GE Selling Real Estate, Dismantling GE Capital

Fairfield, CT-based General Electric (GE) announced this week that it is selling the bulk of its GE Capital banking business in an attempt to simplify the conglomerate and concentrate on the best-performing segments. Blackstone and Wells Fargo also announced that they had signed agreements to purchase most of the assets of GE Capital Real Estate in a transaction valued at approximately $23 billion. The transaction breaks down as follows:

• Wells Fargo has agreed to purchase performing first mortgage commercial real estate loans valued at $9.0 billion in the United States, UK and Canada.
• Blackstone's latest flagship global real estate fund, BREP VIII, has agreed to purchase the US equity assets for $3.3 billion. These assets are primarily office properties in Southern California, Seattle and Chicago.
• Blackstone's European real estate fund, BREP Europe IV, has agreed to purchase the European equity real estate assets, for €1.9 billion. These consist of office, logistics and retail assets, largely in the UK, France and Spain. The logistics assets will be integrated into Blackstone's European logistics platform, Logicor, and the retail assets into its European retail platform, Multi.
• BREDS, Blackstone's real estate debt fund, has agreed to purchase performing first mortgage loans in Mexico and Australia for $4.2 billion.
• BXMT, Blackstone's publicly traded commercial mortgage REIT, has agreed to purchase a $4.6 billion 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, said, "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 United Kingdom and Canada, which are all active lending markets for us."

For more news and information visit Blumberg Capital Partners.

GIC Buys Blackstone AZ Portfolio for $140M

GIC Private Limited, formerly known as Government of Singapore Investment Corporation, a sovereign wealth fund established by the Government of Singapore, has purchased 14 commercial and industrial properties in Phoenix, Tempe and the West Valley for more than $140 million. GIC, which also owns the Arizona Biltmore Resort & Spa, bought the 14 Valley properties as part of its acquistion of Blackstone Group's IndCor Properties 117 milion-square-foot portfolio, according to a Phoenix Business Journal article. Eastdil Secured (a wholly-owned subsidiary of Wells Fargo & Company), Citigroup, Barclays and RBC Capital Markets acted as advisors to Blackstone.

IndCor's assets are principally located in desirable in-fill industrial markets, which benefit from proximity to key domestic and global transportation hubs, major logistics and warehouse/distribution networks, as well as large population concentrations.

Tim Beaudin, IndCor CEO, said: "We built IndCor through 18 acquisitions to be one of the largest industrial real estate companies in the United States. We are excited about the company's future prospects under new long-term ownership with GIC."

Blackstone announced that funds affiliated with Blackstone Real Estate Partners VI & VII have agreed to sell their wholly-owned U.S. industrial platform, IndCor Properties, to affiliates of GIC, Singapore's sovereign wealth fund, for $8.1 billion.

For more news and information visit Blumberg Capital Partners.

Willis Tower Sold for $1.3B to Blackstone

Blackstone and 233 South Wacker LLC announced that they had signed a definitive agreement for Blackstone Real Estate Partners VII to acquire the second tallest building in the country, the Willis Tower in Chicago, for $1.3 billion. The sellers of the 110-story skyscraper, formerly known as Sears Tower, are a group including New York-based investors Joseph Chetrit and Joseph Moinian, and American Landmark Properties Ltd. They paid $841 million for the tower in 2004, while Blackstone's purchase price of $1.3 billion is, according to Crain's Chicago Business, set to become the highest ever paid for a U.S. office building outside Manhattan. Douglas Harmon of Eastdil Secured LLC was the broker for the sale to Blackstone. Further terms of the transaction were not disclosed.

"We are bullish on Chicago as companies expand within and move into the city and look for first-class office space," Blackstone managing director Jacob Werner said in a statement. "We see great potential in further improving both the building's retail operations and the tourist experience for one of the most popular destinations for visitors to Chicago."

The Willis Tower is a 3.8 million square-foot office building in downtown Chicago and, at 110 stories, is the second-tallest office building in the United States and the fifth-tallest office building in the world. The building also features a top Chicago tourist attraction in the Skydeck on the 103rd floor, which provides 1.6 million visitors per year with unmatched views of Chicago and the surrounding area including from the "Ledge", glass cubes which extend from the building. The New York-based company plans to spend as much as $150 million to improve the tower's retail portion and 103rd-floor observatory, according to a Boston Globe article.

