CRE returns down: Blackstone’s Jonathan Gray

Private equity firm’s real estate head cites “more mature” market, CMBS slowdown

TRD New York /
Mar.March 07, 2016 09:30 AM

UPDATED: March 8, 4:25 p.m.: Jonathan Gray, the Blackstone Group’s head of real estate, recently joined the chorus of investors and analysts highlighting headwinds in commercial property market.

While the national multifamily market remains strong, global volatility is slowing down financing through commercial mortgage-backed securities (CMBS) and reducing rates of return on commercial real estate in general, Gray said at the University of Texas Investment Management Company in Austin on Friday.

“Rates of return are definitely coming down,” he said, according to Bloomberg, because the property cycle is “much more mature.”

Persistently-low oil prices and economic volatility in China, Russia and Latin America have led to a slowdown in the creation of commercial mortgage-backed securities, as The Real Deal recently reported.

“It’s very difficult” to do securitizations today, Gray said, according to Bloomberg.

Blackstone’s massive rental portfolio is doing fine as well, Gray said. The company’s Invitation Homes unit, which owns 50,000 single-family rental homes in the U.S., has seen 97 percent occupancy and rent gains of 5 percent per year.

The Real Deal profiled Jonathan Gray and Blackstone’s real estate business in depth back in August. [Bloomberg] Ariel Stulberg

Clarification: A prior version of this version of this article characterized Gray as being “bearish” on commercial property. 

Related Article


Here’s one way to tell if a tower is in trouble

Inside Jon Gray’s ascent at Blackstone

Positive signs for CRE lending in 2018 amid strong market: report

Muss Development lands $198M refi for Brooklyn office building

Here’s how much Blackstone’s heir apparent Jonathan Gray made last year

Blackstone promotes Jonathan Gray, taps his top deputies to head real estate division

Malls dying slower death than some investors anticipated

Adam Neumann complained to Jon Gray after Blackstone bet on rival: report