Blackstone Nabs $1.7B US Portfolio from Swedish Pension Fund

JLL has arranged the transaction, which is part of the $2.1 billion disposition of Stockholm-based Alecta’s 4.5 million-square-foot international commercial portfolio.

New York and London—JLL knows how to multitask. The commercial real estate services firm not only arranged the $2.1 billion sale of Stockholm-based Alecta’s 4.5 million-square-foot international commercial portfolio to two separate buyers—investment giant Blackstone and a global investment bank—but it also orchestrated acquisition financing on Blackstone’s behalf.

815 Connecticut Ave., Washington, D.C
815 Connecticut Ave. NW, Washington, D.C

In spring 2016, occupational pension fund manager Alecta tapped JLL’s Global Capital Markets group to market the portfolio, which consists of 47 office, retail, multifamily and industrial properties spanning the U.S. and U.K.  Investors don’t shell out the big bucks for nothing. “This was a tremendous opportunity for global institutions to acquire core-plus assets in two of the world’s strongest and most transparent economic zones,” Pete Nicoletti, international director with JLL, told Commercial Property Executive. “JLL’s superior capital markets knowledge and strategy, paired with assets located in key gateway markets and across different sectors, allowed us to navigate uncertain macro-economic events to successfully compete this massive sale within just 10 weeks.”

Blackstone grabbed the U.S. segment of the collection, adding 21 assets to its holdings at a price tag of $1.7 billion. The acquisition financing was a two-part endeavor, with The Royal Bank of Canada supplying a $799 million loan for the office, grocery-anchored and high-street retail, and industrial properties. And a government-sponsored enterprise came through with a $93 million loan for the multifamily communities. Blackstone’s new acquisitions are none too shabby; the portfolio features such top-tier locations as Chicago, San Francisco and Washington, D.C., home of the premier 230,000-square-foot office tower at 815 Connecticut Ave. NW.

“We were able to garner a great deal of lender interest and solid financing terms because of the strong optimism in the current U.S. lending environment,” Maggie Coleman, managing director with JLL, told CPE.  “We have confidence that we’ll be able to secure the optimal financing executions for large, diverse portfolios throughout this real estate cycle.”

The buyer of the U.K. collection fared well, too. In a $375 million deal, the investment bank walked away with Alecta’s 1.5 million-square-foot group of industrial, office, and big box and high street retail properties, located in London and environs.

Both the U.S. and U.K. portfolios boast big names on their tenant rosters.

In the U.S., at least, the portfolio transaction may very well be a harbinger of things to come in the investment sales market in 2017, following a notable waning of such deals in 2016. “Corporate profits and corporate sentiment were particularly weak in the U.S., and contributed to a decline in portfolio transactions,” according to a report by commercial real estate services firm CBRE. “The stronger economic growth and lower taxes being forecast for 2017 mean that the recovery in portfolio transactions should continue.”