For more news and information visit Blumberg Capital Partners.

Blackstone Buys German Warehouses for Logicor Unit

Blackstone Real Estate Partners Europe IV announced this week that it had purchased three warehouse properties in Cologne and Düsseldorf for its European logistics company, Logicor. Terms of the deal were not disclosed, but the move is inline with the company's expansion strategy; in April 2013, LogiCor Chief Executive Officer Mo Barzegar told Bloomberg that the company had plans to double its portfolio through 2015 as it seeks to profit from rising rents and values.

"Europe presents a really attractive opportunity because it is a highly fragmented market in terms of ownership of real estate," he said. "There is an opportunity to create a pan- European provider of modern logistics facilities that has access to capital, can provide quality space to customers and, frankly, provides an alternative in the marketplace."

The warehouse properties are located in core logistics markets adjacent to the city centers and are 100% leased to the logistics arm of an unnamed leading German department store. This transaction is the fifth portfolio acquired in Germany over the past year and increases Logicor's overall Germany portfolio by more than 40%, taking it to 550,000 square meters.

"This acquisition substantially increases our exposure in a core European logistics market with solid long-term real estate operating and economic fundamentals," said Mr. Barzegar in a press release this week. "Our investment strategy remains focused on acquiring high-quality, well-located product that represents value-added opportunities in the short to mid-term. This is a great start for us in 2015 and we look forward to building our pan-European portfolio further over the coming months."

For more news and information visit Blumberg Capital Partners.

Kimco Buys Out Blackstone's Interest in Kimstone Portfolio

Kimco Realty Corp. announced this week that it had executed a contract to acquire the remaining 66.67% interest in the Kimstone portfolio from a subsidiary of Blackstone Real Estate Partners VII for a price of $925 million, which includes the assumption of approximately $426.7 million in mortgage debt. Under the deal, Kimco will pay Blackstone approximately $512.3 million to acquire the portfolio in total, using a combination of proceeds from recently completed and pending property sales in the U.S. and Latin America as well as availability under its existing $1.75 billion revolving credit facility. With this acquisition, Kimco Realty continues to advance on its plan to reduce the number of properties in joint ventures, while adding retail assets to its wholly-owned portfolio.

Spanning 5.6 million square feet with a high occupancy rate (97%),the Kimstone portfolio comprises grocery-anchored shopping centers and dominant power centers concentrated in the core markets of New York, Virginia, Texas, Florida, California and Maryland. Major assets in the portfolio include: 280 Metro Center, a 228,000 square foot property located in the San Francisco Bay Area of Colma, California; Airport Plaza, a 437,000 square foot power center, located in the densely populated, high income Long Island community of Farmingdale, New York; Dulles Town Crossing, a 799,000 square foot, fully occupied power center located in Sterling, Virginia; and Stafford Marketplace, a 331,000 square foot, fully occupied grocery anchored shopping center is located in Stafford, Virginia.

For more news and information visit Blumberg Capital Partners.

Hudson Pacific Picks Up California Office Buildings for $3.5B

In another big move for Blackstone this month, it was announced that Hudson Pacific Properties, Inc. will acquire Equity Office Properties' San Francisco Peninsula and Silicon Valley portfolio from Blackstone Real Estate Partners V and VI in a stock and cash transaction valued at $3.5 billion. The transfer brings together two highly complementary office portfolios with a combined asset base of 53 properties totaling approximately 14.6 million square feet across Northern and Southern California and the Pacific Northwest.

The off-market transaction will effectively double Hudson's size and result in Hudson having an equity market capitalization of $3.7 billion and total enterprise value of approximately $6.5 billion. The transaction is subject to customary closing conditions, including Hudson stockholder approval of the proposed equity issuance. Affiliates of Farallon Capital Management, L.L.C., which own approximately 15% of the outstanding common equity on a fully diluted basis, have entered into a voting agreement supporting the transaction.

