The Blackstone Group L.P.
) real estate unit is expected to complete the restructuring of
Netherlands-based real estate company Multi Corp and take over
the latter in the immediate future. Though nothing has been
officially declared, internal sources on condition of anonymity
confirm the news, according to a Bloomberg report.
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The deal has received approval from the European Commission and
Turkish antitrust authorities. After the transaction closes,
Blackstone will merge the acquired properties with the three
Turkish malls that it acquired earlier in Jul 2012 from Redevco
Mutli Corp, which operates in 14 European countries, was burdened
with debt as a result of the eurozone crisis. Being unable to
meet its financial commitments, the company was in a position to
be overtaken by large private equity giants like Blackstone.
Further, in 2011,
) surrendered 80% of its stake in Multi Corp following a
debt-restructuring program. The stake resale kept Multi Corp's
corporate debt and property loans unchanged at €900 million and
€1 billion respectively.
Nevertheless, in the past 15 months, Blackstone has taken over
Mutli Corp's 90% of debt and is, at present, in talks to acquire
the rest. Delving deeper, we can understand that Blackstone
foresees profit avenues in the loss-making company. With the
ongoing Eurozone crisis, retail property sales are common in
Europe and Blackstone intends to use Mutli Corp to take over such
properties at reasonable prices.
Blackstone's real estate segment generates a substantial portion
of the company's revenues (accounting for about 50% of profits).
Therefore, the company constantly strives to expand and
strengthen the segment.
Recently, Blackstone set a target of $5 billion for its new
European Fund, devoted solely to fund investments in Europe.
However, these risky ventures could fall flat on expectations and
dent the company's financials going forward.
Currently, Blackstone carries a Zacks Rank #2 (Buy). Other banks
worth a look include
Brookfield Asset Management Inc.
Fortress Investment Group LLC
). Both these stocks carry a Zacks Rank #2.