General Electric agrees $26.5bn property portfolio sale

The sale is part of a radical shake-up to concentrate on the group’s manufacturing roots

General Electric has agreed a $26.5bn (£18bn) property portfolio sale as part of a radical shake-up to concentrate on the group’s manufacturing roots.

The US conglomerate’s chief executive Jeff Immelt wants to sell the majority of GE’s finance arm GE Capital, which was once the largest part of the company, over the next two years.

The US giant said it will sell the bulk of GE Capital Real Estate assets to funds managed by Blackstone. Buildings are located across locations such as the UK, France, Spain and US.

Starting with the property holdings, it has also struck a deal to sell part of the performing loans valued at $9bn in the US, UK and Canada to Wells Fargo.

It has also lined up buyers for $4bn of buildings. The combined transactions are valued at $26.5bn.

Other planned disposals include its US and international banking assets and its commercial lending and leasing arm.

The company will hang on to some financial companies used to support its remaining industrial business, such as Healthcare Equipment Finance and GE Capital Aviation Services.

As a result, GE expects more than 90 per cent of its earnings will be generated by its industrial businesses by 2018, up from 58 per cent in 2014.

Mr Immelt has been scaling down GE Capital since the financial crisis struck in 2008 to shift partly from finance to the traditional industrial industry heart of the company founded by Thomas Edison.

GE Capital has been an important part of its parent’s history, but the group said “the business model for large, wholesale-funded financial companies has changed, making it increasing difficult to generate acceptable returns going forward”.

The shake-up will also lead to returns of more than $90bn cash to investors through dividends and share buybacks through the end of 2018, Mr Immelt said.

He added: “This is a major step in our strategy to focus GE around its competitive advantages. GE today is a premier industrial and technology company with businesses in essential infrastructure industries.  They are well-positioned in growth markets and are delivering superior customer outcomes, while achieving higher margins.”

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