Blackstone in $475m Mubadala GE debt deal

Mubadala GE Capital, the $8bn joint venture between GE Capital – the financial arm of US conglomerate GE – and Abu Dhabi sovereign wealth fund Mubadala Development, has quietly sold around $475m of real estate debt interests to The Blackstone Group.

However, according to various media reports, Mubadala GE said the price of the assets sold to Blackstone is subject to adjustment and the deal could be terminated under certain circumstances. A Mubadala GE spokesperson declined to comment.

The investment in eight loan interests in Mubadala GE Capital was initially announced by Blackstone earlier this month as an “additional investment related to the transaction” between the firm and GE Capital, which saw the New York real estate powerhouse acquire approximately $23bn of GE Capital’s real estate interests.

The investment was made from Blackstone’s publicly traded commercial mortgage real estate investment trust, the Blackstone Mortgage Trust, and accounts for 8% of the joint venture’s total assets at the end of May.

GE set up the joint venture with Mubadala in 2008 when each company planned to contribute $4bn in equity over three years to the fund up to $40bn in assets.

In another GE deal, Bank of America Merrill Lynch has provided Blackstone with nearly £300m for the purchase of GE Capital’s UK real estate portfolio. The bank also supplied Blackstone with a further €180m to buy GE’s European property assets.

The two loans will be secured against office, logistics and retail assets located in the UK, France, Spain, Italy, Poland, Czech Republic and Slovakia. The total value of the assets is around €850m.

Blackstone’s BREP Europe IV fund bought GE Capital’s European equity real estate assets for about €1.9bn in April. The acquisition financing of the remaining €1bn of assets, which are located mainly in France, is yet to be settled.

Blackstone plans to integrate the retail assets purchased into its European retail platform, Multi, and the logistics assets into its Logicor platform.

Blackstone’s €1.9bn purchase was part of the deal it put together with US bank Wells Fargo to buy most of GE Capital’s global real estate business for $23bn in April.

Blackstone also bought through its BREP VIII fund, GE Capital’s US equity assets, which are mainly in Chicago, California and Seattle, for $3.3bn. And it acquired GE’s portfolio of first mortgage loans in the US for $4.6bn and its first mortgage loans in Mexico and Australia for $4.2bn.

Blackstone recently bolstered its debt capabilities through the hire of Jonathan Pollack, who has joined the firm as a senior managing director in its Real Estate Group. Previously global head of commercial real estate at Deutsche Bank, Pollack, will be the chief investment officer for Blackstone Real Estate Debt Strategies, reporting to Mike Nash, the global head.