GE Real Estate, the real estate investment arm of US-based General Electric, is planning to launch private equity real estate funds, senior executives have told the Wall Street Journal.
Joe Parsons, chief executive of GE Real Estate’s newly formed global investment management division, told the paper that GE will use its established local agents in real estate markets throughout the globe to look for properties to fit into the fund. GE has been making direct investments in real estate with its own money for 15 years.
Parsons said that the funds will not focus on distressed opportunities but rather on properties that are discounted due to current pricing adjustments. The firm is looking to raise $1 billion to $3 billion for the first two funds, contributing 10 percent to 25 percent of its own money, Parsons told the paper. He said the first funds will likely focus on assets in North America and Europe, looking at office buildings in major US cities as well as at retail and residential assets in central Europe.
Some commentators have suggested the move may be an effort to appease shareholders and reduce GE’s direct exposure to financial services operations by reducing the amount of its balance sheet committed to investing. GE Real Estate has about $80 billion in direct equity investments and loans for property around the world.
However GE Real Estate chief executive Ron Pressman told the paper that GE may actually be increasing its direct real estate investments in the future. GE’s real estate assets increased by almost 50 percent last year. Earlier this month the firm revealed it may directly purchase up to $10 billion (€6.4 billion) of real estate in Japan this year.