General Electric Co. announced Friday it is selling the majority of its $26.5 billion real estate lending business to Blackstone Group and Wells Fargo as part of its decision to sell most of its lending business, GE Capital, over the next 24 months, a press release said.
GE announced that it will only retain the portion of GE Capital that relates to its industrial businesses. GE has already sold off or spun off portions of its consumer lending businesses. In March, Varde Partners, KKR & Co. and Deutsche Bank entered a deal to buy GE Capital's Australia and New Zealand consumer-lending business for A$8.2 billion ($6.25 billion).
Blackstone and Wells Fargo are buying $23 billion of GE Capital Real Estate, with Wells Fargo agreeing to purchase performing first mortgage commercial real estate loans valued at $9 billion in the U.S., U.K. and Canada, said Peter Rose, Blackstone spokesman.
GE has letters of intent with other buyers for another $4 billion of commercial real estate assets, the release stated. GE spokesman Seth Martin said in an e-mail that GE is not disclosing the identity of the other buyers.
“There is an equity and a debt component to the deal,” Mr. Rose said. “The proportions of debt and equity are not being disclosed.”
Four Blackstone’s funds and a Blackstone real estate investment trust are providing the equity.
Blackstone’s latest flagship global real estate fund, Blackstone Real Estate Partners VIII, agreed to purchase the U.S. equity assets of GE Capital Real Estate in a deal valued at $3.3 billion. This is the first investment for Blackstone’s eighth opportunistic real estate fund. Investors in the fund include the $51.7 billion Pennsylvania Public School Employees’ Retirement System, Harrisburg; $34.9 billion Illinois Municipal Retirement Fund, Oak Brook; and $29.4 billion Connecticut Retirement Plans & Trust Funds, Hartford.
Blackstone’s European real estate fund, Blackstone Real Estate Partners Europe IV is buying the European equity real estate assets consisting of office, logistics and retail assets for €1.9 billion ($2.1 billion). The logistics assets will go to Blackstone’s European logistics platform, Logicor, and the retail assets to its European retail platform, Multi Corp. Among the investors in the fund are $129.9 billion Texas Teacher Retirement System, Austin, and $107.6 billion New York State Teachers’ Retirement System, Albany.
Blackstone Real Estate Debt Strategies II, Blackstone’s real estate debt fund, agreed to purchase performing first mortgage loans in Mexico and Australia for $4.2 billion. Illinois Municipal Retirement Fund and Connecticut Retirement Plans are both investors in the fund.
Blackstone Mortgage Trust, Blackstone’s REIT, is buying a $4.6 billion portfolio of first mortgage loans primarily in the U.S. Wells Fargo is providing the financing.