Blackstone Sells Last Building from Famous 2007 Real Estate Deal
Blackstone Sells 100 Summer Street for $806 Milion
The Wall Street Journal says that Blackstone has sold the last office building it purchased in 2007. The building was part of their $39 billion purchase of Equity Office Properties Trust. That purchase was the largest real estate deal in history.
The deal, however, came at pretty much the top of the market. It looked like it could go wrong for Blackstone. The private equity giant had to mark down the value of the properties to as low as 70% of the original purchase price.
Wall Street Journal: Anatomy of Blackstone Deals
Blackstone had also purchased Hilton Hotels from Marriott for $26 billion.
The two deals looked to be headed for disaster. However, Blackstone was able to repurchase some of the debt at less than face value. It also worked with its lenders to keep the portfolio solvent during the crisis.
By 2012, the office markets began to recover. Blackstone then started methodically and carefully selling the properties. Blackstone was patient and allowed prices to recover sufficiently to make a profit on the portfolio.
Blackstone Sells 100 Summer Street
With the sale of 100 Summer Street in Boston for $806 million, the final property has been sold. The total profits on the portfolio come to more than $7 billion, according to the Wall Street Journal. The company primarily financed this deal with debt. This means that Blackstone only had about $3.5 million of equity. As a result, the total return is about three times what they put into the properties in 2007.
As nice as that is, it is not even the most significant profit that came from their 2007 endeavors.
Blackstone only used $65 billion in equity to buy Hilton. It later added additional equity of $819 million. When the firm sold its last shares of Hilton last year, the total profits came to more than $14 billion.
It was one of the largest profits ever for a real estate deal.
Blackstone has become one of the largest real estate firms in the world, with a property portfolio worth over $250 billion.
Thanks to profits like those on the Equity Office and Hilton deals, the firm has been able to raise two real estate funds in the last year.
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