GE to sell most of its $30bn property portfolio

General Electric is an advanced talks to sell most of its $30bn real estate portfolio to Blackstone and Wells Fargo, people familiar with the matter said.

A deal could be announced as soon as Friday as the three parties were finalising an agreement on Thursday, said one person involved in the negotiations.

It is unclear how much Blackstone and Wells Fargo will end up controlling of GE's property holdings, which include office buildings, apartments and commercial properties.

The sale is part of the US conglomerate's efforts to improve the performance of its financial services unit, GE Capital, which controls most of its property portfolio.

Jeff Immelt, chief executive, said last month that he would focus more on improving returns at GE Capital and "returning substantial dividends" to its parent company.

"GE is an industrial company first and foremost. GE Capital must enhance our industrial competitiveness, not detract from it," Mr Immelt said, raising the prospect of further disposals of assets at its financial services unit.

GE Capital made large investments in property before the global financial crisis, generating attractive returns for the parent company, which focuses on large-scale manufacturing projects. However, the 2008 crisis later forced it to seek government assistance to keep its financial arm in business.

GE Capital's return on capital was about 8 per cent at the end of last year, compared to the 14 per cent return generated by the industrial business.

Mr Immelt wants to cut the share of earnings derived from GE Capital to 25 per cent of the group's total, down from 42 per cent last year.

GE Capital has already floated its North American retail credit business Synchrony Financial, with a plan for a complete separation this year, and sold its consumer finance operations in Australia and New Zealand for A$8.2bn last month.

Blackstone, which oversaw about $81bn in real estate assets as of December 31, has been aggressively pursuing opportunities to expand its portfolio. The world's largest private real estate investor recently raised $14.5bn for a global property fund.

Blackstone recently acquired Chicago's 110-storey Willis Tower for $1.5bn as well as three hotels from John Paulson's hedge fund for about $1.2bn. The hotels are the Ritz-Carlton and J.W. Marriott in Orlando and the J.W. Marriott in Phoenix.

Wells Fargo, the San Francisco based lender, also expanded its real estate portfolio last year when it acquired about $6bn worth of assets from Germany's Commerzbank and its Eurohypo UK real estate lending unit.

GE shares rose 3.2 per cent after the Wall Street Journal reported the company was in talks to sell its property holdings.

GE, Blackstone and Wells Fargo declined to comment.

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