Brexit triggered fastest property deal for biggest wealth fund

[OSLO] Norway's US$875 billion sovereign wealth fund, the world's biggest, pounced on London's Oxford Street after UK voters decided to leave the European Union.

Just about two weeks after Britons unexpectedly voted to leave the EU at the end of June, the fund snapped up a retail and office property for £124 million (S$224 million) from the Aberdeen UK Property Fund.

The deal "may have been the fastest transaction we've ever made," Karsten Kallevig, chief executive officer of Norges Bank Real Estate Management, said in an interview in Oslo on Tuesday.

The fund got a "significant discount" because the seller had liquidity pressure, he said. The purchase underscored the fund's post-Brexit commitment to the UK and its capital, where it owns significant swathes of real estate, including large parts of Regent Street and the Mayfair district.

The fund at the end of June took the step of independently cutting the value of its massive UK real estate portfolio by 5 per cent, or 2.3 billion kroner (S$379.1 million), after the vote. In total, it lost 1.6 per cent in the second quarter on its 168 billion-krone unlisted real estate holdings.

Mr Kallevig declined to comment on the writedown and it's current assessment of the market, while adding that UK logistics properties "are doing well". The final fallout from Brexit is still unclear.

"What we do believe, is that London will continue to be an important city in Europe in the foreseeable future," he said.

The fund has a target of investing in large cities around the globe as it seeks to build up a portfolio to at least 5 per cent of its total assets. It's now at about 3 per cent.

BLOOMBERG