October 6, 2022

Blackstone Is Getting to be a Serious Estate Powerhouse

Blackstone Group (BX -4.04%) created headlines when once again this 7 days by building another big splash in the serious estate market. This time, the foremost option asset supervisor scooped up American Campus Communities, a actual estate expenditure rely on (REIT) targeted on college student housing. The almost $13 billion deal is the most current in a string of headline-grabbing transactions by the business.

It can be turning out to be a dominant force in the true estate market. Here is a closer glance at how Blackstone Group compares to its rivals in the real estate sector.

Image resource: Getty Images.

A behemoth amongst asset substitute administrators

Blackstone is the world’s largest asset supervisor. It has $881 billion of property beneath administration across four key spots: actual estate, personal fairness, hedge fund alternatives, and credit rating and coverage.

Authentic estate is its most significant concentration area, with $279 billion of trader cash below management throughout a $514 billion worldwide genuine estate portfolio. That makes it the world-wide leader in authentic estate investing:

Real estate assets under management by some of the leading alternative asset managers.

Info resource: Organization web-sites. Chart by the author. 

Blackstone has been splurging on authentic estate above the earlier calendar year, generating quite a few headline-grabbing offers:

  • Data middle REIT QTS Realty for $10 billion
  • Solitary-loved ones home rental platform Dwelling Partners of The us for $6 billion
  • Industrial REIT WPT Industrial True Estate Expense Belief for $3.1 billion
  • Apartment-focused household REIT Bluerock Household Progress REIT for $3.6 billion
  • Non-traded apartment REIT Source REIT for $3.7 billion
  • Condominium REIT Most popular Condominium Communities for $5.8 billion
  • American Campus Communities for $12.8 billion

Numerous of these discounts continue to haven’t shut but. When they do, they will widen Blackstone’s direct over Brookfield Asset Management (BAM -2.40%), Starwood Capital, and KKR (KKR -4.43%)

Taking non-public genuine estate to retail investors

One particular of the vital drivers of Blackstone’s authentic estate shopping spree has been its results in raising money from retail traders around the earlier yr. Blackstone shaped a non-traded REIT, Blackstone Serious Estate Profits Trust (BREIT), 5 years in the past to appeal to retail buyers who required obtain to the non-public authentic estate marketplace. 

It truly is been a smashing good results. Blackstone’s ability to deliver outsized returns for BREIT traders has made it a magnet for investor money about the earlier 12 months:

Non-traded REIT sponsor fundraising in 2021.

Details source: Stanger Financial investment Banking. Chart by the creator. 

Blackstone’s BREIT raised a whopping 68.4% of all the cash hauled in by non-traded REITs previous year, an average of $2 billion per month. Blackstone’s big haul is leading much more different asset administrators to start rival non-traded REITs targeting retail buyers.

KKR introduced its non-traded REIT — KKR Serious Estate Select Securities, or KREST — in May 2021. Meanwhile, Brookfield took more than the advisory job of Oaktree’s non-traded REIT in November by seeding it with new belongings and renaming it Brookfield REIT.

Nevertheless, Blackstone’s non-traded REIT stands out from the pack because of its achievement in providing returns. It outpaced all other non-traded REITs with a 30.2% complete return over the earlier yr.

A large driver has been its approach of investing in higher-conviction themes like knowledge proliferation, Sun Belt migration, inexpensive housing, and e-commerce. Its capacity to deliver outsized returns from people trendy themes has enabled it to elevate additional revenue from traders. Which is supplying it the capital to make larger sized acquisitions, making it possible for it to even more improve returns by its developing scale.

Blackstone’s good results is driving its advancement

Blackstone is 1 of the most significant names in authentic estate. Its thematic investing approach has enabled the firm to provide strong returns, which has investors entrusting it with more revenue. Which is permitting it to purchase extra actual estate, furthering its authentic estate dominance.