Blackstone could transfer bulk of real estate holdings into REITs

February 14, 2013 04:00PM

A good portion of private equity giant Blackstone Group’s real estate holdings across the U.S. – including hotels, homes and offices — may either be acquired by or turned into real estate investment trusts through initial public offerings in the coming years, Reuters reported. Jonathan Gray, head of Blackstone’s global real estate division, said that with the debt market improving, the firm will sell off much of its funds this year and next.

Office buildings could end up in the possession of large REITs, whereas sovereign wealth funds would probably buy shopping centers and office properties in dense markets, like New York City, he said. Blackstone’s Hilton Worldwide collection could become a publicly traded REIT.

“If the market stays conducive, I would expect to see the acceleration of sales,” Gray said at the Credit Suisse Financial Services Forum in Miami.

“The potential to grow the brand outside the U.S. is enormous,” he added.

And as for homes, which the firm has been snatching up in hard-hit markets such as Arizona, Nevada and Florida, Blackstone might stop buying them, with home prices appreciating quickly.

Blackstone in October closed the largest ever real estate opportunity fund, the Blackstone Real Estate Partners VII fund, at $13.3 billion. [Reuters via Chicago Tribune]Zachary Kussin