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Blackstone Buys America's Most Iconic Skyscraper With Rent Collected As "America's Landlord"

Tyler Durden's picture




 

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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Sun, 03/08/2015 - 19:53 | 5867993 knukles
knukles's picture

Lemme see.  The last guy owned this was whazziz name with Sears and that worked out ever so super dooper neato keeno well

Sun, 03/08/2015 - 20:00 | 5868006 Cognitive Dissonance
Cognitive Dissonance's picture

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.

Sun, 03/08/2015 - 20:04 | 5868016 knukles
knukles's picture

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.

Sun, 03/08/2015 - 20:54 | 5868114 Self-enslavement
Self-enslavement's picture

Blackstone is reported to have purchased the Federal Reserve. Jews are such nice people.

Sun, 03/08/2015 - 21:04 | 5868146 Manthong
Manthong's picture

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

Sun, 03/08/2015 - 21:40 | 5868241 BuddyEffed
BuddyEffed's picture

Was there a credit default swap attached to it that needed a covering?

Sun, 03/08/2015 - 22:15 | 5868321 Handful of Dust
Handful of Dust's picture

Jobless in Seattle has a new meaning for Americans:

 

 

Rich Chinese lead race for ticket to green card

 

http://www.seattletimes.com/2015/03/ticket-for-a-green-card-isnt-too-pri...

Mon, 03/09/2015 - 07:32 | 5868801 SoilMyselfRotten
SoilMyselfRotten's picture

Exactly my first thought CD, good ol' lucky Larry

Sun, 03/08/2015 - 21:03 | 5868141 Miffed Microbio...
Miffed Microbiologist's picture

Strange how that picture reminds me of the Grim Reaper. I should take a Rorschach test.

Miffed

Sun, 03/08/2015 - 22:29 | 5868351 markar
markar's picture

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

Mon, 03/09/2015 - 10:59 | 5869417 PTR
PTR's picture

The John Hancock has a better observatory, fwiw.

Mon, 03/09/2015 - 17:51 | 5871008 Exponere Mendaces
Exponere Mendaces's picture

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.

Sun, 03/08/2015 - 20:04 | 5868022 Yes_Questions
Yes_Questions's picture

the next Great Chicago Fire

Sun, 03/08/2015 - 20:12 | 5868037 Took Red Pill
Took Red Pill's picture

Yeah, it will be brought down by a jetliner crashing into it

Sun, 03/08/2015 - 20:27 | 5868067 HowdyDoody
HowdyDoody's picture

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

Sun, 03/08/2015 - 20:55 | 5868120 Self-enslavement
Self-enslavement's picture

Tell me he didn't do 911...

Sun, 03/08/2015 - 20:21 | 5868055 Sofa King
Sofa King's picture

Back in Brooklyn, they use to call it Jewish Lightning.

Mon, 03/09/2015 - 11:51 | 5869650 PTR
PTR's picture

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.

 

Sun, 03/08/2015 - 21:08 | 5868159 williambanzai7
williambanzai7's picture

Sun, 03/08/2015 - 23:28 | 5868446 sodbuster
sodbuster's picture

Thanks WB7- I like that!!

Mon, 03/09/2015 - 01:07 | 5868557 Rubbish
Rubbish's picture

Heh heh

Mon, 03/09/2015 - 01:30 | 5868583 joego1
joego1's picture

Does Sears still make nail guns?

Sun, 03/08/2015 - 19:56 | 5868003 yrad
yrad's picture

Winners and losers. Lots of losers. 

Sun, 03/08/2015 - 20:16 | 5868045 NihilistZero
NihilistZero's picture

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.

Sun, 03/08/2015 - 20:01 | 5868012 chosen
chosen's picture

Fuckers.

Sun, 03/08/2015 - 20:03 | 5868017 Yen Cross
Yen Cross's picture

 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.

Sun, 03/08/2015 - 21:32 | 5868226 Took Red Pill
Took Red Pill's picture

and what ever happened to Roebuck?

Sun, 03/08/2015 - 22:15 | 5868320 disabledvet
disabledvet's picture

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....

Mon, 03/09/2015 - 00:46 | 5868534 OldPhart
OldPhart's picture

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.)

Sun, 03/08/2015 - 20:05 | 5868025 Dre4dwolf
Dre4dwolf's picture

Towers once dedicated to titans of industry.

Now party towers for the kleptocracy ^^ . . .

Sun, 03/08/2015 - 20:13 | 5868040 knukles
knukles's picture

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.

Sun, 03/08/2015 - 20:34 | 5868080 red1chief
red1chief's picture

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.

Sun, 03/08/2015 - 20:57 | 5868124 Self-enslavement
Self-enslavement's picture

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.

Mon, 03/09/2015 - 00:45 | 5868522 Dre4dwolf
Dre4dwolf's picture

What's wrong is that Wall Street just prints money. All they want. And there are no laws against it

There is a law against it.

The constitution:

Section. 10.

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

-http://www.archives.gov/exhibits/charters/constitution_transcript.html

 

The Constitution is the supreme law of the land.  - Wiki 

http://en.wikipedia.org/wiki/United_States_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?



Mon, 03/09/2015 - 04:50 | 5868720 sTls7
sTls7's picture

Ya...  it's called greed. 

Sun, 03/08/2015 - 20:10 | 5868035 Berspankme
Berspankme's picture

Is Schwarzstein a tribe member? 

Sun, 03/08/2015 - 20:13 | 5868041 knukles
knukles's picture

Does the Pope shit in the woods?

Sun, 03/08/2015 - 20:26 | 5868064 Boomberg
Boomberg's picture

Is the bear Catholic?

