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Blackstone Buys America's Most Iconic Skyscraper With Rent Collected As "America's Landlord"
As we’ve noted previously, the post-crisis, Fed-subsidized rush to acquire distressed real estate resulted in none other than Blackstone becoming the US’s largest landlord. The giant PE firm — which borrowed $3.6 billion in seed money from Deutsche Bank to get its real estate empire up and running — accumulated a portfolio of some 50,000 single family homes after spending billions buying foreclosures at bank auctions. The properties were quickly converted to rental units and the rent checks were (naturally) securitized into the first ever rental-home-backed-securities. All of this has had the predictably sad effect of driving down US home ownership and driving up rents.
More recently, Blackstone introduced the “landlord loan” wherein the firm lends prospective real estate speculators cash to buy homes, then securitizes the loans. Deutsche Bank intends to bring the first landlord-loan-backed securities to market over next several weeks.
Now we learn that the firm, whose real estate ambitions apparently know no bounds, is set to buy Chicago’s Willis Tower (formerly the Sears Tower) in a deal worth some $1.5 billion.
Via WSJ:
Private equity giant Blackstone Group LP is in advanced discussions to buy the Willis Tower in Chicago, the country’s second-tallest skyscraper, for about $1.5 billion according to a person briefed on the talks.
If completed, it would be by far the highest price paid ever for a building in Chicago, and well above the $841 million that the iconic black tower—formerly known as the Sears Tower—last traded for in 2004 when it was sold to a group that includes New York investors Joseph Chetrit and Joseph Moinian...
The 1,451-foot tower is often viewed within Chicago as second-tier real estate despite its soaring views and height, given that much of the city’s top-quality property is concentrated on the other side of the Chicago River and closer to Lake Michigan.
The potential deal with Blackstone, reported Friday evening by Crain’s Chicago Business, comes as the ownership group has long been eyeing a sale.
***
The bottom line: Wall Street destroyed the housing market, waited for prices to collapse, stepped in and bought up all of the foreclosures turning a nation of homeowners into a nation of renters in the process, securitized rental cash flows, and used the proceeds to buy the nation’s second largest skyscraper.
CEO Stephen Schwarzman made $690 million last year.
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Lemme see. The last guy owned this was whazziz name with Sears and that worked out ever so super dooper neato keeno well
Let's just hope it's not another Larry Silverstein deal. If Blackstone insures it for $3 Billion Chicago might just want to duck and cover.
It's One Mother of a Big Building. Years ago Salomon had offices near the top and we were visiting. One of the guys looks out and down and shouts "Look!", pointing down. We look out and were looking down onto the top of the Goodyear blimp sailing past. Acrophobia, several body parts shriveling.
Blackstone is reported to have purchased the Federal Reserve. Jews are such nice people.
The naming rights are a perceived big deal and worth a ton, but to many millions it will always be referred to as the Sears Tower or “The building formerly known as the Sears Tower”.
http://www.inetours.com/Chicago/images/Arch/Ledge_s4021.jpg
Was there a credit default swap attached to it that needed a covering?
Jobless in Seattle has a new meaning for Americans:
Rich Chinese lead race for ticket to green cardhttp://www.seattletimes.com/2015/03/ticket-for-a-green-card-isnt-too-pri...
Exactly my first thought CD, good ol' lucky Larry
Strange how that picture reminds me of the Grim Reaper. I should take a Rorschach test.
Miffed
As a college kid, I worked a job summers downtown and used to walk by the 10 story deep foundation when it was under construction
The John Hancock has a better observatory, fwiw.
You are full of shit, knukles. The blimp only made it out for games and it sure as fuck wouldn't be floating near the Sears Tower. Soldier field is the opposite direction, numbnuts.
the next Great Chicago Fire
Yeah, it will be brought down by a jetliner crashing into it
Haaretz, one of Israel's major newspapers had a cartoon about Nutty-yahu's visit to the US. It seems very relevant.
https://mobile.twitter.com/haaretzcom/status/527684198358716416
Tell me he didn't do 911...
Back in Brooklyn, they use to call it Jewish Lightning.
