Blackstone Group has been buying and selling iconic properties for years.
Late Friday, the private equity firm reportedly had a new one in its sights: Chicago’s Willis Tower, previously known as the Sears Tower.
A report in Crain’s Chicago pegged the purchase price for the skyscraper at roughly $US1.5 billion; Blackstone is likely going to invest in the Willis Tower through one of its real estate funds, rather than its flagship private equity fund.
Real estate makes up a big portion of Blackstone’s enormous portfolio. According to its website, the firm has assets under management approaching $US291 billion and its real estate portfolio makes up $US81 billion of that. The Willis Tower, at 1,450 feet in height, was the tallest building in the world from 1973 until 1998.
Blackstone has a history of doing deals with iconic properties
The private equity firm is in the process of reducing its stake in another hotel chain, Hilton Worldwide Holdings, which has posted gains in excess of 30% since its late 2013 debut on public markets. Though shares have risen, Blackstone keeps chipping away at its stake, dumping stakes of around $US2 billion worth of stock at a time into what looks like a receptive public market.
Hilton, which still counts Blackstone as its largest investor, has also made divestitures of its own: namely, the Waldorf-Astoria, which was sold last year from the chain to Anbang Insurance Group Co. in a deal worth nearly $US2 billion.
Blackstone has a lot to be happy about right now
Blackstone is in the process of raising its seventh flagship private equity fund, which could grow to the $US16 billion to $US20 billion range, a source told Business Insider. In part thanks to the relative success of its largest all-time investment (Hilton) Blackstone is making the most of heady times, as other PE firms are struggling to raise new funds following post-crisis disappointments.
Also, Blackstone CEO Stephen Schwarzman is enjoying heady times, while others figureheads in the private equity industry have experienced various difficulties — from key assets’ bankruptcies to collusion inquiries to disappointing funds. Schwarzman was reportedly the top-paid private equity executive last year.