Comcast Corp.’s deal to acquire General Electric’s entire 49% common equity stake in the NBCUniversal joint venture for $16.7 billion announced last week, includes a separate agreement to purchase the properties used by NBCUniversal at 30 Rockefeller Plaza and CNBC’s headquarters in Englewood Cliffs, NJ, from GE for $1.4 billion.
GE will realize a $900 million pretax gain on the real estate sale, according GE officials. That hefty gain may be enough to entice GE into exploring the sale of other real estate-related assets, the company disclosed in discussions on the NBCUniversal deal.
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When asked what other assets GE could potentially monetize, Keith Sherin, CFO of GE said they did not have specific assets in mind, but added there were broad categories on noncore assets it would consider.
“Certainly our global mortgage portfolio, if there were an opportunity to execute a transaction where we could reduce our ending net investment associated with global mortgages that added economic price, not destroying capital now that we’ve kind of got a gain, that would be very attractive to us,” Sherin said. “Certainly maybe there are other things in the real estate portfolio and the real estate equity portfolio that might have a bid aspect.”
“We have an economic plan,” Sherin said. “We're looking at not destroying shareholder value. We don't need to sell early. But at the end of the day if there's an opportunity to monetize some of these things and reduce our investment in some of these noncore assets and the economics look attractive to us, we're going to evaluate those hard now, and I think this gain gives us an opportunity to accelerate some of those things. So I'd say those would be the primary focus areas, the global mortgage portfolio and private real estate equity.”
Some of that real estate selloff may have already begun in Europe. This week GE Capital Real Estate sold its Polish Retail Fund, which included six shopping centers and three hypermarkets, totaling 984,251 square feet, in seven of Poland's key cities including Warsaw, Kraków and Wroclaw.
As part of the NBCUniversal deal, Comcast agreed to acquire the real property at 30 Rockefeller Plaza in New York occupied by NBCUniversal Media and CNBC’s 300,000-square-foot headquarters at 900 Sylvan Ave. in Englewood Cliffs, NJ.
“We thought it was important to bring [GE’s real estate] into the transaction given what we considered to be both strategic facilities that we were fortunate enough to have both under one roof, one GE roof, and to be able to negotiate that,” said Michael Angelakis, CFO of Comcast.
“We made the decision that it was strategic to buy these facilities from an economic perspective, as well as a smart deal. And you can look at a whole variety of real estate metrics to make that decision,” he said. “There will be some savings on EBITDA related to rent expense that we would have at both facilities that when the transaction closed that we won’t have that.”
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