The fund’s investments in real estate returned 18.6 percent in 2021 and made up 4.6 percent

of the fund at the end of the year. Unlisted real estate investments returned 13.6 percent, and listed real estate investments 26.8 percent.

In 2021, the fund acquired a 41 percent interest in a life science property located at 50 and 60 Binney Street in Cambridge, Boston.

The fund’s real estate strategy covers both unlisted and listed real estate investments. Together, these amounted to 573 billion kroner at the end of the year.

Unlisted real estate

The fund’s unlisted real estate investments are not part of the strategic benchmark index, which consists solely of equities and bonds. It is up to Norges Bank to determine the scope and mix of real estate investments within the upper limit set in the management mandate of 7 percent of the fund.

Our unlisted real estate investments had a market value of 312 billion kroner at the end of the year, equivalent to 2.5 percent of the fund and 54.3 percent of our total real estate investments.

The return on the fund’s unlisted real estate investments depends on rental income, operating costs, changes in the value of properties and debt, movements in exchange rates, and transaction costs for property purchases and sales. Measured in local currency, income return contributed positively with 3.4 percentage points to the return in 2021.

Operating costs consist of interest on external debt, taxes, fixed management fees, costs at management companies and costs in the holding structure. Changes in the value of properties and debt contributed 9.8 percentage points to the return in local currency. These consist of realised gains and losses, changes in the value of properties, external debt and other assets, and variable management fees.

Transaction costs contributed -0.1 percent, while exchange rate movements made a slight positive contribution of 0.2 percentage point as a result of differences between the currency composition of the real estate portfolio and the fund’s currency basket.

It was a good year for real estate investments after a challenging 2020 on account of the pandemic. The acute effects of pandemic restrictions have been accompanied by an acceleration of existing trends in the market. Trading in physical stores has increasingly been replaced with shopping online, a phenomenon that has been very positive for the logistics sector. The return on our unlisted logistics properties in 2021 was 38.5 percent in local currency, driven by rapidly rising rents and falling capitalisation rates. The return was particularly strong in the US. The retail portfolio

had a weak year but fared better than in 2020. In the office segment, there is still great uncertainty about long-term trends, but our investments produced a solid return, especially in Europe. The growing focus on environmental and sustainability assessments of properties was a key element in our work on the fund’s real estate portfolio in 2021.

Investments in Europe returned 8.8 percent in local currency and accounted for 47.3 percent of the fund’s unlisted real estate investments at the end of the year.

Logistics was also the strongest segment in Europe, followed by offices. Retail performed much better than in 2020, with values bottoming out somewhat in the UK and rising slightly in Paris.

Real estate investments in the US returned 18.9 percent in local currency and made up 50.1 percent of the fund’s unlisted real estate investments at the end of the year. The return on the logistics portfolio was particularly strong in 2021, while values for office properties were relatively flat.

Real estate investments in Japan returned 0.6 percent in local currency and accounted for 2.6 percent of the fund’s unlisted real estate investments at the end of the year.

Office values were largely unchanged, while retail values fell slightly.

Table 20 Value of real estate investments as at 31 December 2021. Millions of kroner.

Value¹ Unlisted real estate investments 311,538

Listed real estate investments 261,672

Aggregated real estate investments 573,211

1 Including bank deposits and other receivables

Table 21 Return on the fund's unlisted real estate investments. Percentage points.

Since 01.04.2011 2021 2020 2019 2018 2017

Rental income 3.8 3.4 3.4 3.6 3.6 3.7

Change in value 3.4 9.8 -3.5 3.1 4.1 3.8

Transaction costs -0.9 -0.1 -0.2 -0.1 -0.2 -0.2

Currency effect 0.1 0.2 0.3 0.1 -0.1 0.1

Total (percent) 6.5 13.6 -0.1 6.8 7.5 7.5

Table 22 The fund's largest unlisted real estate invest-ments, excluding logistics, by city as at 31 December 2021.

City Percent

Table 23 The fund's largest unlisted real estate invest-ments. Logistics by country as at 31 December 2021.

Country Percent

Czech Republic 1.9

Poland 1.8

Hungary 0.9

Table 24 Announced new investments and disposals in 2021.

City Partner Sector Ownership

Percent Currency Price

Millions New investments

One logistics property in the UK Daventry, UK Prologis Logistics 50 GBP 27.1

11 logistics properties in Berlin and

Rhine-Ruhr area Berlin and

Rhi-ne-Ruhr area, Germany

Prologis Logistics 47 EUR 108,0

One Memorial Drive, Cambridge Boston, US MetLife Office 47.5 USD 391.9

50-60 Binney Street, Cambridge Boston, US Alexandria Real Estate and MetLife

Life sciences 41 USD 485.9

Disposal of assets

One logistics property in Jeffersonville, Indiana Jeffersonville,

USA Prologis Logistics 45 USD 45,0¹

27 logistics properties in the US US Prologis Logistics 45 USD 206,0

1 In june 2021, the limit for when purchases and sales are announced was raised from 25 million dollars to 100 million dollars.

Chart 16 The fund’s unlisted real estate investments by sector as at 31 December 2021. Percent.

Chart 16The fund’s unlisted real estate investments by sector as at 31 December 2021. Percent.

1Other sectors, bank deposits and other claims.

Office

1 Other sectors, bank deposits and other claims.

Chart 17 The fund’s unlisted real estate investments by country as at 31 December 2021. Percent.

Chart 17The fund’s unlisted real estate investments by country as at 31 December 2021. Percent.

Chart 18 Changes in the fund’s market value by unlisted real estate investments in 2021. Billions of kroner.

Chart 18 Changes in the fund’s market value by unlisted real estate investments in 2021. Billions of kroner.

350 Chart 19 Annual investments in unlisted real estate.

Completed transactions. Billions of kroner.

Chart 19 Annual investments in unlisted real estate. Completed transactions. Billions of kroner.

- 10

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sales

New investments Net value