Sun, 03/08/2015 - 20:59 | 5868129 Self-enslavement
Self-enslavement's picture

Do Jews charge interest to their own children?

Sun, 03/08/2015 - 21:28 | 5868215 Hulk
Hulk's picture

Does a bear skin cover your bare skin ???

Sun, 03/08/2015 - 20:27 | 5868066 Squid Viscous
Squid Viscous's picture

Nah, he's just one of "those nice folks next door" ...hat tip to David Irving

Sun, 03/08/2015 - 20:11 | 5868036 Vinividivinci
Vinividivinci's picture

The tallest FEMA camp in the world ?

Sun, 03/08/2015 - 20:14 | 5868043 yogibear
yogibear's picture

"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.

Sun, 03/08/2015 - 20:29 | 5868070 Bollixed
Bollixed's picture

What chu talkin bout, Willis Tower?

It'll always be the Craftsman Tower to me...

Sun, 03/08/2015 - 20:30 | 5868074 knukles
knukles's picture

Yeah.  And Willys went out of business, too.

Sun, 03/08/2015 - 20:20 | 5868047 i_call_you_my_base
i_call_you_my_base's picture

It's a good thing RE prices will never go down again.

Sun, 03/08/2015 - 20:21 | 5868056 bytebank
bytebank's picture

Let's see the insurance policy on this one. We are due for another shock to the system to completely eradicate the Constitution.

Sun, 03/08/2015 - 20:25 | 5868061 Lostinfortwalton
Lostinfortwalton's picture

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.

Sun, 03/08/2015 - 20:28 | 5868069 Chuck Knoblauch
Chuck Knoblauch's picture

Is the building insured for terrorist attacks?

Larry Silverstein could give Blackstone some advice.

Like don't use the words PULL IT.

Sun, 03/08/2015 - 20:35 | 5868078 Squid Viscous
Squid Viscous's picture

Will they rename it the Schmears Tower?

Sun, 03/08/2015 - 22:01 | 5868290 brown_hornet
brown_hornet's picture

Lost-

Do your Boeing friends take Madison Av. to work or the Ike?

Mon, 03/09/2015 - 08:38 | 5868927 Lostinfortwalton
Lostinfortwalton's picture

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

Sun, 03/08/2015 - 22:05 | 5868298 brown_hornet
brown_hornet's picture

I think it would take at least 5 dreamliner hits to bring down that monster.

Or maybe a ton of thermite.

Mon, 03/09/2015 - 04:15 | 5868695 Turtle49
Turtle49's picture

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.

Mon, 03/09/2015 - 08:30 | 5868898 Lostinfortwalton
Lostinfortwalton's picture

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.

Tue, 03/10/2015 - 14:39 | 5874326 Hope Copy
Hope Copy's picture

Rumor has it that it has happened before

Sun, 03/08/2015 - 22:08 | 5868305 Colonel Klink
Colonel Klink's picture

They should change their name to Black Heart Big Nose Tribal hedge fund.

Sun, 03/08/2015 - 22:24 | 5868341 Lmo Mutton
Lmo Mutton's picture

Don't worry guys.  It is nowhere near the ORD arrivals path.  /sarc?

Mon, 03/09/2015 - 06:16 | 5868753 ch25061
ch25061's picture

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.

Mon, 03/09/2015 - 12:21 | 5869792 Grinder74
Grinder74's picture

Hint: "/sarc" means he's being sarcastic. 

Sun, 03/08/2015 - 22:54 | 5868387 RE Guy
RE Guy's picture

"..........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.  

Tue, 03/10/2015 - 14:38 | 5874308 Hope Copy
Hope Copy's picture

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.

Sun, 03/08/2015 - 23:05 | 5868406 knowshitsurelock
knowshitsurelock's picture

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.

Mon, 03/09/2015 - 01:25 | 5868576 DipshitMiddleCl...
DipshitMiddleClassWhiteKid's picture

its called capitalism , baby!

 

Mon, 03/09/2015 - 09:01 | 5869006 SmedleyButlersGhost
SmedleyButlersGhost's picture

Shhh.....it's just a dream....go back to sleep. Dream of iWatches and sleeeeeeeep.

Mon, 03/09/2015 - 01:28 | 5868578 Catullus
Catullus's picture

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.

Mon, 03/09/2015 - 01:53 | 5868598 bozoklown
bozoklown's picture

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.

Mon, 03/09/2015 - 03:13 | 5868659 Keyboard Kommando
Keyboard Kommando's picture

They are attacking the Satanic Tribe in Europe, it needs to happen here, too!

Mon, 03/09/2015 - 03:46 | 5868680 Jano
Jano's picture

they play the game with borrowed moeny from DB , so what?

Mon, 03/09/2015 - 04:38 | 5868712 MDP
MDP's picture

"CEO Stephen Schwarzman made $690 million last year."

KILL IT WITH FIRE

Mon, 03/09/2015 - 05:43 | 5868743 Shylockracy
Shylockracy's picture

Rachmanism  

Noun

[mass noun] British
The exploitation and intimidation of tenants by unscrupulous landlords.

Origin

Named after Peter Rachman (1919–62), a jewish London landlord whose practices became notorious in the early 1960s.

Mon, 03/09/2015 - 09:48 | 5869194 bh2
bh2's picture

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".

Mon, 03/09/2015 - 12:19 | 5869783 Grinder74
Grinder74's picture

CEO Stephen Schwarzman + rifle + scope = bliss

Tue, 03/10/2015 - 14:31 | 5874272 Hope Copy
Hope Copy's picture

911 in the making.. these building are probably stressed out and past their demolition date (the secret structural report).  Steel frames have a lifetime.

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