, The Blackstone Group LP
) entered the London real-estate market by acquiring the high
profile Devonshire office and retail complex from Rockpoint and Abu
Dhabi Investment Authority (ADIA). For the property, Blackstone
paid £340 million ($540 million approximately), which is
substantially lower than what was shelled out by Rockpoint and ADIA
during the property market boom in 2006
Blackstone will finance the acquisition by obtaining a five-year
senior loan of £210 million from
The Goldman Sachs Group, Inc.
). Goldman had offered competitive price as well as there was no
prepayment clause, which will enable Blackstone to keep the
property for five years or sell it within this time without facing
any penalty charge.
Rockpoint and ADIA sold the Devonshire property incurring
significant losses. The reasons behind the lower sale proceeds were
attributed to a weak property market as well as the vendor's
unfavorable debt position along with the fine negotiating
ability of Blackstone.
Besides London, Blackstone has acquired StarHub Green project, a
400,000 square feet property in Singapore, from SEB Asset
Management, a German company. For this, Blackstone paid around $173
million (S$215 million).
Last month, the Blackstone Group reported its first quarter 2012
economic net income (ENI) of 39 cents per share, missing the Zacks
Consensus Estimate by 3 cents. This compared unfavorably with the
year-ago quarter earnings of 51 cents.
Results of the company were negatively impacted due to the
shrinking top line, which was, to some extent, mitigated by lower
expenses. Despite the unsatisfactory results, significant
improvement in assets under management was a huge relief.
This acquisition will enable Blackstone to further expand its
presence on the European soil and enrich its real estate portfolio.
Moreover, it has also facilitated a change of strategy for
Blackstone, which was involved in buying distressed properties from
the European banks. Blackstone plans to revamp the property and
find new occupants, to generate good returns.
Currently, Blackstone retains a Zacks #3 Rank, which translates
into a short-term Hold rating.
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