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GE to sell real estate holdings, sets US$50b share buyback
[BENGALURU] General Electric Co said it would sell the bulk of its real estate portfolio to investors including Blackstone Group and Wells Fargo & Co for US$26.5 billion, in the biggest commercial real estate deal since 2007.
The company, which has been refocusing on its industrial businesses, also said its board had authorized a share repurchase program of up to US$50 billion.
The plan allows GE to buy back nearly 2 billion of its outstanding shares, based on Thursday's close.
GE's shares rose 2.2 per cent to US$26.30 in premarket trading on Friday. The stock rose nearly 2 per cent on Thursday after the Wall Street Journal first reported that the company was close to selling its real estate holdings.
GE has been selling off its property investments globally as it focuses on improving earnings from sales of products such as jet engines, generators, electric grid gear and oil field equipment.
The company said on Friday it expected earnings from its aviation, power and water, and other industrial businesses to account for about 90 per cent of total earnings by 2018. The units made up just over half of GE's profit in 2013.
GE said it would take after-tax charges of about US$16 billion related to the restructuring in the first quarter, of which about US$12 billion would be non-cash.
Blackstone and Wells Fargo said they would buy most of the assets of GE Capital Real Estate in a deal valued at about US$23 billion.
GE said it also had letters of intent to sell an additional US$4 billion of commercial real estate assets to other buyers that it did not identify.
The company said it expected to reduce its share count to 8 billion-8.5 billion by 2018. GE had 10.06 billion shares outstanding as of Jan 31.
The deal is the biggest commercial real estate deal since Blackstone's acquisition of office landlord Equity Office Properties Trust in 2007 for US$39 billion, including debt.