Exit for GE Capital Real Estate with €700m German sale

The London-based private equity group Kildare Partners has bought most of the remaining German commercial real estate and debt portfolio from GE Capital Real Estate for an undisclosed amount.

The portfolio is thought to include 60 commercial properties and 80 secured loans, almost all secured on office propertis, with a face value of close on €700m.

GE Capital Real Estate is selling the assets as part of its strategy, announced a year ago, to reduce the size of GE Capital, its financial unit, in a drive to refocus on its core industrial operations. The sale of the German assets leaves GE with only seven light-industrial properties left in Germany, held in a joint venture, along with a shopping centre loan which is due to be imminently dissolved.

It said it now plans to close down its Frankfurt office with its 40 staff by mid-2016, with perhaps a handful of staff moving with the assets to Kildare.

In April the GE group sold the major part of its property assets worldwide to Blackstone for $23bn along with $9bn of performing first mortgage property loans to US bank Wells Fargo.

According to Timo Thömmes, managing director and general counsel of GE Capital Real Estate Germany: 'Within a very short time we have succeeded in completing an immensely complex integrated share and portfolio transaction at very high quality. At the same time, it was important to us to put the portfolio into good hands. We are confident that this is the case with Kildare Partners."

The German sale comes barely a year after the company had announced big plans for investment into German commercial real estate, but those plans were rapidly supeceded by parent company GE's sudden volte face, and its new strategy to return to its electrical and manufacturing roots.

Kildare was founded in 2013 by former Lone Star executive Ellis Short, and targets opportunistic investment in distressed real estate in western Europe. Last year it bought the German Mars NPL portfolio from Deutsche Bank, and has since been busy selling several of that portfolio's assets, including Le Méridien hotels in Munich and Frankfurt, which it sold to German savings bank manager Deka and Cologne-based Art-Invest Real Estate respectively.

It raised equity of $2 bn for its first European real estate investment fund last year. In total, the company has closed on 12 investment deals at an aggregate price of over $3.8bn over the past two years in Germany, the UK, the Netherlands, Norway and Ireland.