Adding Up Blackstone’s EOP Divestitures

I’m a little confused by Jennifer Forsyth’s WSJ

article today explaining how Blackstone’s Jonathan Gray

has sold a large chunk of Sam Zell’s EOP property portfolio

for $27 billion. I understand the idea behind the trade: buy a bunch of office

buildings, and then sell off the most overpriced ones, holding on to the rest.

That makes sense. But what I don’t understand is how Forsyth arrives at the

$27 billion figure.

According to the article, and at a first glance at the handy

accompanying chart, Zell’s Equity Office Properties sold seven properties

in Manhattan to Harry Macklowe for $6.6 billion before

selling the rest of the company to Blackstone for $39 billion. Then Blackstone,

which never owned the Macklowe properties, sold 261 of the 543 properties it

bought for a total of $27 billion.

But if you add up all the Blackstone sale prices in the chart, they come to

less than $21 billion. In order to get the $27 billion figure, you have to include

the Macklowe properties – money which never went to Blackstone.

Then again, the chart only lists 233 properties. Could it be that the other

28 properties sold for over $6 billion between them? It’s conceivable, but there

would have had to have been some very big deals in there – much bigger

than, say, the sale of one Boston office building for $38 million, which was

big and important enough to make it onto the chart.

Part of the problem is that it’s not clear where all this information is coming

from, or how accurate it is. Here’s Forsyth:

Equity Office once held about 102 million square feet of office space in

24 markets; Blackstone has shed at least 62 million square feet of it, including

much of the choicest and most expensive properties, according to Real Capital

Analytics. Real-estate experts said it is too soon to estimate how much money

Blackstone will make on the deal.

The "once held" formulation implies that the total might include

the Macklowe Properties, even if that wouldn’t jibe with the "Blackstone

has shed" bit. We don’t know exactly what information Real Capital Analytics

provided to Forsyth, and I can’t for the life of me work out what "deal"

is being referred to in the final sentence, or whether the "real-estate

experts" referred to are the people at Real Capital Analytics.

But hey, it’s only $6 billion, right? Who cares about that?

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