"The acquisition of the EOP Northern California Portfolio perfectly aligns with our strategy to acquire high-quality office properties in West Coast markets poised for continued growth through off-market transactions. Hudson has long targeted these two Northern California regions for expansion, and while we expect the transaction to be immediately accretive to FFO, we also intend to move quickly to employ our leasing, repositioning and development expertise to extract additional value for our stockholders," said Victor Coleman, Hudson Pacific Properties' Chairman and Chief Executive Officer.

"We chose to take a major stake in Hudson given its high-quality portfolio, outstanding management team and attractive prospects for growth. We believe strongly in the upside potential of the EOP Northern California Portfolio and this combination creates a market-leading West Coast office REIT," said Jonathan Gray, Blackstone's Global Head of Real Estate.

"As long time shareholders, we are excited about Hudson's latest growth opportunity, and are confident that they will continue their excellent track record of execution," added Rocky Fried, Managing Member at Farallon Capital Management.

For more news and information visit Blumberg Capital Partners.

GLP, GIC Make $8.1B IndCor Purchase

Blackstone announced this week that Blackstone Real Estate Partners VI & VII agreed to sell IndCor Properties to affiliates of GIC, Singapore's sovereign wealth fund, for $8.1 billion. GIC's partner in the acquisition is Global Logistic Properties Ltd., one of the largest owners of warehouses and other industrial property in Asia, according to a Wall Street Journal article. GIC is estimated by the Sovereign Wealth Fund Institute to manage around $320 billion in assets; real estate accounted for 7% of its portfolio in the financial year to April 1, according to its annual report. Closing is expected to occur in the first quarter of 2015. Eastdil Secured, Citigroup, Barclays and RBC Capital Markets acted as advisors to Blackstone in the transaction.

Tim Beaudin, IndCor CEO, said: "We built IndCor through 18 acquisitions to be one of the largest industrial real estate companies in the United States. We are excited about the company's future prospects under new long-term ownership with GIC." As a result of this transaction, IndCor will no longer be pursuing an IPO. The sale is the latest in a string by Blackstone's real estate unit, which has returned more than $16 billion to fund investors since the end of the third quarter of 2013. This year the firm has sold five Boston office buildings totaling 3.3 million square feet, along with shares of hotel operator Extended Stay America Inc., shopping-center owner Brixmor Property Group Inc. and Hilton Worldwide Holdings Inc., according to a Bloomberg report.

For more news and information visit Blumberg Capital Partners.

Blackstone Breaks Ground on Waikiki Tower

Blackstone announced this week that it had broken ground on the development of a new 418-unit vacation ownership tower at Hilton Hawaiian Village Waikiki Beach Resort, with an official ceremony that marked the construction launch of The Grand Islander by Hilton Grand Vacations Club®, slated for completion in early 2017. Blackstone Real Estate Partners VI, a Blackstone-managed fund, is providing capital for the 37-floor tower adjacent to the Tapa Tower along Kalia Road. The pricepoint of the project was not disclosed, but Blackstone did reveal that it appointed Hilton Grand Vacations, the vacation ownership division of Hilton Worldwide, to provide vacation ownership sales and marketing services, resort operations, timeshare homeowners' association management and loan servicing.

"We are thrilled to partner with Hilton Worldwide to bring a new timeshare offering to the Hilton Hawaiian Village Beach Resort," said Tyler Henritze, Senior Managing Director at Blackstone. "Combined with the quality of the Hilton Grand Vacations Club product and the Hilton brand, this destination will provide a fantastic vacation experience. We're pleased that Blackstone's investment will help create hundreds of jobs for the community, in line with our continuing commitment to Hawaii's tourism economy."

"It is our privilege to continue creating new ownership opportunities for our discerning clientele with a spectacular new Hilton Grand Vacations Club tower in Hilton Hawaiian Village," added Mark Wang, Executive Vice President, Global Sales and President, Hilton Grand Vacations for Hilton Worldwide. "This project combines the industry-leading sales, marketing and management expertise of Hilton Grand Vacations with the established development strength of Blackstone, and builds upon our history of strategic collaboration."

