While no official statement has been released by the firm, rumours abound that Blackstone Group LP (BX) is looking to offload its US property holdings over the next 18 months.
One option availabe to the firm would see its office portfolio go public in America.
The group may have been looking to offload the assets for a while. They were acquired in a 2007 after the firm bought the Equity Office Properties Trust, in one swoop promoting Blackstone to the status of one of the US’s largest office landlords.
Property prices peaked in 2007, but the firm was able to ‘flip’ for a quick profit many of the buildings it gained from the $39 billion acquisition of Equity Office Properties Trust, meaning it has escaped unscathed from the downturn.
The firm must be relieved, given the turbulence since their 2007 activity. The US commercial housing market fell 39% during the financial crisis. Prices have since recovered, however, and are 26% above their January 2010 low. These swings are not necessarily indicative of Blackstone’s holdings however. While commercial property prices across America have been stumbling through a slow recovery in the last couple of years, the values of buildings in America’s six largest cities have rebounded far more swiftly.
Early estimates, based on around $300 per square foot pricing, suggest that Blackstone could be in a position to raise as much as $22 billion from the sales. This would represent something in the region of an $8 billion profit for the firm.
Conflicting strategies regarding the nature and scale of the sell-off have emerged. Some see a whole-scale sell-off as the most likely option, but others think that it could be limited to some of the more iconic assets in its portfolio, such as 1411 Broadway, in Manhattan.
The sale is partly being driven by a desire to return money to their investors; the firm’s funds are usually liquidated before they reach 10 years of age.