Blackstone’s GE Portfolio Purchase Benefits Both Sides

by Marc Bastow | August 13, 2013 2:40 pm

Blackstone Group (BX[1]) reportedly has bolstered its rental property holdings with an agreement to buy 80 U.S. apartment complex properties[2] from General Electric’s (GE[3]) GE Capital unit.

The transaction valued at about $2.7 billion and includes complexes comprising about 30,000 rental units in Dallas, Atlanta and other areas in both Texas and the Southeast. The market looked favorably on the move, bidding up BX shares more than 2% in early Tuesday trading.

The purchase is another step for Blackstone in its strategy to buy up a variety of U.S. rental properties, from single-family homes to apartments, amid a boom in demand.

The acquisition strategy comes amid Blackstone’s divestiture of some of its hotel, office and retail portfolios.

Blackstone recently filed for an initial public offering of its Brixmore Property[4] shopping center REIT and hotel chain Extended Stay America[5]. BX also is eying two other IPOs for its commercial real estate holdings, with Hilton[6] and La Quinta[7] hotel properties eyed for possible sales or public offerings.

Meanwhile, the private equity firm also is exploring a new strategy of taking 1,700 of its 32,000 single-family rental homes under management and packaging up the rentals into securitized products[8] offered through Deutsche Bank (DB[9]).

Blackstone’s wheeling and dealing definitely hasn’t been for naught — BX has enjoyed a one-year run-up of nearly 70%, including YTD gains of roughly 45%.

As for General Electric, consider this another step toward the reworking of GE Capital’s balance sheet, which CEO Jeffrey Immelt is looking to continue downsizing. Immelt already has sold off its Property Lending unit, and earlier this year GE dumped an $800 million real estate portfolio to American Realty Capital Properties (ARCP[10]).

This looks like a pretty good deal for both parties, and for their shareholders, too.

Marc Bastow is an Assistant Editor at As of this writing, he was long GE.

  1. BX:
  2. buy 80 U.S. apartment complex properties:
  3. GE:
  4. Brixmore Property:
  5. Extended Stay America:
  6. Hilton:
  7. La Quinta:
  8. packaging up the rentals into securitized products:
  9. DB:
  10. ARCP:

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