GE Capital strengthens move to debt side with Postbank portfolio

The finance arm of General Electric has bought a £1.4bn portfolio of commercial real estate loans from Deutsche Postbank, as part of its drive to boost its refinancing and new loans business. GE Capital Real Estate said the portfolio is composed of performing commercial property loans, mostly in Britain but with a portion in Germany and France, with several of the loans soon up against their renegotiation deadlines.

GE said that the portfolio acquisition would help it access a new customer base and offers the potential for new refinancing or fresh lending activity. "This transaction supports GE's plans to grow our core commercial real estate lending business globally," said 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.”

The commercial real estate unit of GE Capital has been a lender for 40 years, and overall earnings continue to improve as it exits CRE equity holdings to focus on the debt side. Equity exposure is down 60% from its peak before the recession, following a strategy to reduce these through property improvements and lease-up actions, and then selling into rising markets.

“This transaction is a significant investment and an expansion opportunity for GE’s commercial real estate lending activities in Europe," said Ellen Brunsberg, MD of GE Capital Real Estate UK. The transaction is expected to close before year-end.