Blackstone sells US property assets to refocus on Asia, Europe

Global investment giant sees potential for making money in Asia, including Hong Kong

PUBLISHED : Wednesday, 28 August, 2013, 12:00am
UPDATED : Wednesday, 28 August, 2013, 5:29am


Global investment giant Blackstone is reshuffling its vast property portfolio, shedding US assets to buy new ones in Asia and Europe.

The New York-based firm has plenty of firepower, with US$64 billion in real estate assets under management, the world's largest portfolio in the sector.

Blackstone has recently been lining up its strategy with an eye on juicier investment prospects outside the US.

That includes a slew of asset sales and IPOs of units to generate cash for other acquisitions.

"We are in a period of time where you can expect to see real estate realisation growing," Tony James, Blackstone's president and chief operating officer, said.

Overall, the company raised US$14 billion in the second quarter alone, mostly from its real estate and credit businesses, Blackstone chief executive Steve Schwarzman said.

In the US, Blackstone, the country's leading hotel owner, is working on an initial public offering of Hilton Worldwide, its biggest real estate asset, bought in 2007 for US$25 billion including debt.

Blackstone also appears to be seeking a disposal of La Quinta Inns & Suites hotels, acquired in 2006 and valued at about US$4.5 billion.

It is also planning IPOs for Brixmor Property Group, a grocery-anchored shopping centre owner that is the company's third-largest real estate investment, and Extended Stay Hotels, which it co-owns.

The company, meanwhile, is moving ahead with several acquisitions, including the purchase of 30,000 apartments from US industrial conglomerate General Electric for about US$2.7 billion, a source close to the situation said.

Schwarzman said that "in the US, markets are healthier, properties are doing better and credit markets are very accommodating.

"In Europe though ... to the contrary there's been a lot of distress," the CEO said.

"But the spigots are starting to loosen up and people are starting to face that and want to sell assets."

Blackstone itself is selling its 50 per cent stake in Broadgate office complex in London to GIC, Singapore's sovereign wealth fund, according to sources.

Asia is also beckoning Blackstone, which has US$230 billion in total assets under management.

"In real estate, we had our first Asia fund closing of US$1.5 billion, marking strong investor reception to our first dedicated fund in the region," Schwarzman told analystsl.

According to The Wall Street Journal, the private-equity firm is also in negotiations to buy Hong Kong-based China developer Tysan Holdings for US$2.5 billion.