AXA Real Estate and Norwegian Wealth Fund Agree on Biggest German Commercial Real Estate Transaction of 2012

By Gabriel Circiog, Associate Editor

Berlin—AXA Real Estate Investment Managers, acting on behalf of AXA France Insurance Companies and Norges Bank Investment Management, manager of the Norwegian Government Pension Fund Global have agreed to buy two buildings in Germany for a total of €784 million (around $981 million), from the Royal Bank of Scotland Group Plc. The transaction, which is set to become the biggest German commercial real estate transaction of the year, is expected to be completed before the year-end and will give each partner a 50 percent stake in each building.

Karsten Kallevig, chief investment officer for real estate at Norges Bank Investment Management said: “This marks the fund’s first property investment in Germany. It is in line with our strategy to build our real estate portfolio by initially investing in large, well-developed markets alongside partners with aligned interests.”

The properties are located in Berlin and Frankfurt and were part of the Pegasus portfolio, which Royal Bank of Scotland took over from Morgan Stanley when the bank liquidated its P2 Value German-property fund in 2010. The building in Berlin is located on the famous Kurfürstendamm Boulevard and features 72,400 square meters (around 780,000 square feet) of office and retail space over 16 floors. The second property, the 81,600-square-meter (878,000-square-foot) Die Welle tower, is located in Frankfurt’s central business district and it features predominantly office space.

Pierre Vaquier, CEO of AXA Real Estate, said: “This transaction highlights our ability to both source high quality real estate assets through our local country teams and invest in joint venture with world class investors. In a challenging environment, AXA Real Estate is focused on sourcing large transactions with core characteristics and asset management opportunities.”

Norges Bank Investment Management and AXA France announced in 2011 the forming of a joint venture where AXA Real Estate provides asset management services. The first investments of the partnership were in a €1.4 billion ($1.84 billion) portfolio of seven assets prime office properties in and around Paris.

As of the end of June 2012, Norges Bank Investment Management held assets worth 3,561 billion kroner ($632 billion).  The fund invests globally in equity, fixed-income and real estate markets. With more than €42 billion ($55 billion) of assets under management, AXA Real Estate Investment Managers is the largest real estate portfolio and asset manager in Europe.