Blackstone's well-timed IPO in 2007 was almost the perfect top-tick indicator as 'the smart money' private-equity guys cashed out into the public markets at peak euphoria. Earlier this year we noted that, among others, Blackstone was drastically ratcheting down purchases (and in fact selling what it could) US residential real estate - and with it withdrew the only pillar holding up the housing market. And now, in the biggest deal in 7 years, Blackstone is dumping a $3.5 billion commercial real estate portfolio. Given the recent declines in CMBX pricing, perhaps, once again, Blackstone is calling the top in another bubble...
CMBX prices have been sliding for mezz tranches in recent months as last year's yield at any price market rolls over...
So is Blackstone calling the top with this deal? (via Bloomberg)
Blackstone agreed to sell 26 Northern California buildings to Hudson Pacific Properties for $3.5 billion in its latest deal to exit office holdings acquired seven years ago near the market’s peak.
Hudson Pacific, based in Los Angeles, agreed to pay $1.75 billion in cash for the properties and the rest in stock, giving Blackstone about a 48 percent stake in the real estate investment trust, the companies said in a statement today.
The acquisition of the properties, in the San Francisco area and Silicon Valley, “perfectly aligns with our strategy to acquire high-quality office properties in West Coast markets poised for continued growth through off-market transactions,” Victor Coleman, Hudson Pacific’s chairman and chief executive officer, said in the statement.
Blackstone, the biggest U.S. office landlord, has been selling assets from its 2007 acquisition of Equity Office Properties Trust as occupancies increase and rents recover from the real estate crash. The Hudson Pacific transaction marks the private-equity firm’s biggest sale of office buildings since just after the $39 billion Equity Office takeover, when it flipped many of the properties to reduce debt.
This is not Blackstone's first sale...
Blackstone in November agreed to sell a 42-story office building on Manhattan’s Bryant Park to an Ivanhoe Cambridge venture for about $2.25 billion, according to two people with knowledge of the deal. The sale would be the largest of a whole U.S. office property since a group led by Boston Properties Inc. purchased the General Motors Building in New York for a record $2.8 billion in 2008, according to Real Capital Analytics Inc.
In September, Blackstone sold five office buildings in the Boston area to investors led by Oxford Properties Group, a unit of the Ontario Municipal Employees Retirement System, for about $2.1 billion.
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Who's the greater fool?