General Electric Co. agreed to sell a commercial property lender to EverBank Financial Corp. for $2.51 billion in cash as Chief Executive Officer Jeffrey Immelt shrinks real estate operations.
The deal for Business Property Lending Inc. includes $2.44 billion in performing commercial real estate debt and servicing rights on $3.1 billion of loans securitized by GE Capital, the companies said in a statement today. The sale is expected to close next quarter, pending regulatory approval, EverBank said.
Immelt has been working to exit some businesses tied to real estate as he pares GE Capital’s balance sheet after $32 billion of credit losses during the financial crisis. GE curbed the unit’s loan originations as credit markets froze following Lehman Brothers Holdings Inc.’s 2008 collapse.
“The platform has excellent potential to grow,” EverBank CEO Robert Clements said on a conference call. Even as Stamford, Connecticut-based GE Capital cut new loans at Business Property Lending, it kept “the people and the essential infrastructure required to restore and expand lending volumes,” he said.
The acquisition will immediately provide a “low double-digit” boost to earnings per share, Jacksonville, Florida-based EverBank said. Business Property Lending’s new loans fell 97 percent to $43 million in 2009, and are on pace in 2012 for $317 million, according to a presentation on EverBank’s website.
EverBank rose 4.4 percent to $11.35 at the close in New York. That was the biggest jump since May 3, a day after the company held an initial public offering. GE fell 1.7 percent to $20.49.
The sale will reduce GE Capital’s ending net investment, a measure of the unit’s size that excludes non-interest-bearing liabilities and cash, by $5 billion, a spokesman, Russell Wilkerson, said in an e-mail. Ending net investment at the unit is targeted to fall 3.4 percent to $425 billion this year from 2011, CEO Mike Neal reiterated in May.
“The transaction is consistent with our strategy of reducing our real estate portfolio,” Wilkerson said in the e-mail.
GE Capital sold its Irish mortgage unit last month to Pepper Home Loans Group, Australia’s largest non-bank mortgage lender.