General Electric Company (NYSE:GE) announced on Friday that it is planning to sell its real estate assets to Blackstone Group LP (NYSE:BX). This move comes as part of the long term strategy of the company that seeks to minimize investment in finance and real estate.
Blackstone Group LP (NYSE:BX) is a financial advisor and an asset manager. The company deals with private equity, hedge fund solutions, real estate and non-investment grade credit. However, the company’s main strength is its real estate. With the large investment in real estate, Blackstone Group LP (NYSE:BX) is the largest private sector real estate owner in the United States.
The company owns a large variety of real estate across the globe; from skyscrapers in New York and Chicago, to malls and hotels that span across Europe, Middle East and Asia. The company also holds nearly 50,000 rental homes in the United States.
Thus it is a bit more obvious when General Electric Company (NYSE:GE) plans to trade its real estate properties to the giant in the field. It is speculated that the company has decided to retreat from finance and this deal is part of this strategy. The market of real estate and finance has rebounded since the financial crisis of 2008-2009. This is a good time to sell. The stock market responded to the deal positively.
The shares of the company increased to 28% after the rise of 3% on Thursday. Most of the returns from the deal will be given back to shareholders. Around $50 billion share buybacks will be authorized. However, the annual dividend of the company is said to remain steady at 92 cents a share.
The exact amount of the deal is not yet confirmed. Sources speculate up to $14- $23 billion worth of real estate to be involved in the deal. However, one thing is sure that General Electric Company (NYSE:GE) has successfully found a buyer that will buy its real estate in bulk. There is time to fully understand the details of the deal. However it surely appears to be a good deal for General Electric Company (NYSE:GE).