Ahead of its much-ballyhooed $4 billion initial public offering of stock, Blackstone Group has been doing a bit of housecleaning.
The private-equity firm has been disposing of assets at a rapid clip over the past several months, including its largest deal -- an $8 billion sale of Extended Stay America hotels to Lightstone Group.
Blackstone was expected to be a net seller of commercial properties to help reduce the debt load tied to its blockbuster $39 billion leveraged buyout of Sam Zell's real estate investment trust
Equity Office Properties
back on Feb. 9. Even so, the fund's inclination to shop properties than buy this year has been notable.
Data firm Dealogic says that as of last week, Blackstone had five acquisitions outstanding totaling $5.49 billion. Last year at this time, it had seven deals on deck valued at about $19.84 billion -- including its $11 billion deal for Dutch global media company VNU, parent of Nielsen Media research. The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co., Thomas H. Lee Partners and AlpInvest Partners also partnered on that buyout.
A Blackstone spokesman declined to comment
Blackstone recently withdrew its bid for Australian chemicals group Orica, which would have brought its total deal volume this year to $8.54 billion. Orica, which includes a mining outfit and consumer products unit, is one of the top 40 companies listed on the Australian Stock Exchange.
On the sell side, commercial property has been the sector du jour for Blackstone.
It has sold $15.6 billion of EOP offices, according to Dealogic. Sources within the private-equity firm say the total number of EOP-related dispositions is closer to a range of $20 billion to $25 billion.
The LBO shop also unloaded a stake in German apartment-owner Vitus Group for $2.1 billion last month.
Blackstone's sales pace now may be a function of its heady investment volume in years prior. They may also reflect its natural LBO-tendency to cash out in order to fetch outsized prices while the market's hot.
The former head of Blackstone's real estate unit, John Kukral, speaking generally on the sales environment, says, "In today's market it's natural for people to look to sell. ... Things have been very frothy."
The real estate pro is reportedly launching his own $500 million investment shop, Northwood Investors, but he declined to comment on his plans.
At this point, Blackstone has been preoccupied with its impending IPO. The offering could hit the Street in late summer, but how quickly it debuts its shares is contingent on the time it takes for the
Securities and Exchange Commission
to approve its filings.