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Real estate

For the purposes of diversification of the investment portfolio and increasing profitability of SOFAZ, new investment policy was adopted in accordance with the amendments under the Presidential Decree № 519 dated October 27, 2011 made to "Rules on management of foreign currency assets of the State Oil Fund of the Republic of Azerbaijan". According to the new investment policy, SOFAZ can invest up to 5 % of its investment portfolio in real estate. 

In 2012, SOFAZ made its foray into real estate market through direct property acquisitions in several key European cities. Fund’s strategy is aimed at investing in key business cities with high market transparency, depth, liquidity, landlord friendly laws and practice of very long leases. The investments were primarily directed into mixed use office space. SOFAZ made its first investment in London followed by Moscow, Paris, Seoul, Tokio, Milan. Its first real estate investment in Asia SOFAZ made in Seoul, Korea. 

  • 78 St James Street, London, UK for 177,350,000 GBP (285,550,000 USD) completed in December, 2012
  • Actor Gallery, Tverskaya 16, Moscow, Russia for 133,000,000 USD completed in  December, 2012
  • 8, Place Vendome, Paris, France for 135,000,000 EUR (180,000,000 USD) completed in March, 2013
  • 203 Euljiro2-ga, Jung-gu, Seoul, South Korea for 477,504,000,000 KRW
  • Chou Avenue, Ginza, Tokio, Japan for 52 300 000 000 JPY (432,073,855 USD)
  • Palazzo Turati,Via Meravigli 7, Milan, Italy for 97 000 000 EUR
 

These acquisitions are early examples of SOFAZ’s successful realization of its real estate investment strategy. The secure income that will be generated tied with strong fundamentals of prime office space in major world capitals are the defining factors in fund’s investment rationale. 

 

78 St James’s Street, London, West End, UK: Office building  

 

State Oil Fund of the Republic of Azerbaijan (SOFAZ) made its first real estate investment, with the purchase of 78 St James’s Street, an office complex in London’s West End for £177 350 000. The seller was RREEF Real Estate, the real estate investment business of Deutsche Bank’s Asset and Wealth Management division.

St James is a well-known prime location for exclusive office properties within London. 78 St James Street is located in one of the most prestigious parts of St James and is a Grade II listed building. 78 St James Street 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.

 

16 Tverskaya Street, Moscow, Russia: Gallery Actor, Mixed-use office and retail  

 

State Oil Fund of the Republic of Azerbaijan (SOFAZ) purchased of Gallery Actor, mixed-use office and retail complex located in Moscow central business district at 16 Tverskaya Street for USD 133 million. The seller was Metropolitan Insurance Group, part of VTB Group.

Gallery Actor is located in historical centre of Moscow. Tverskaya Street is a prime location for exclusive hotel and office schemes as well as main Moscow street-retail destination where flagship stores of many international retailers are located.  The asset is located at the intersection of Tverskaya Street and Strastnoy Boulevard, in close proximity to the Red Square and the Kremlin. Actor Gallery was built in 1881 and was completely reconstructed in 1995 behind the historical façade. The total area of the asset is 18 075 square meters, leased to a number of Russian and international occupiers. Tenants of the building include well known finance, insurance, consulting and retail companies.

 

8 Place Vendôme, Paris, France: Mixed-use office and retail 

 

The State Oil Fund of Azerbaijan (SOFAZ) announces that it has reached an agreement to buy the prime office and retail property, 8 Place Vendôme, for €135 million from AXA Real Estate Investment Managers (AXA Real Estate).

SOFAZ has acquired the building as part of its strategy to build a diversified real estate portfolio comprised of high quality, prime assets in major cities of the world. Paris, being the largest office market in Europe, warranted its place as one of the initial destinations for SOFAZ’s investments.

Place Vendôme is the most prestigious square in Paris and is widely considered as the most prime location in the city. Combining high-class offices and luxury retail brands, this micro market is highly sought after by national and international occupiers and attracts prime rental levels. The elegant and distinctive architecture of the square is considered a masterpiece of French Classicism.

8 Place Vendôme offers office, retail and residential space within an iconic 18th century mansion as well as an office building from the 1950’s. Constructed in 1712, the classic French Baroque mansion forms a part of the iconic Place Vendôme, which was built in honour of the Sun King Louis XIV. The total area of this prime asset is 5,400 square meters and is let to various renowned financial services and legal firms.

 

Pine Avenue Tower A, Seoul, South Korea: Mixed-use office and retail

The State Oil Fund of Azerbaijan (SOFAZ) has acquired prime office complex, Pine Avenue Tower A in Seoul, South Korea for 477,504,000,000 KRW. The purchase of the property has been realised through a competitive auction process organized by Mirae Asset Management on behalf of the four owners (NongHyup Bank, NongHyup Life insurance, Woori Bank and KDB Life Insurance).

This is the first acquisition by SOFAZ in the Asia Pacific region. Seoul is one of the most attractive investment destinations in Asia providing steady gains across the office sector for many years. It is underpinned by a strong domestic economy and a well-capitalised financial sector.

 Pine Avenue Tower A is located in central business district (CBD) of Seoul, a sought after area by leading Korean as well as international tenants. The property was built in 2011 and is one of the very few trophy assets recently completed in the Seoul CBD area. The property’s Class A specifications position it well to cater to the needs of discerning tenants, generating long term value. The gross floor area (GFA) of the property is approximately 65,000 m2. The asset is solely leased to S&K Group, one of the largest conglomerates of South Korea.

 

Tokyo, Japan: Kirarito Ginza 

The State Oil Fund of Azerbaijan (SOFAZ) made an investment in a landmark retail property Kirarito Ginza in Tokyo, Japan for JPY 52.3 billion. The property was purchased from SPC vehicle named GK John. This is SOFAZ’s first real estate investment in Japan and the property is managed by Mitsubishi UFJ Trust & Banking Corporation.  

Kirarito Ginza is located in Chou Avenue, Ginza, which is the most prestigious retail location in Japan. The property was built in 2014 and is one of the very few trophy assets recently completed in Ginza area. The gross floor area (GFA) of the property is approximately 15,647 m2. The asset is let to 47 tenants. 

 

 

Milan, Italy: Palazzo Turati

               

State Oil Fund of the Republic of Azerbaijan (SOFAZ) announces today the agreement to acquire Palazzo Turati, an office property in Milan's historical Central Business District (CBD), for €97 million with the aim to further diversify its real estate portfolio. This is the first property acquisition of SOFAZ in Italy.

Palazzo Turati is located at Via Meravigli 7, historical centre of Milan, just a step away from Piazza Cordusio and Piazza Affari, and 500 m from Duomo. The building develops over six floors above the ground for office use, in addition to an exhibition hall on the ground floor. The net leasable area of this prime asset is 10 360 square meters. Palazzo Turati is a historical building built in 1880 and is part of Milan’s heritage. It has recently undergone major restoration works. The property is leased in its entirety to Milan Chamber of Commerce, a primary Italian public institution, which uses it as its HQ, till 2021. The seller of Palazzo Turati is Tecnoholding S.p.a.