According to an inside Bloomberg source, Blackstone Group and Wells Fargo are close to purchasing a GE real estate portfolio valued around $27 billion. The source, who wanted to remain anonymous, noted an agreement may be reached before the weekend.
When contacted by Bloomberg, spokespersons for for General Electric, Wells Fargo and Blackstone declined to speak on the record.
GE was up as much as 3% in Thursday trading on the NYSE when news of the potential transaction broke.
Unwinding GE capital
Selling the GE real estate portfolio will be a major step in CEO Jeffrey Immelt’s goal to significantly reduce the size of GE Capital. Of note, GE Capital has been busy unloading holdings, including several overseas bank stakes, while at the same time trying to grow GE’s industrial holdings.
GE real estate will beef up Blackstone and Wells Fargo commercial portfolios
Over the last few year, private equity firm Blackstone has quietly assembled the largest real estate investing business in the world, managing $81 billion in assets as of the first of the year. The firm raised $14.5 billion for its most recent property fund in less than fourth months, according to a Bloomberg source, and will be signing up an additional $1.3 billion soon. Blackstone’s seven earlier global property funds have delivered annualized returns of 18% after fees since 1994, according to the most recent SEC filings.
Analysts point out that GE and Blackstone have worked together in the past on several occasions. In specific, Blackstone previously bought apartment properties in the U.S. and Japan and office buildings in Australia from GE. Back in 2011, the industrial company’s lender put up about $800 million to help finance Blackstone’s purchase of U.S. office buildings for more than a billion dollars.
Also of note, Wells Fargo has also been on a real estate buying spree, picking up several portfolios of commercial real estate loans as it searches for higher-yielding assets. The bank agreed to buy $5.9 billion of “high-quality” assets from Commerzbank AG and its Eurohypo U.K. real estate lending unit back in the summer of 2013.