ASIA NEWS:GE Capital’s wind-down

In late July, PAG, the Asia-focused investment management firm, officially announced the acquisition of a significant part of GE Capital’s Japan commercial real estate portfolio.

The portfolio, comprising predominantly office buildings in Tokyo, is estimated to be valued at approximately $1 billion.

PAG declined to disclose the price paid for the 26-property portfolio, but PERE understands the deal was made via its pan-Asia core-plus real estate fund for which the firm is still in fundraising mode.

Commenting on the GE deal, Broderick Storie, partner, PAG said: “The portfolio sits squarely within the strategy’s objectives and provides an attractive income-driven return profile for our investors in one of Asia’s more compelling core markets.”
With this, and other reported portfolio sales, GE Capital, the financial arm of the US conglomerate GE, has moved further ahead in the global selldown of its real estate debt and equity holdings.

PERE understands that the firm has now completed the sale of nearly all of its debt and equity assets in Japan and Australia.

In May, the Japanese financial group Shinsei Bank took over GE’s property loan book consisting of ¥65 billion (€469.2 million; $523 million) worth of real estate loans mainly for office and residential buildings in Tokyo. Around the same time as the PAG deal was announced, Ichigo Group Holdings, a Japanese owner and operator of real estate, reportedly also purchased a chunk of GE’s office assets in the capital city. According to a report in the Nikkei Real Estate Market Report, 24 properties exchanged hands in a deal estimated to be valued at ¥50 billion.

It is also worth remembering that GE Capital had exited its residential portfolio in the country in late 2014, when it sold 200 properties located across Japan to The Blackstone Group for over ¥190 billion.

“Our real estate exits are going well and support our overall estimate of achieving $100 billion of dispositions by the end of 2015,” Keith Sherin, GE Capital’s chairman and chief executive officer had said in a company statement issued in June.

At the time, the firm already had executed the Shinsei deal, as well as the mammoth $22.5 billion portfolio sale, marking the exit of its US and UK real estate assets to Blackstone and Wells Fargo, in April.

As of August 1, the firm had $10 billion in real estate assets globally, just a third of the $30 billion it had in April, a company spokesman told PERE.