The Real Deal New York

Blackstone’s Gray: Trump win is a game changer for real estate

Real estate head hints at possible REIT acquisitions

November 15, 2016 03:35PM
By Konrad Putzier

Jonathan Gray and Donald Trump

The Blackstone Group’s real estate head Jonathan Gray thinks Donald Trump’s victory in last week’s election is a game changer for the real estate industry. But whether it’s a good or bad one remains to be seen. “I think it’s fair to say that the economic narrative has changed,” Gray said Tuesday at a conference hosted by Bank of America.

“It does appear like we’re going to have lower taxes, less regulation and probably more fiscal spending, particularly around infrastructure. All of that should be good for growth,” Gray said, adding that economic growth tends to increase income from real estate. But the flipside, according to Gray, is that the kind of debt-financed government spending spree Trump has hinted at could lead to higher inflation and higher interest rates.

Still, Gray said “the potential for higher growth certainly exists.” He argued that history shows real estate tends to do well during periods of high growth and rising interest rates.

While Gray sees challenges in parts of the retail real estate market, he continues to be bullish on residential real estate because new supply is not keeping up with demand across the U.S. “The shortage is leading to rising rents and it’s leading to rising home prices,” he said.

Gray also hinted that Blackstone could buy public real estate investment trusts if REITs continue to trade at significant discounts to their asset values for a prolonged period of time. “The public market is more volatile,” he said. “That creates opportunities for us.”

In a leaked email from April 2015, Hillary Clinton’s finance director Dennis Cheng described Gray as a fan of hers. “Really admires HRC and wants to be helpful, but doesn’t know our world that work. Would be good for him to get to know you,” he wrote. “The next time you are in NYC, I think you and I should meet with him.”

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