Norway’s Sovereign Wealth Fund Increases Manhattan Holdings

Norges Bank Investment Management (NBIM), the Norwegian sovereign wealth fund, is partnering with Boston Properties on a 49-story office tower to be built at 343 Madison Avenue.

NBIM bought a 45% stake in the 900K SF development in proximity to Grand Central Station. The partners have signed a 99-year ground lease for the site with the owner, NYC’s Metropolitan Transportation authority, Bloomberg reported.

The ground lease requires the developers to build a new entrance to the Grand Central Station terminal.

The MTA bought the building that occupied 343 Madison Avenue—which has been demolished to make way for the new tower—in 1979, along with adjacent sites in 1991. Boston Properties (BXP) was chosen as the developer of the property in 2016.

In a second quarter earnings call, BXP CEO Owen Thomas announced the joint venture—without naming NBIM—and said the partners had completed a 99-year ground lease with the MTA.

“Under the terms of the lease, the joint venture is required to construct a direct entrance into the Long Island Railroad East Side Access project known as Grand Central Madison,” Thomas said.

“The joint venture can terminate the ground lease and be reimbursed for its costs in constructing the access to Grand Central Madison,” The BXP CEO added. “With direct access to transit in the relatively tight Grand Central submarket, 343 Madison is a unique offering.”

Thomas also disclosed that “preliminary discussions with potential anchor clients have been constructive.”

In an interview with Bloomberg, John McCarthy, NBIM US head of unlisted real estate investments, said the $1.4T wealth fund has “billions” to spend on properties across asset classes and is seeking to increase its US holdings, especially in Manhattan.

Overall, the fund is aiming to allocate 7% of its holdings to real estate, McCarthy said.

Earlier this month, NBIM, one of the world’s largest sovereign wealth funds, disclosed that it has started the process of closing down its office in Shanghai, in another sign of big global companies pulling back operations from China.

Norway’s government pension fund is the world’s biggest single investor in China’s stock market. As of the end of 2022, it owned shares worth about $42 billion in some 850 Chinese companies. Those investments will be managed in future from its Asia hub in Singapore, it said.

The decision to close its Shanghai office was driven by “operational considerations” and doesn’t affect the fund’s investments or its investment strategy in China, NBIM said in a statement.