Blackstone: Give me your tired, your poor REITs

Firm pursuing takeovers as public-market valuations take a hit

National /
Apr.April 25, 2022 12:30 PM
Blackstone's Jonathan Gray (Blackstone, iStock)

Blackstone’s Jonathan Gray (Blackstone, iStock)

Blackstone sees riches in the volatility of REIT valuations.

The investment giant is pursuing private takeovers as the public-market valuations of REITs suffer, the Financial Times reported. Inflation and rising interest rates have led to REIT share prices dropping, presenting the company with bargains if it can take the companies private.

Blackstone president Jonathan Gray explained his rationale, telling the publication that the public REIT market is “not necessarily reflective of what’s happening at any one time in real estate.”

Blackstone’s own private REIT, Blackstone Real Estate Income Trust, has reportedly raised $63 billion since inception five years ago. And since the start of the pandemic, Blackstone has taken four real estate companies private.

Last June, Blackstone and Starwood Capital dished out $6.3 billion to acquire the 62,000-key portfolio of Extended Stay America, one of the biggest real estate deals of the Covid era. The acquisition took the country’s largest lodging REIT private at a price of $20.5 per share.

Earlier this month, Blackstone agreed to buy American Campus Communities in a deal valuing the student housing provider at $12.8 billion, including debt. The Austin-based company is the largest publicly traded student housing owner and developer in the United States; Blackstone is paying $65.47 per share to buy the company and plans to take it private.

And on Monday, the Wall Street Journal reported that the firm agreed to buy PS Business Parks, a suburban office REIT, in a deal valued at $7.6 billion, including debt. The deal is expected to close in the third quarter.

REITs pay out the bulk of their income annually in exchange for corporate tax exemptions. In taking them private, Blackstone benefits from investors having fewer ways of cashing out, while investors could benefit from a lack of knee-jerk reaction to market volatility.

[FT, WSJ] — Holden Walter-Warner





    Related Articles

    arrow_forward_ios
    From left: Bert H. Dweck and Joe Sitt with 790 Madison Avenue (
    Joe Sitt, Bert Dweck settle Madison Ave dispute with fashion house
    Joe Sitt, Bert Dweck settle Madison Ave dispute with fashion house
    IBM's Arvind Krishna and One Madison Avenue (IBM, One Madison Avenue, Illustration by Kevin Cifuentes for The Real Deal)
    IBM CEO: Only 60% of office workers will ever return full-time
    IBM CEO: Only 60% of office workers will ever return full-time
    Marcus & Millichap Associate David Ferber in front of part of the 30-building, 319-unit portfolio concentrated in Jersey City (Marcus and Millichap, iStock)
    Hot rental market boosts NJ multifamily despite rate hikes
    Hot rental market boosts NJ multifamily despite rate hikes
    Orbach Affordable Housing Solutions' Meyer Orbach and One East River Place (Orbach Housing, Google Maps)
    Black Spruce, Orbach strike $1.8B NYC multifamily deal
    Black Spruce, Orbach strike $1.8B NYC multifamily deal
    Industrious co-founder Justin Stewart and 25 Broadway/Cunard Building (LinkedIn, Tdorante10/CC BY-SA 4.0/via Wikimedia)
    Industrious partners with Wolfson for 44K sf at Cunard Building
    Industrious partners with Wolfson for 44K sf at Cunard Building
    The Indie Cultivate event and Independent Lodging Congress president Andrew Benioff (Independent Lodging Congress)
    Is innovation dead? These real estate disruptors say no
    Is innovation dead? These real estate disruptors say no
    Bentley Zhao and 58-01 Queens Boulevard (New Empire Real Estate, Google Maps, iStock)
    New Empire plans ambitious condo in quiet Woodside
    New Empire plans ambitious condo in quiet Woodside
    Rudin Management CEO Bill Rudin and 3 Times Square (Getty Images, 3 Times Square, iStock)
    Rudin gets $415M refi for 3 Times Square makeover
    Rudin gets $415M refi for 3 Times Square makeover
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...