GE Capital has taken a major step towards dismantling the remainder of its real estate business by agreeing a deal to sell its German portfolio.
Ellis Short’s Kildare Partners is under offer to buy the business for close to €700m (£497m). The deal is the remaining part of GE Capital’s European real estate portfolio not accounted for following the company’s $23bn (£14.6bn) deal last month to sell the majority of its property assets worldwide to Blackstone and Wells Fargo.
GE Capital’s parent General Electric is divesting its financial arm in order to concentrate on its traditional business areas, such as manufacturing.
Kildare fought off competition from a shortlist that included Starwood Capital, Grand City Properties and Oaktree Capital Management alongside Valad Europe.
The price reflects a yield of around 8%.
The granular portfolio includes two pools roughly equal in value: 59 directly owned assets, and loans secured against 85 properties. Overall the portfolio includes a high proportion of office properties and has a 20% vacancy rate.
The collection of directly owned properties has a large concentration in Düsseldorf. Some of the highly leveraged loans being sold were bought by GE Capital in 2008 from Credit Suisse.
This is the second major deal for Kildare in Germany since Short, the chairman of Sunderland Football Club and former president of Lone Star, raised $2bn for its maiden fund in 2013.
A year ago it bought the €1bn distressed Mars portfolio from Deutsche Bank and has since flipped two of the largest assets – Le Méridien hotels in Frankfurt and Munich.
GE Capital is also in the process of selling the remainder of its Japanese business after Blackstone bought GE Capital’s residential assets in the country in November last year for $1.6bn.
A joint venture between GIC and Lone Star is looking at the company’s remaining Japanese properties.
