GE Capital does not see the commercial real estate markets as healthy enough to be in buy mode, but it is leasing them ”“ notably taking IMS Health”™s former offices in Norwalk.
Earnings at GE Capital soared nearly 60 percent in the fourth quarter, as the finance arm of General Electric Co. expanded its Norwalk headquarters operation with an expanded lease for 35,000 square feet. According to the commercial broker Newmark Knight Frank, GE Capital Real Estate is taking space formerly occupied by IMS Health at 901 Main St. before that company moved its headquarters last year to Danbury.
General Electric CEO Jeff Immelt reiterated plans to seek federal approval this year for GE Capital to resume dividends, even as the unit eyes new rules on capital ratios under the Dodd-Frank Wall Street Reform and Consumer Protection Act. In December, GE”™s board approved a two-cent increase in the company”™s quarterly dividend to 17 cents a share, the fourth increase in the past two years.
In a conference call with investment analysts in mid-January, Immelt said federal regulators have been assessing GE Capital”™s structure fully six months now.
“They are looking at our risk systems and risk teams, our risk models,” Immelt said. “They”™re looking at our capital levels. They”™re looking at our liquidity and our liquidity risk management.
“It”™s a ton of oversight,” Immelt acknowledged. “We”™re pleased with operating results of GE Capital and ultimately that”™s the proof of the pudding.”
GE Capital contributed $1.6 billion toward total General Electric earnings totaling $3.7 billion, with GE revenue dropping 8 percent to $38 billion due to the sale of a majority stake in NBC Universal to Comcast Corp.
For all the full year, GE had profits totaling $14.2 billion and revenue of $147.3 billion, off 2 percent from 2010. As of Dec. 31, GE had a backlog of orders touching $200 billion, the largest in its history.
In December, GE Capital announced that it would acquire MetLife”™s U.S. retail deposit business with $7.5 billion in U.S. deposits and an established online banking platform. If approved, GE Capital sees the deals as an initial step to launch a U.S. deposit platform, diversify its funding base and improve service to its middle-market commercial customers.
One area GE Capital is not currently pursuing is direct investments in commercial real estate.
“We’re not buying any properties,” Immelt said “We have done some debt investing, but we”™re not buying any properties. We’re running the equity book down.”
While GE”™s health business was impacted by the economic troubles roiling Europe, GE CFO Keith Sherin said that GE Capital has held up well there to date, while acknowledging the uncertainty ahead.
“I don”™t think Europe was really worse than what we expected,” Sherin said. “I think we”™re preparing for a recession and that”™s what we expect. I think, encouragingly, it looks like there”™s more liquidity in the market now than there probably was even (in mid-December), but we”™ll see how it all shakes out. We”™re ready for a tough environment.”
Editor”™s note: The reporter holds shares of GE.Â
