State Street buys GE Asset Management

The deal gives State Street $3.6 billion in real estate assets under management, a small slice of the platform’s total alternative investments.

State Street Global Advisors, a Boston-based financial services firm, is buying GE Asset Management (GEAM) in a deal that will add $3.6 billion in real estate assets under management to the financial services provider’s holdings, according to GE spokesman Chris Linehan. The firms announced the merger last week.

Boston-based State Street is acquiring GE’s investment management arm for up to $485 million, according to a joint statement from the firms. The GE platform manages about $100 billion in assets for the GE pension plan and more than 100 institutional clients, such as foundations, endowments and retirement plans, according to the firms’ statement. GE does not manage real estate investments for all the individual accounts.

“GEAM will bring new alternatives capabilities in direct private equity and real estate to SSGA while enhancing our existing active fundamental equity, active fixed income and hedge fund teams,” said Ron O’Hanley, State Street’s chief executive, in a statement last week.

State Street currently manages about $136 billion in alternative investments, including investments in real estate investment trusts, according to its fourth-quarter earnings statement. This purchase gives the firm capabilities for direct and co-investment real estate deals.

The sale is expected to close in the third quarter of this year, according to the joint statement.

GE has been trimming its auxiliary services to focus on its industrial business. Last spring, GE Capital – a separate entity from GEAM sold the majority of its commercial real estate assets in the biggest private property transaction since the global financial crisis. The Blackstone Group and Wells Fargo teamed up to buy the majority of the firm’s real estate assets for $23 billion.