected a "start-up phase" in its development as a real estate investor.

It currently targets office and retail, "where there is a lot of volume".

However, she also confirmed that the fund intended to pick up the pace of investment, though it would continue to invest via joint ventures with partners able to source assets.

"We got the mandate to invest in real estate in 2010, and we've been busy building our team and getting started on investments in this asset class," she said.

"Two years ago, we were only three people working on the real estate team at NBIM. Now we're around 18 people."

The Berlin and Frankfurt deal is the second announced by the so-called oil fund this week.

It follows the announcement on Monday that it had acquired 50% of the Meadowhall shopping centre in the UK for £348m (€431m) from a joint venture between London & Stamford and Green Park Investments.

AXA REIM and the Norwegian fund set up the 50:50 joint venture in July last year with the acquisition of a €1.4bn, seven-asset French portfolio.

It acquired a second portfolio in Paris in November.

The deal announced this week reflects the fund manager's pursuit of strategic diversification outside the French market.

AXA REIM chief executive Pierre Vaquier said in a statement that it would continue to source large transactions with core characteristics and asset management potential.

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