Blackstone may offload US office holdings

The New York-based private equity and real estate giant is considering selling a 100-plus office building portfolio, which is valued at around $22 billion.

The Blackstone Group may be looking to sell a portfolio of more than 100 US office buildings, which is valued at approximately $22 billion, according to the Wall Street Journal. 

Citing sources familiar with the matter, the WSJ has revealed that the New York-based private equity and real estate giant is looking to sell its office holdings, which total roughly 50 million square feet of space, in regional parcels. Those assets are located primarily in northern California, Boston, New York and Los Angeles. Blackstone also is considering listing the portfolio as a REIT should an outright sale not prove as attractive. 

Blackstone built the portfolio primarily through three transactions totalling $48 billion in 2006 and 2007, which included the buyouts of Equity Office Properties Trust, Trizec Properties and CarrAmerica Realty. Soon after, the firm sold many of those buildings for a total of $36 billion. If Blackstone manages to sell the remaining properties for more than $12 billion, the firm will see a profit. 

Market sources told PERE that Blackstone is looking to shed the portfolio partly because it needs to return capital to investors in its funds raised prior to the global financial crisis. Such funds typically have a maximum life of 10 years, and the firm believes now is an opportune time to take advantage of strong demand from pension funds and other institutions for core US office assets. 

Those sources added that Blackstone may look to unload the portfolio via a bulk sale as early as next year. However, the investment manager has not approached any specific prospective buyers, nor has it established a specific timeframe for dispensing with the assets. Representatives from Blackstone declined to comment. 

Blackstone owns about 80 million square feet of industrial property and 185,000 hotel rooms in the US, including the Hilton chain and Motel 6 budget chain. In addition, its 2011 acquisition of 600 US shopping centres from Centro Properties has made the firm a sizable retail owner. 

Blackstone currently is raising capital for its Blackstone Real Estate Partners VII global opportunistic fund, which already has attracted approximately $10 billion in equity commitments.