GE Capital bags €1.7b bank loan portfolio

GE Capital Real Estate has signed a definitive agreement with Deutsche Postbank to acquire a portfolio of commercial property loans valued at £1.4 bn (€1.7 bn).

The portfolio consists of performing commercial property loans issued mainly to UK borrowers. Many loans are set to expire in the near term, providing GE with access to both a new customer base and the potential for refinancing or for new loan activity, the US-based group said in a statement.

Financial details were not disclosed. However, press reports put the price at a low single-digit discount to the assets' market value.

'This transaction supports GE's plans to grow our core commercial real estate lending business globally,' said Mark Begor, CEO of GE Capital Real Estate. 'It also demonstrates GE’s ability to underwrite portfolio deals and positions us as a lead provider in the market for the long term.'

The transaction is expected to close before year-end.

GE Capital's commercial real estate unit has been a lender for 40 years in the US. Last year, the company launched a new strategy to step up its focus on commercial real estate lending and move away from equities, which currently represent around 60% of its portfolio.

The investor is hoping to build a $5 bn UK loan portfolio within the next four to five years, the company recently told PropertyEU.

'This transaction is a significant investment and an expansion opportunity for GE’s commercial real estate lending activities in Europe,' said Ellen Brunsberg, managing director of GE Capital Real Estate UK. 'We are fortunate to acquire a portfolio from Deutsche Postbank given their excellent reputation for real estate lending, and our similar approach to providing outstanding client service.'