Specialized Financing

For GE Capital's Specialized Financing segment, 2001 was a year in which a weak economy presented a rigorous test of our adaptive skills.

One example was the Structured Finance Group, which faced intense turbulence in the majority of its core markets – energy, telecom, industrial and transportation. When traditional capital-raising techniques would not suffice for many of our clients, we used our creativity, experience and decades of financial structuring capabilities to meet their unique requirements. The combination of financial acumen and GE's power industry heritage proved especially effective in the troubled energy sector. For example, we were able to assist existing customers like Edison Mission Energy, which benefited from a $1.6 billion sale-leaseback of its Homer City, Pennsylvania, power facility, and Cogentrix, which was helped by both a major construction loan and equity investments in two of its U.S. power projects. In addition, we were the lead investor in the first U.S. acquisition of an electricity transmission system, Michigan Electric Transmission Company. As a result of these and other innovative deals, 2001 was a very strong year for SFG. New capital invested more than doubled to $6 billion and year-to-year earnings grew by more than 9%. Moreover, in an industry characterized by single-transaction relationships, SFG had an unprecedented 17 repeat customers in 2001, rewarding testimony to our value-added approach to business relationships.

Real Estate, with more than $24 billion in assets, is one of the world's pre-eminent providers of commercial real estate capital and services. 2001 saw earnings grow by 31%, reflecting outstanding execution by our real estate team. Core growth was driven by increases of 41% in Asia, 27% in Europe and 11% in North America. Key developments included our pending acquisition of Security Capital, a leading international real estate operating company with high-quality properties in some of the industry's most stable asset classes - self-storage, grocery-anchored retail and parking - and the announced purchase of $3 billion of properties from France Telecom through a consortium. We also closed four significant new joint ventures in grocery-anchored retail, international hotels and suburban office parks. Underpinning this growth has been our aggressive use of Digitization to achieve double-digit improvements in productivity and our unyielding attention to risk management. Rigorous risk management processes have produced a diversified portfolio spread across 18 countries and 5,000 properties, with an average loan size of $10 million.

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