GE Capital to Sell Hotel Financing Arm

Western Alliance Bank is set to acquire GE Capital's Franchise Finance U.S. hotel business.

By Scott Baltic, Contributing Editor

Keith Sherin of GE Capital
Keith Sherin of GE Capital

New York—As part of its plan, announced just about a year ago, to sell most of its GE Capital assets and focus on its industrial businesses, GE will sell both the U.S. and Canadian operations of GE Capital’s Franchise Finance business, it was announced Tuesday.

The U.S. hotel business of Franchise Finance, which provides real estate financing to owners of limited-service hotel properties, will be acquired by Western Alliance Bank, a wholly owned subsidiary of Western Alliance Bancorporation of Phoenix. This sale reportedly includes about $1.4 billion in ending net investment (ENI) and the majority of the hotel business employees. The purchase price was not disclosed.

Neither was the buyer of GE’s Canadian Franchise Finance business disclosed. That transaction reportedly represents about $300 million in ENI and is for a business that provides financing primarily to the Canadian hospitality and restaurant industries.

The two sales together represent “a significant portion of Franchise Finance, our last North American business to be sold as part of our plan to significantly reduce the size of GE Capital,” Keith Sherin, GE Capital chairman & CEO, said in a prepared statement.

When the two transactions are closed, likely in the second quarter, they will contribute approximately $200 million of capital to the overall target of approximately $35 billion of dividends expected to be paid to GE, subject to regulatory approval, according to GE.

Barclays provided financial advice to GE for both transactions. Hogan Lovells provided legal advice for the U.S. hotel transaction, and McCarthy Tétrault LLP provided legal advice for the Canadian transaction.

Since the current strategy was announced in April 2015, GE Capital has signed agreements for about $161 billion and has closed $138 billion of those. In total, GE plans to sell approximately $200 billion of GE Capital businesses worldwide and expects to be largely complete with the process by the end of this year.

Neither GE Capital nor Western Alliance replied to Commercial Property Executive’s requests for additional information.