Blackstone Group is planning to sell its real estate portfolio of over 100 office buildings with over 50 million square feet of combined space, Eliot Brown and Craig Karmin of Wall Street Journal reported. Analysts value this property at approximately $22 billion.
The firm is readying its office portfolio for a bulk sale by next year, people familiar with the developments told WSJ. However, it isn’t negotiating deals with any specific buyers yet. Blackstone is selling the properties to return money to the investors.
Blackstone made a number of purchases worth $48 billion during 2006 and 2007. Soon it sold many of the buildings for $36 billion. If the company sells the remaining properties – located mainly in New York, Los Angeles and Boston, at the estimated value of $22 billion, it will make a net profit of $10 billion from these dealings.
However, the prices may fluctuate depending upon the direction of US economy. Office rents and occupancies are increasing rapidly, but the growth may come to a halt if companies don’t add more jobs aggressively. Commercial property business has become the backbone of Blackstone. In 2011, $1 billion of the company’s $1.6 billion net profit came from real estate.
“When we exit the real estate, my expectation is that we will really crush it and we will really do extremely well,” Stephen Schwarzman, CEO of The Blackstone Group L.P. (NYSE:BX) said on February.
That’s not all. Blackstone has 600 shopping centers, 185,000 hotel rooms in the US and industrial property spreading cross 80 million square feet.
The two potential buyers are Douglas Emmett, Inc. (NYSE:DEI) and Canada-based Ivanhoe Cambridge. The CEO of Douglas Emmet, Inc. has showed keen interest in Blackstone’s Los Angeles office holdings. Ivanhoe Cambridge is interested to purchase 50 percent stake in 1411 Broadway building which is situated in the Times Square area.