Azerbaijan, Baku, Dec. 17 / Trend E. Ismayilov /
State Oil Fund of the Republic of Azerbaijan (SOFAZ), announced on December 17, 2012 its first real estate investment, with the purchase of 78 St James's Street, an office complex in London's West End for £177. 35 million.
The seller was RREEF Real Estate, the real estate investment business of Deutsche Bank's Asset and Wealth Management division. Jones Lang LaSalle and Clifford Chance were the advisors to SOFAZ on this deal.
The building was built in 1845 and was completely renovated in 2003 behind the historical facade and now corresponds to "A" class office building. The total area of this prime asset is 11 018 square meters and is entirely leased to HSBC Bank, which uses it as HQ of its Private Bank in the UK, until 2023. Annual rental income is £9.65 million and the net initial yield is 4.5% p.a
Shahmar Movsumov, Executive Director of SOFAZ commented that Sovereign Wealth Funds across the globe are looking for ways of diversifying their risks by expanding their investments beyond traditional asset classes.
For the last decade SOFAZ has been growing rapidly both in terms of the size of the assets under management and its investment universe.
"Today I am delighted to announce SOFAZ's first direct real estate investment," he said. "This newly acquired office building in London is the first in a row of planned property acquisitions in prime business districts of major cities around the world. The secure income that this type of investment will generate over the years coupled with strong fundamentals of prime office spaces in major world capitals are the determining factors in our investment rationale."
By the investment policy overall value of the investment portfolio can be invested into the gold, equities and real estate with maximum limit of up to 5 % per each financial tool.
The projected total cost (the average amount) of SOFAZ's investment portfolio for 2012 was set at 23 billion manat, while as of late 2011 it was predicted at 19.4 billion manat.
It is predicted that by late 2012, SOFAZ assets reach the level of $34 billion.
As of Dec. 1, 2012, assets of SOFAZ totalled $33. 895 million.
The main purposes of the fund are: accumulation of funds and placement of the fund's assets abroad to minimize the negative impact on the economy, preventing a "Dutch syndrome" to ensure savings for future generations and to maintain the current socio-economic standard in the country.
The official exchange rate is 0,7849 AZN/USD on Dec. 17.