Norway sovereign wealth fund buys $1.6 billion of Prologis’ properties

Norway’s sovereign wealth fund agreed to buy 50% of a European property portfolio from Prologis Inc. for €1.2 billion ($1.6 billion) for its first industrial property purchase.

The $680 billion Government Pension Fund Global, Oslo, will buy stakes in 195 properties in 11 European countries, including Spain, Italy, Poland, the U.K. and France, the sovereign wealth fund said in a statement Thursday. Prologis will hold 50% of the venture and manage the properties.

“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, chief investment officer for real estate at Norges Bank Investment Management, manager of the fund.

The sovereign wealth fund is expanding into real estate and is seeking to have 5% of its assets invested in properties.

The Prologis transaction included €100 million in bank debt and is expected to be completed in the first quarter. The venture has an initial term of 15 years.

The Norwegian sovereign wealth fund earlier this month said it would enter the U.S. real estate market. The fund is focusing on conservative property deals, such as large office complexes in major cities and developed malls, Yngve Slyngstad, CEO of Norges Bank Investment Management, said in a Dec. 1 interview.

The properties purchased from Prologis comprise 4.5 million square meters (48 million square feet) of rentable space, the largest amount in France. Most of it is used as distribution facilities by about 300 tenants, according to the statement.

Prologis merged with AMB Property in June 2011 in the biggest combination of U.S. real estate investment trusts.