Blackstone tipped for GE portfolio bid

US ALTERNATIVE asset giant Blackstone and one of its smaller rivals, the Hong Kong-based private equity firm, Pacific Alliance Group, are separately pursuing General Electric’s A$1.6 billion Australian and New Zealand property platform.

According to people familiar with the negotiations, both firms have expressed an interest in acquiring the portfolio.

While it is understood GE Capital Real Estate has entertained tentative discussions on a prospective deal, many in the market are sceptical that either of the private equity players would be able to satisfy the industrial behemoth’s high price expectations.

Last year the company pulled the bulk of a A$500 million portfolio it had offered for sale off the market, reportedly after bids were weaker than anticipated. More recently, a A $215m deal on Allendale Square collapsed even though the Investa Property Group had conducted due diligence on the building.

But GE has quietly disposed of a large number of smaller holdings since its portfolio peaked at more than 70 assets in the second quarter of 2006.

Some in the market predicted GE might instead forge deeper into property lending and capitalise on the funding gap left following the retreat of the European banks. A senior source pointed out few buyers possessed the financial fire power to take over the entire platform and the opportunity to sell the assets in one transaction might persuade GE to swallow a discount to the total book value.

In the past five years Blackstone has mushroomed into one of the largest real estate owners in the world.

Its influence is set to become even greater after it gathered US$13.3 billion from investors for its latest global property fund, BREP VII.

However, despite it carrying financial heft, sources said the New York-based firm might lose to Pacific Alliance if the Hong Kong-based firm agreed to fund the deal through a mortgage provided by GE Capital, a subsidiary of GE.

Blackstone and Pacific Alliance Group declined to comment on the speculation. GE also refused to discuss a potential deal.