GE sells $3.7B Portfolio to Kensington

GE announced this week that it had completed the sale of a $3.7 billion portfolio of loans from its UK home lending business to Kensington Mortgage Company Limited. The deal, GE's third loan portfolio sale this year, nearly halves the size of the company's UK home lending business to less than $7 billion, according to a Reuters report. While terms of the deal were not disclosed, the acquisition is a big gain for the mortgage company. Kensington Mortgage, which is controlled by Blackstone Tactical Opportunities and TPG Special Situations Partners, was previously sold to the joint venture by Investec Plc in September 2014, in an all-cash deal valued at about $290 million.

The sale is part of a plan to return to GE's industrial roots and sell most of finance-related assets, according to a CBS News report. "We are pleased with the progress we are making to reach and close agreements for our businesses and assets. The speed and value we have achieved is a testament to the hard work of our GE Capital teams around the world," said Keith Sherin, GE Capital chairman and CEO, in a press release. GE Capital once accounted for almost half of GE's profit. However, the unit's rising funding costs nearly sank the entire company during the 2008 financial crisis.

With the addition of the UK home lending portfolio, the total for GE Capital 2015 announced sales is approximately $90 billion. Earlier this month, BMO Financial Group agreed to acquire GE Capital's transportation finance business in the US and Canada, in a bid to expand its commercial banking business.

For more news and information visit Blumberg Partners.

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.