State Oil Fund of theRepublic 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 £177 350 000. 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.

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. Annual rental income is £9.65 million and the net initial yield is 4.5% p.a. Shahmar Movsumov, Executive Director of SOFAZ commented: “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. 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.”