MetLife, Norway Fund Bets Reach $1.7 Billion With New Deals

Jan 13, 2014 11:45 am ET

(Updates with Manulife comment in the sixth paragraph.)

Jan. 13 (Bloomberg) -- MetLife Inc., the largest U.S. life insurer, expanded its real estate joint venture with Norway’s sovereign wealth fund to $1.7 billion with investments in San Francisco and Washington.

Norges Bank Investment Management and MetLife purchased a 12-story office at 555 12th St. in Northwest Washington, according to a statement today. The Norway fund, which oversees about $830 billion, also purchased 47.5 percent of a San Francisco property at 425 Market St. from the insurer. The gross value of the two buildings is about $1 billion, according to a separate statement from Norway’s fund.

MetLife and Norges Bank began the joint venture last month with a bet on One Financial Center, a 46-story Boston office tower. The insurer has been working to attract institutional investors to a new asset-management unit as Chief Executive Officer Steven Kandarian seeks to add fee income.

“Our growing partnership with NBIM speaks to our strong capabilities in the asset-management business,” Robert Merck, global head of real estate investments at New York-based MetLife, said in the statement.

The 782,000-square-foot (72,700-square-meter) Washington office was acquired from Manulife Financial Corp., Canada’s largest insurer. The Toronto-based company, which provides coverage in the U.S. through its John Hancock unit, sold the building for $505 million, according to Ted Willcocks, global head of asset management.

“The sale was part of our normal portfolio review,” Willcocks said in an e-mail. “It has been a very successful asset for us and became part of our regular real estate portfolio-rotation decisions.”

Asset Management

The 36-story San Francisco office is 945,000 square feet. That building and the Washington property are each about 85 percent leased, according to the Norway fund’s statement.

Norges Bank, which gets its funds from Norway’s taxes on oil and gas, ownership of petroleum fields and dividends from its stake in Statoil ASA, made its first U.S. property investment last year in a venture with TIAA-CREF. The first commitment to MetLife’s asset-management push was a $5 billion deal with SunTrust Banks Inc. for commercial mortgages, announced in August.

Norges Bank paid $238 million for a 47.5 percent stake in the Boston tower, with MetLife owning the rest, the fund said last month. That values the property at about $500 million. The $1.7 billion figure includes $200 million of financing, according to the statement from Norway’s fund.

--With assistance from Katia Dmitrieva in Toronto. Editors: Dan Kraut, Steven Crabill