Blackstone Group and Wells Fargo are nearing a deal to buy a real estate portfolio from General Electric worth as much as $30 billion, according to a person with knowledge of the matter.
An agreement may be reached as soon as tomorrow, said the person, who requested anonymity because discussions are still ongoing. Representatives for GE, Wells Fargo and Blackstone declined to comment.
It would be one of the largest real estate deals since Blackstone acquired Equity Office Properties Trust for $39 billion in 2007 at the height of the last property boom. U.S. commercial values have since reached new records as investors from around the globe seek places to put money at a time of near-zero interest rates.
Unloading the assets would further Chief Executive Officer Jeffrey Immelt's goal of shrinking GE Capital, whose lack of access to credit during the 2008 financial crisis put the parent company at risk. GE Capital has been disposing billions of dollars in holdings, including foreign bank stakes, while Immelt works to bulk up the industrial side of GE's business.
GE, based in Fairfield, Connecticut, rose 2.6 percent to $25.66 at 2:41 p.m. in New York. The Wall Street Journal reported the discussions earlier.
Blackstone has built the largest global real estate investing business, overseeing $81 billion in assets as of Dec. 31. The New York-based firm gathered $14.5 billion for its latest property fund in about fourth months, a person familiar with the process said last week, and is planning to collect an extra $1.3 billion in coming weeks. Its seven previous global property funds have doubled their invested capital, with annualized returns of 18 percent after fees since 1994, according to the firm's most recent earnings statement.
Wells Fargo has purchased portfolios of commercial real estate loans from rivals as it seeks to add higher-yielding assets amid low interest rates. In July 2013, the bank agreed to purchase about 4 billion pounds ($5.9 billion) of "high- quality" assets from Commerzbank AG and its Eurohypo U.K. real estate lending unit.
