General Electric Co (NYSE:GE) said it plans to sell the bulk of its $30 billion real estate portfolio over the next two years as it returns to its industrial roots, and has set a share buyback plan of up to $50 billion - the second-largest ever.
GE shares are seeing the biggest jump in six years helping lift the Dow Jones Industrials higher. The company also says there is potential to return more than $90 billion to investors through 2018.
Blackstone Group LP (NYSE:BX) and Wells Fargo & Co (NYSE:WFC) are buying most of the assets of GE Capital Real Estate in a deal valued at about $23 billion.
GE said it had letters of intent to sell an additional $4 billion of commercial real estate to other buyers that it did not identify.
The total deal is the biggest in the commercial property market since Blackstone's acquisition of office landlord Equity Office Properties Trust in 2007 for $39 billion, including debt.
GE has been selling off its property investments globally as it focuses on improving earnings from sales of products such as jet engines, generators, electric grid gear and oil field equipment.
The company said on Friday it expected earnings from its aviation, power and water, and other industrial businesses to account for about 90 percent of total earnings by 2018. The units made up just over half of GE's profit in 2013.
GE said it would take after-tax charges of about $16 billion related to the restructuring in the first quarter, of which about $12 billion would be non-cash.
Real estate accounted for about 7 percent of GE Capital's total assets of $499 billion related to continuing operations as of Dec. 31.
GE Capital will retain some financing "verticals" that relate to its industrial businesses, the company said.
GE said it expected to reduce its share count to 8 billion-8.5 billion by 2018. GE had 10.06 billion shares outstanding as of Jan. 31.
The repurchase program, which will be partly funded by $35 billion through dividends from GE Capital, is second biggest in history after Apple Inc's $90 billion plan.
GE's shares were up 6.5 percent at $27.41 in premarket trading on Friday. The stock rose nearly 2 percent on Thursday after the Wall Street Journal first reported that the company was close to selling its real estate holdings.
Shares of Blackstone (NYSE:BX) and Wells Fargo (NYSE:WFC) were up slightly before the bell.
(Additional reporting by Rohit T.K. and Siddharth Cavale in Bengaluru; Editing by Ted Kerr)