Blackstone president: US real estate market “softer”

"Opportunities today are scattered," Tony James says

TRD NEW YORK /
Jan.January 26, 2017 11:00 AM

The Blackstone Group’s real estate business continued to grow in the fourth quarter of 2016, but the company’s president Tony James cautioned that investment opportunities could be harder to come by as the market matures. “The one area that’s a little softer I’d say is real estate in the U.S.,” he said on an earnings call with journalists Thursday morning.

“I think the opportunities today are scattered and tend to be around some larger multi-property assets,” he said, adding that there is no “big theme that has been really cheap in the U.S.”

The fund manager ended the year with $102 billion in real estate assets under management – up 9 percent over 2015 – making real estate its largest business line ahead of private equity. The real estate funds’ dry powder, or money committed from investors waiting to be spent, fell slightly to $32.1 billion, down from $33.2 billion in the third quarter. Economic income (which accounts for both realized and unrealized profits) from real estate investments rose to $395.4 million in the quarter, up from $162.1 million a year ago.

Echoing prior statements by Blackstone’s TRData LogoTINY real estate head Jonathan Gray, James said he is not too worried about rising interest rates because they tend to coincide with economic growth. “The spreads of cap rates over base rates are near all-time highs so we have a lot of cushion” to absorb interest rate hikes, he said.

Blackstone, long one of the most active investors in New York City real estate, has recently taken to buying large multifamily complexes. After dishing out $5.3 billion for Stuyvesant Town-Peter Cooper Village in partnership with Canadian pension fund Ivanhoe Cambridge in 2015, the firm last month bought Kips Bay Court for $620 million.

On Monday, news broke that Blackstone is preparing a new, $5 billion-plus Asian real estate fund. James didn’t delve into detail, but said that Blackstone is “still seeing a lot of good opportunities in Asia real estate.” He also said that the firm is considering investing in infrastructure, a field it is currently not active in.


Related Articles

arrow_forward_ios
Liberty View Plaza at 850 3rd Avenue and Marvin Schein (inset) (Photo by Axel Dupeux)

City lets Salmar bring office tenants to Brooklyn industrial property

Brookfield's largest-ever $15B property fund has invested in properties from New York (666 Fifth Avenue) to Bangalore (the Leela Palace hotel) (Credit: Brookfield, Getty Images, Leela)

Real estate fundraising hits lowest level since 2013

Blackstone's Jonathan Gray and an aerial of Industry City (Credit: Getty Images and Google Maps)

Industry City gets $720M refinancing

From left: Blackstone's Jonathan Gray, Joseph Simone of Simone Development and 535 Zerega Avenue in the Bronx (Credit: Google Maps, Simone Development)

Blackstone buys Bronx warehouse for $29M from controversial carter

Canarsie Plaza and Blackstone’s Kathleen McCarthy (Credit: Google Maps and Blackstone)

Blackstone picks up Canarsie shopping plaza for $130M

Blackstone Chairman Stephen Schwarzman (Credit: Blackstone via YouTube)

It will make you laugh, it will make you … cringe: Blackstone’s latest holiday video

Jonathan Gray

Moving out: Blackstone sells remaining stake in Invitation Homes

Blackstone's Jonathan Gray (Credit: Getty Images and iStock)

Here’s a look at Blackstone’s industrial plays after its record-breaking portfolio purchase

arrow_forward_ios
Loading...