Boeing is 4 blocks north. Northrup Grumman directly south. Chicago Mercantile Exchange 2 blocks north. Chicago Fed 2 blocks east. Train station 2 blocks west.
Take that info for what it's worth.
I would think that if any steady regulars at Lou Mitchell's were suddenly absent, I'd keep an eye out.
Thanks WB7- I like that!!
Heh heh
Does Sears still make nail guns?
Winners and losers. Lots of losers.
Happy day when those securities blow up. While the Blackstone scum will get away with their hall as least their brothers in filth, the Wall Street scum who bought the securities, will face a reckoning. Getting back to RE being a sane portion of household expenditures instead of total largesse for the oligarchs will be most welcome.
Fuckers.
It will always be known as the 'Sears Tower' to me. My parents took me up in that behemoth when I was a kid.
Back when American talent & ingenuity were thriving.
and what ever happened to Roebuck?
Whatever happened to Sears?
Eddie "the default King" Lampert with Nancy Pelosi as his number one role model "stiffin the bond holders to ensure confidence." Well...so much for a subway system for Chi-town. Nice facility for the rendition of any trouble makers there tho....
Once they stopped publishing their three inch catelog they went right into the shitter.
(Of course, their catalog usually went right into the shitter back when TP was scarce.)
Towers once dedicated to titans of industry.
Now party towers for the kleptocracy ^^ . . .
Interesting you say that. Was having coffee today with a bud, an engineering type retired form Lockheed's missile/communications satellite launch operations. We got talking about financial markets and he sounded just like a ZH'er. All paper being yanked and pulled all over hell and high water, no manufacturing, etc., all the stock market performance is Fed liquidity. This is a fairly astute fellow, but by no means a financial type, but he sees it. More and more are starting to wakie wakie rise and shine.
Indeed, used to be named after something somebody built which Made Real Things.
Now, no real things, not here.
There is a great and growing sense of "something the fuck is really wrong" out there.
What's wrong is Wall St. is running a big derivative Ponzi scheme in order to fund a compensation model that is much bigger than the business model can produce. It's gone on so long that I fear there won't be any place to hide, as a lot of jealous non-Wall St. firms have gotten involved as well.
What's wrong is that Wall Street just prints money. All they want. And there are no laws against it or any person overseeing them. They used to refer to them as criminals and shoot them dead.
There is a law against it.
The constitution:
http://en.wikipedia.org/wiki/United_States_Constitution
Anyone using anything other than gold and silver as money is committing Treason in fact. . . so what do you do when everyone in the country is a traitor?
Well at that point, I think its fair to say now, that we have no country, there is no law, and if you can violate one law without repercussions, you can violate them all.
By not using gold/silver as money, everyone is essentially saying "the law doesn't matter". . . so . . . if one law doesn't matter... why do any laws?
And don't tell me about "the federal reserve act" and all that bullshit 1) It wasn't even properly ratified 2) Even if it was ratified, it doesn't trump the constitution . . . so wtf?
Ya... it's called greed.
Is Schwarzstein a tribe member?
Does the Pope shit in the woods?
Is the bear Catholic?
Do Jews charge interest to their own children?
Does a bear skin cover your bare skin ???
Nah, he's just one of "those nice folks next door" ...hat tip to David Irving
The tallest FEMA camp in the world ?
"known as the'Sears Tower"
Now known as the Willis Tower.
This building seems like bad luck. Sears hasn't done well and may not be around in a few years.
What chu talkin bout, Willis Tower?
It'll always be the Craftsman Tower to me...
Yeah. And Willys went out of business, too.
It's a good thing RE prices will never go down again.
Let's see the insurance policy on this one. We are due for another shock to the system to completely eradicate the Constitution.
Who amongst us would not want to live and work in Chicago? I did hear some Boeing employees are aprehensive of traveling to work at any time other than normal rush hours. I'm sure Rahm will get right on it.
Is the building insured for terrorist attacks?
Larry Silverstein could give Blackstone some advice.
Like don't use the words PULL IT.
Will they rename it the Schmears Tower?
Lost-
Do your Boeing friends take Madison Av. to work or the Ike?
