As we’ve noted previously, the post-crisis, Fed-subsidized rush to acquire distressed real estate resulted in none other than Blackstone becoming the US’S largest landlord. The giant PE firm — which borrowed $3.6 billion in seed money from Deutsche Bank to get its real estate empire up and running — accumulated a portfolio of some 50,000 single family homes after spending billions buying foreclosures at bank auctions. The properties were quickly converted to rental units and the rent checks were (naturally) securitized into the first ever rental-home-backed-securities. All of this has had the predictably sad effect of driving down US home ownership and driving up rents.
More recently, Blackstone introduced the “landlord loan” wherein the firm lends prospective real estate speculators cash to buy homes, then securitizes the loans. Deutsche Bank intends to bring the first landlord-loan-backed securities to market over next several weeks.
Now we learn that the firm, whose real estate ambitions apparently know no bounds, is set to buy Chicago’s Willis Tower (formerly the Sears Tower) in a deal worth some $1.5 billion.
Private equity giant Blackstone Group LP is in advanced discussions to buy the Willis Tower in Chicago, the country’s second-tallest skyscraper, for about $1.5 billion according to a person briefed on the talks.
If completed, it would be by far the highest price paid ever for a building in Chicago, and well above the $841 million that the iconic black tower—formerly known as the Sears Tower—last traded for in 2004 when it was sold to a group that includes New York investors Joseph Chetrit and Joseph Moinian…
The 1,451-foot tower is often viewed within Chicago as second-tier real estate despite its soaring views and height, given that much of the city’s top-quality property is concentrated on the other side of the Chicago River and closer to Lake Michigan.
The potential deal with Blackstone, reported Friday evening by Crain’s Chicago Business, comes as the ownership group has long been eyeing a sale.
The bottom line: Wall Street destroyed the housing market, waited for prices to collapse, stepped in and bought up all of the foreclosures turning a nation of homeowners into a nation of renters in the process, securitized rental cash flows, and used the proceeds to buy the nation’s second largest skyscraper.
CEO Stephen Schwarzman made $690 million last year.