Blackstone president still sees opportunity in US real estate

Firm’s core-plus portfolio grew 36% last year

Oct.October 19, 2017 12:00 PM

Tony James and the Seattle skyline

The U.S. real estate market may have slowed down, but Blackstone Group president Tony James still sees plenty of opportunities for profit.

“Real estate is a gargantuan market,” he said during the company’s quarterly earnings media call Thursday. “There are always undermanaged assets.”

Blackstone has been investing heavily in logistics real estate, hoping to capitalize in the rise of online retail, and James indicated more acquisitions are possible. “There’s just not near enough of it in any metropolitan area,” he said. He also pointed to senior living, mixed-use neighborhoods and markets that lack housing, such as Seattle and Northern California, as investment opportunities.

Blackstone’s real estate assets under management grew to $111.3 billion in the second quarter, up 9 percent from $101.9 billion a year ago. Its core-plus portfolio, which includes Stuyvesant Town-Peter Cooper Village, grew 36 percent to $18 billion.

In May, Blackstone won a $20 billion commitment from Saudi Arabia’s sovereign wealth fund for a new infrastructure investment fund, but James said it may be a while before the money gets spent. Saudi Arabia’s commitment depends on Blackstone raising additional cash from other investors, and the firm only just began marketing the fund, he said.

According to James, the fund does not depend on the federal government passing an infrastructure spending package.

“There’s a big opportunity right as we stand today,” he said. “It doesn’t take a genius to see the crumbling infrastructure of the United States and the massive need for new investment.”

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