GE selling real estate for $26.5B to focus on industrial business
The company expects its industrial businesses to account for 90% of its earnings by 2018.
NEW YORK — General Electric plans to sell most of its real estate business for about US$26.5 billion as it shrinks and focuses on its industrial operations.
The company got only 58% of its earnings last year from industrial businesses but that’s expected to jump to 90% of a slimmed-down General Electric by 2018.
“This is a major step in our strategy to focus GE around its competitive advantages,” GE chairman and CEO Jeff Immelt said.
The company announced that funds managed by the Blackstone private equity group will buy the bulk of the assets in GE Capital Real Estate and about $4 billion of commercial real estate will be sold to other buyers.
The Wells Fargo bank will also acquire some of GE Capital’s loan portfolio.
GE will also keep some parts of the business that finance purchases of aviation, energy services and health care equipment, which will be at the core of the company’s industrial business.
The parent company expects to get about US$35 billion in dividends from GE Capital as a result of the plan, which requires various approvals.
It also estimates US$16 billion in charges after taxes – about $12 billion non-cash – in the first quarter but the company expects to offset the impact over time by share buybacks.
The GE board has authorized up to $50 billion to buy back common stock. It also intends to maintain its dividend at the current level in 2016 and grow it afterwards.
© 2015 The Canadian Press