GE Snares $2.25B European Loan Portfolio

LONDON-GE Capital Real Estate will acquire a portfolio of commercial property loans from Deutsche Postbank AG, 93.7% owned by Deutsche Bank. The portfolio, comprised mainly of loans with UK borrowers, is valued at 1.4 billion pounds, or approximately US $2.25 billion. The transaction is expected to close before year-end.

GE Capital, which announced the agreement on Tuesday, says the portfolio of performing loans will provide it with access to both a new customer base and the potential for refinancing or for new loan activity, thanks in large measure to an average unexpired term of two-and-a-half years. “This transaction supports GE's plans to grow our core commercial real estate lending business globally,” says Mark Begor, CEO of GE Capital Real Estate. “It also demonstrates GE's ability to underwrite portfolio deals and positions us as a lead provider in the market for the long term.”

Adds Ellen Brunsberg, managing director of GE Capital Real Estate UK, “This transaction is a significant investment and an expansion opportunity for GE's commercial real estate lending activities in Europe. We are fortunate to acquire a portfolio from Deutsche Postbank given their excellent reputation for real estate lending, and our similar approach to providing outstanding client service.”

According to published reports, GE entered the bidding on the loan portfolio, known as Project Tower, in August. The entire portfolio includes just under 60 performing and non-performing loans, with the non-performing portion—not part of the GE Capital deal—valued at around 250 million pounds, or approximately US $400 million.