GE Capital Plans to Shed Half of CRE Portfolio

The finance arm of Connecticut-based General Electric Co. is making plans to shrink its $80 billion commercial real estate portfolio by half, according to multiple media reports.

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""GE Capital"":http://www.gecapital.com, at one time, accounted for nearly half of its parent company's overall income, but the financial services subsidiary, whose primary focus has been on commercial lending and leasing in the Americas, continues to struggle under the trials and tribulations of the nation's credit crisis and the real estate downturn.

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At a company conference last Friday, Mike Neal, CEO of GE Capital and a GE vice chairman, told investors that the market value of commercial properties owned by the company â€" primarily office and apartment buildings â€"has lost some $7 billion, or nearly 40 percent, since 2008.

Neal said GE Capital is going to shed some of this dead weight and swing more of its business toward lending, rather than property ownership and management.

""We're probably largely through just the free fall in asset values,"" the _Wall Street Journal_ quoted Neal as saying at the investor conference. But the sector still is ""not out of the woods yet,"" he said.

According to the _Associated Press_, Neal said that commercial real estate has historically been a good business for GE Capital, but that has changed with the drop in property values and the decline in the demand for office space.

""We just never imagined, or at least I never imagined, values that could drop as much as they have,"" Neal said, as quoted by _AP_.