For more news and information visit Blumberg Capital Partners.

Griffin Towers in Santa Ana Sold for $129M

An affiliate of Blackstone, the global investment and advisory firm, completed the purchase of the Griffin Towers in Santa Ana, California for $129 million, making it the largest commercial office transaction to take place in Orange County this year. A joint venture between Lincoln Property Company and Angelo, Gordon & Co. sold the property with representation from CBRE while Blackstone represented itself. Terms of the deal were not disclosed.

"Our acquisition and subsequent sale of the Griffin Towers is representative of Lincoln's value-add strategy as an owner, operator and manager of Class-A office space across Southern California," said Kevin Hayes, Senior Vice President at Lincoln Property Company. "We identified a trophy asset in financial distress, invested energy and capital into alleviating deferred maintenance, and took a hands-on approach to improving occupancy in a challenging leasing environment."

The twin 12-story office buildings at 5 and 6 Hutton Centre Drive was previously purchased by the Lincoln-led JV in 2010, which then made thorough upgrades to the common areas, improving the occupancy rate from 71% to 88%. The buildings' largest tenants include Corinthian Colleges, one of the largest post-secondary education companies in North America; CH2M Hill; Ultimate Software; and Premier Business Centers.

For more news and information visit Blumberg Capital Partners.

Lloyds Sells Australian Property Loans to Blackstone, Morgan Stanley JV

In a statement on Wednesday, Lloyds Banking Group announced that it was selling a portfolio of Australian corporate real estate loans to AET SPV Management, a joint venture sponsored by Morgan Stanley Real Estate Investing and Blackstone, for £388 million (or $252.4 million) in cash. The distressed property loans are reportedly valued at £809 million ($526.3 million). A Zacks Investment Research summary of the deal reports that the portfolio comprises nearly 60-70 commercial property loans in Queensland, Melbourne and Canberra.

The proceeds from the portfolio, which recorded losses of £183 million in 2011, will be used to pay down Lloyd's debt. The loans were acquired by Lloyds when it purchased HBOS in 2008, including the Bank of Scotland and its international unit, BOS International.

Dave Smith, Chief Executive of Lloyds International, said in a statement: "This transaction further de-risks the Australian business, and results in a cumulative 92% reduction of our real estate non-performing loan portfolio." British taxpayers hold a 40% stake in Lloyds.

According to a Bloomberg article, European banks are trying to sell real estate assets as they seek to meet stricter capital rules. Lloyds, which has cut more than 30,000 jobs since its 20 billion-pound taxpayer rescue in 2008, last month raised its asset-reduction plan for the year by 5 billion pounds to at least 30 billion pounds and expects to meet its 2014 target a year early.

With the acquisition, Blackstone will add to its already sizable real estate portfolio, which includes Hilton Worldwide, reported the New York Times. Last year, the firm acquired roughly 600 malls across the United States for $9.4 billion from the heavily indebted Australian company Centro Properties.

For more news and information visit Blumberg Capital Partners.

Concord Corporate Centre Sold by Transwestern

Transwestern Investment Company sold a two-building Class A office campus in Concord, California to Westcore Properties for an undisclosed sum this month according to a CoStar report. Westcore Properties was represented by Waveland Financial in the transcation. The 346,747 sqaure foot Concord Corporate Centre previously sold for $99 million in July 2007 when Transwestern acquired the property from Blackstone.

"Concord Corporate Centre is one of the top office projects in Concord and offers flexible and efficient floor plates, due to a center core configuration, that are ideal for smaller tenants," said Neil Johnson, managing director of acquisitions with Westcore Properties' Northern California office. "Westcore Properties recognized the opportunity to secure a Class A asset in a submarket that appears to be rebounding with 54,613 square feet of positive net absorption being reported for the quarter."

Major tenants of Concord Corporate Centre, located just 31 miles east of San Francisco in Contra Costa County, include Pacific Bell Directory, Eichleay Engineers, SeaBright Insurance Company and Gregory B. Bragg & Associates. Cornish and Carey Commercial will reportedly continue to be responsible for the leasing at the property.

For more news and information visit Blumberg Capital Partners.