Not sure, the article said that workers were apprehensive about working late and being on the streets then. Also the airline support groups that work shifts were no too happy about going home late in the evening after their normal shift
I think it would take at least 5 dreamliner hits to bring down that monster.
Or maybe a ton of thermite.
On Sept 11 2001 one of the first reports was that a plane was heading for the Sears Tower.
Remember seeing workers fleeing the White House?
Only once was it reported that Flight 77 circled the Capitol twice before heading to the Pentagon. 77 then disappeared in the debris.
At his retirement the chief pilot of United Airlines said that making a steep descending turn at high speed and center punching that wall in the Pentagon about six feet above ground level on the first try is something he, personally, could not have done.
Rumor has it that it has happened before
They should change their name to Black Heart Big Nose Tribal hedge fund.
Don't worry guys. It is nowhere near the ORD arrivals path. /sarc?
Not true. The airplanes circling waiting to land take a route that goes East over lake Michigan and then back
West toward ORD...this loop can be repeated several times when planes are "stacked up" waiting to land.
Hint: "/sarc" means he's being sarcastic.
"..........Wall Street destroyed the housing market, waited for prices to collapse, stepped in and bought up all of the foreclosures turning a nation of homeowners into a nation of renters in the process, securitized rental cash flows, and used the proceeds to buy the nation’s second largest skyscraper."
I've learned a ton from reading ZH over the past year or so (and become even more cyncial about our gov't in the process, if that was possible), so it has been worthwhile. But at the same time, when I read comments like this quote - particularly the last portion of this sentence - I wonder about what other blatantly wrong information is seeping into my head. Either "Tyler(s)" don't understand how private equity funds and their individual deals work (which would actually restore some confidence in the other info on here), or I'm simply wasting too much reading an overly verbose and bitter version of USA Today. While BX is certainly no saint in the real estate biz, especially on the residential property side, an acquistion of this tower is about as plain jane vanilla of an office deal as there can be for a fund. And it has absolutely zero (hedged or not) to do with their shenanigans in the residential realm.
Quit harping like houses last forever. They don't and many should be demolished. Once a house is comercialized, it can come under different zoning and it is much easier to be condemmed.. This is a total middle man play with all the disclamers included. The people that buy into this have all the risk and only the savy will survive. The downward spiral of investment quality continues.
Let me see if I got this one straight. Wall Street mortgages everyone who has a pulse with a liar loan, blends them all together into a REMIC and sells them as securities to unsuspecting investors, takes the money and lines their own pockets, then trashes the economy, causes a huge foreclosure debacle, screws the homeowners, the bondholders AND the investors, then buys back all this troubled real estate at pennies on the dollar, turns them into rentals, and feeds the inventory back into the market slowly which hold up the artificial pricing, and now they want to hide the loot in a tower in Chicago?
Sounds like business as usual to me.
its called capitalism , baby!
Shhh.....it's just a dream....go back to sleep. Dream of iWatches and sleeeeeeeep.
I own BX. I'm betting grandma Yellen never raises interest rates. Or that she at least rounds out another 3-4 years of this so we do get our lost decade.
All of these CRE loans are libor plus. When the going gets tough, they'll continue to manipulate the shit out of it.
I could buy BX and make a profit... but as it is I'll just climb back into that tiny car with my co- workers 'cause klowns never seek alpha.
They are attacking the Satanic Tribe in Europe, it needs to happen here, too!
they play the game with borrowed moeny from DB , so what?
"CEO Stephen Schwarzman made $690 million last year."
KILL IT WITH FIRE
Rachmanism
Noun
[mass noun] British
OriginThe exploitation and intimidation of tenants by unscrupulous landlords.
Named after Peter Rachman (1919–62), a jewish London landlord whose practices became notorious in the early 1960s.
The current homeownership rate in the US has simply returned to the same level prevailing prior to the blowoff top.
Reducing an excess inventory of unsold homes with market-clearing prices (which is to say "cheap") is typical for booms gone bust.
If house prices are currently "too high", they will eventually come down. If prices do not come down, they are not "too high".
CEO Stephen Schwarzman + rifle + scope = bliss
911 in the making.. these building are probably stressed out and past their demolition date (the secret structural report). Steel frames have a lifetime.