Even before the ink is dry on the biggest buyout deal in history, private equity real estate firms are snapping up the properties being sold off by The Blackstone Group in the wake of its acquisition last week of Equity Offices Properties.
Shorenstein Properties of San Francisco could reportedly be paying around $1.2 billion (€914 million) for EOP’s office portfolio in Portland, which includes 17 buildings and 4.2 million square feet of office space.
The deal comes on the heels of other reported transactions, which see Blackstone selling off large chunks of the EOP portfolio, which it acquired after a lengthy bidding war with Vornado. Blackstone paid $39 billion for the office REIT, which comprised $22 million in equity and $17 billion in debt.
The same day Blackstone inked the takeover deal with EOP, the private equity firm sold eight New York City skyscrapers to New York-based Macklowe Properties for $7 billion. The $1.7 billion paid for the Worldwide Plaza building on Eighth Avenue was the second-largest sale price for an office building in US history.
“The whole thing was done on a handshake,” William “Billy” Macklowe told a real estate luncheon this week. “If they won, we won.”
Private equity firms seem eager to get in on the action, as well. Blackstone is reportedly selling 19 properties in Washington DC and 17 properties in Seattle to Boston-based Beacon Capital Partners for $6.4 billion. Last year, that firm closed the largest real estate deal between a private buyer and seller at that time when it sold an office portfolio to New York’s Broadway Partners for $3.4 billion.
More asset sales are expected to follow. In Chicago, the firm has reportedly retained Holliday Fenoglio to market its EOP properties in the Windy City and its suburbs, including two towers on Wacker Drive, a building in the Loop and two corporate campuses in the western suburbs.
Crain’s Chicago Business estimates that EOP has approximately $1.4 billion in real estate in downtown Chicago and $750 million in the suburbs. The figures don’t take into account Sam Zell’s office building, 2 N. Riverside Plaza.
At the end of 2006, EOP had 543 buildings comprising more than 103 million square feet of offices across the US.