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| Columbia Center, Seattle |
Dealmakers, start your engines. All across the country, the rumor mills were churning Friday about what assets The Blackstone Group will dispose of following its acquisition of Chicago-based Equity Office Properties Trust for $39 billion in cash and debt.
Blackstone began dismantling the huge portfolio even as the largest leveraged buyout in history closed Friday; it flipped eight buildings in Manhattan to Macklowe Properties for $7 billion. The private equity firm can use the cash: it had to sweeten its bid in the face of a strong challenge from rival suitor Vornado Realty Trust that cost Blackstone an additional $3 billion.
Meanwhile, sources said Beacon Capital Partners is close to a deal to buy Equity properties in Seattle and Washington, D.C. Other street talk had The Shorenstein Co. eyeing Equity’s Portland portfolio and Tishman-Speyer circling property in San Francisco and other California markets.
A source close to Beacon confirmed the Boston-based fund plans to buy Equity’s Seattle and Washington, D.C. assets for $6.5 billion. Seattle sources close to Equity, meanwhile, said the deal is all but definite, with Blackstone and Beacon under a letter of intent to sell the portfolio in Seattle -- one of the nation's hottest office markets -- and Bellevue, its booming neighbor across Lake Washington.
A local source said Beacon would probably keep the core CBD properties in the portfolio, including the 76-floor, 1.55 million-square-foot Columbia Center, the tallest building on Seattle's skyline. However, Beacon would probably spin off Equity's collection of 2- to 6-story offices in the Seattle and Bellevue suburbs, he said.
"I think you’ll see a lot of changing of hands. Just because Beacon buys it doesn’t mean they’ll keep it."
Another major player in Seattle’s CBD said Beacon will definitely buy the portfolio and probably sell off the suburban properties. But the prevailing attitude among Equity’s asset managers and those who do business with them is uncertainty. While Equity hired its own in-house property and leasing teams, Beacon’s style is cost savings through outsourcing, he noted.
"We don’t know Beacon, and we’ve got to meet them just like the Equity people do. It's been a wild week."