4.21.15: GE Selling Most of GE Capital to Blackstone and Wells Fargo

General Electric (GE) is selling most of the real estate and other remaining assets of its GE Capital unit, the financial arm that was once the largest part of the company. The company expects to get $26.5 billion from various buyers, including Blackstone Group (BX) and Wells Fargo (WFC). But as an indication of the decline in value of those assets in recent years, GE will take a $16-billion after-tax charge related to the transaction. Still, investors cheered the news, sending shares up 8% in morning trading, the best one-day move for the stock in six years. GE shares have lagged the broader market during most of the bull market of recent years.

The sale will free some cash for GE to repurchase $50 billion of its shares, which helped move the stock in trading. GE will hang onto some financial units that support its remaining industrial business, such as its aircraft leasing unit and the parts of the business that finance sale of its energy and healthcare equipment. But it will now focus on industrial businesses, such as making jet engines and electrical turbines. The company has been moving away from its financial business: It spun off its retail lending and credit card business in the IPO of Synchrony Financial (SYF) last July and its Genworth Financial (GNW) life and mortgage insurance unit a decade ago.

“GE was not much of a force in CMBS,” noted Gary Unkel, senior originator at ValueXpress. The firm was 24th in the league tables in 2014, contributing only $580 million in loans to securitizations, less than 1% of the market total. So GE was already effectively out of the market relative to CMBS conduit loans.

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This entry was posted in CMBS, CMBS Securities, Commercial Mortgage-Backed Securities, Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged , . Bookmark the permalink.

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