Blackstone’s real estate spending rose amid earnings slip

Blackstone cracked opened its checkbook to buy more apartments and homes in the second quarter, even though earnings in its real estate group slid backwards.

The alternative asset manager deployed nearly $10 billion in the quarter on deals like its purchase of Apartment Income REIT Corp. and single-family rental landlord Tricon Residential, the company disclosed in its second-quarter earnings.

That was up from $4.8 billion the company deployed in the first quarter.

On the other side, distributable earnings for real estate in the second quarter fell 19 percent from a year ago to $516.5 million. At the end of March, earnings had been up 15 percent year-over-year.

The mixed signals are in line with Blackstone’s mantra in recent months of “investing before the all-clear sign.”

CEO Jon Gray likened it to the aftermath of the Great Recession in 2009, when Blackstone was spending while the headlines were still negative. Gray said that in the past six months the cost of debt has come down significantly, while fundamentals in sectors like warehouses and apartments are “decent” — setting the stage for a market recovery.

“There’s some similarities we’re seeing today,” he said during the company’s earnings call Thursday morning. “The sentiment we think will stay negative because there still will be some troubled assets to work through the system, but on the ground prices have cleared and some of these headwinds have gone away and that creates a favorable environment. And what we’re doing now is we’re seed-planting for the future.”

In areas the company is invested heavily like logistics and rental housing, Gray added that Blackstone is seeing two to three times more bidders showing up to buy assets, an encouraging sign that demand is on the rise.

Companywide, Blackstone reported net income for the second quarter of $948 million, down $1.2 billion from the same time last year.

Blackstone chairman Stephen Schwarzman said the company was more bullish than some of its peers on the view that inflation would moderate more quickly.

“[It was] in part because of our unique position in our real estate area and our understanding of the shelter component of the consumer price index,” he said. “As a result of our convictions, we decided to adopt a more aggressive approach to new investments.”

Blackstone as a whole deployed $34 billion in the second quarter, the most in the past two years.

Read more

Commercial

National

Blackstone bets $10B on multifamily

Commercial

National

Blackstone buys major landlord Tricon for $3.5B