Blackstone Said to Be Moving Toward Sale of Office Assets

Blackstone Group LP (BX), whose 2007 takeover of Equity Office Properties Trust made it one of the largest U.S. office landlords, is preparing to sell its office holdings over the next 18 months, according to two people with knowledge of its plans.

The private-equity firm may sell groups of buildings to buyers seeking to bolster their regional holdings, said the people, who asked not to be identified because the plans are private. The New York-based company is also considering taking its office portfolio public, they said.

Peter Rose, a spokesman for Blackstone, declined to comment. The sale plans were reported earlier today by the Wall Street Journal.

Blackstone bought Equity Office, known as EOP, for $39 billion including assumed debt in February 2007 as commercial real estate prices were nearing a high. It resold more than $30 billion of the buildings to pay down borrowings, keeping properties in markets including Northern California, West Los Angeles and Boston.

U.S. commercial-property prices are recovering after falling as much as 39 percent from a 2007 peak, according to an index compiled by Moody’s Investors Service and Real Capital Analytics Inc. The gauge has climbed 26 percent from a January 2010 low.

Blackstone’s office division owns stakes in about 70 million square feet (6.5 million square meters) of space, according to its website. Top-quality office buildings in coastal markets such as San Francisco and Los Angeles fetched in the low $300s per square foot in the past year, according to Reis Inc. (REIS), a New York-based research firm. That suggests the assets may be valued at more than $21 billion.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net