US private equity giant Blackstone and banking group Wells Fargo have clinched one of the largest global real estate deals since the 2008 crisis after signing agreements to acquire most of the assets of GE Real Estate for about $23 bn (€21.7 bn).
US private equity giant Blackstone and banking group Wells Fargo have clinched one of the largest global real estate deals since the 2008 crisis after signing agreements to acquire most of the assets of GE Real Estate for about $23 bn (€21.7 bn).
Blackstone’s European real estate fund, BREP Europe IV, has agreed to purchase the European equity real estate assets, for €1.9 bn.
These consist of office, logistics and retail assets, largely located in the UK, France and Spain. The logistics assets will be integrated into Blackstone’s European logistics platform, Logicor, while the retail assets will be added to its European retail platform, Multi.
Blackstone’s latest flagship global real estate fund, BREP VIII, is to acquire the US equity assets for $3.3 bn. These assets are primarily office properties in Southern California, Seattle and Chicago.
Loan portfolios
San Francisco-based Wells Fargo has agreed to purchase performing first mortgage commercial real estate loans valued at $9 bn in the US, UK and Canada.
BREDS, Blackstone’s real estate debt fund, has agreed to purchase performing first mortgage loans in Mexico and Australia for $4.2 bn.
BXMT, Blackstone’s publicly traded commercial mortgage REIT, is to purchase a $4.6 bn portfolio of first mortgage loans primarily in the US with Wells Fargo providing the financing.
Jon Gray, global head of real estate for Blackstone, said: 'We are delighted to partner with GE on another major transaction and we thank them for their confidence in us. We also thank Wells Fargo for our longstanding relationship, and for their swift execution on this investment. This transaction clearly demonstrates the unique scale and reach of our real estate platform.'
Mark Myers, head of commercial real estate for Wells Fargo, commented: 'This is an important transaction in the commercial real estate industry and Wells Fargo is pleased to be working with our colleagues at GE Capital and Blackstone. The portfolio of performing loans we’ve purchased is a strong addition to our commercial real estate platform in the United States, the UK and Canada, which are all active lending markets for us.'
Exit GE
For GE, the agreements mark its virtual exit as a major player in the global real estate arena.
The New York-listed multinational conglomerate said it is selling the bulk of its real estate holdings to refocus on increasing its earnings from its industrial business lines. These include the production of jet engines and equipment for electricity generation and oil fields. GE has also announced plans for a $50 bn share buyback programme.
The transactions are subject to regulatory and other approvals. The initial closings will take place in the second and third quarter of the year.
Wells Fargo is New York-listed and describes itself as a 'nationwide, diversified, community-based financial services company' with $1.7 tln in assets. It is an established real estate lender in the US and Europe, where the GE acquisitions will give it considerably more weigh.
Blackstone is a heavyweight investor in the main property segments of the European real estate sector. Globally, its property business, which was founded in 1991, has $81 bn of investor capital under management.
