GE’s $23B deal with Blackstone took just three weeks: Jon Gray

Head of real estate for private equity giant discusses recent deals at Schack's REIT forum

Rosemary Scanlon and Jonathan Gray
Rosemary Scanlon and Jonathan Gray

If you think the $23 billion price tag the Blackstone Group paid for most of General Electric’s real estate assets is an impressive figure, try this one on for size: three.

That’s the number of weeks the private equity firm’s real estate group had to close the blockbuster deal.

“They said they wanted to try to exit as much as their real estate as possible in one transaction and the only hitch was, we basically had three weeks to get it done,” Jonathan Gray, global head of real estate at Blackstone, told an audience of several hundred who gathered earlier today to hear him speak at the New York University Schack Institute of Real Estate’s annual conference on real estate investment trusts.

As soon as Gray got out of the elevator from his meeting with GE, he made a phone call to Wells Fargo from the sidewalk, he said.

“From that moment forward, really, the three institutions went like crazy to get this done,” he explained.

GE announced last week that it would sell $23 billion worth of real estate and financial-service assets to Blackstone and Wells Fargo. On the heels of that announcement, the company also said it would be drastically transforming its structure by spinning off its $200 billion financial arm, GE Capital.

Even with his close proximity, Gray said the move came as a surprise.

“We were working on what, at the time, seemed like a very large transaction,” he said. “We didn’t know they were going to be doing something quite so transformative with the company.”

Gray spent about 30 minutes chatting with Rosemary Scanlon, dean of the Schack Instutute, on the stage in the grand ballroom at the Pierre Hotel across Central Park.

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He touched on other big Blackstone deals, such as the company’s $14.5 billion fund and the nearly $2 billion sale of the Waldorf Astoria to Chinese insurance company Anbang, which is planning a condo conversion for a portion of the iconic hotel.

Last month The Real Deal reported, blow by blow, how the deal came together.

Gray said people ask him, “Does this make sense, the price they paid? I would tell you I think it makes a lot of sense and I think in the rearview mirror, when people look back, it will look like a shrewd purchase.”

He said the price was “highly rational” considering what Anbang got: 1.5 million square feet on a prime Manhattan block with potential, in terms of retail and other investments.

“I think it’s going to end up as a win-win,” he said.

Yet despite all Blackstone’s recent deals, Gray warned about using the company as a divining rod for the real estate industry.

“So one of the things people are trying to do in reading the tea leaves with us is draw conclusions. What are we doing? What does that mean,” he said. “I think sometimes it’s hard because we run, typically what we do in closed-end funds.”

The company’s “buy-it, fix-it, sell-it” model, he said, “is just the nature of our businesses and the nature of the funds we run.”