October 7, 2022

Blackstone Is Starting to be a Real Estate Powerhouse

Blackstone Group ( BX -1.80% ) created headlines when once again this week by creating another huge splash in the genuine estate market. This time, the major alternate asset supervisor scooped up American Campus Communities, a genuine estate expenditure believe in (REIT) concentrated on university student housing. The practically $13 billion offer is the most recent in a string of headline-grabbing transactions by the corporation.

It’s becoming a dominant pressure in the serious estate market. Here’s a nearer glimpse at how Blackstone Group compares to its rivals in the real estate sector.

Impression supply: Getty Photos.

A behemoth amongst asset alternate supervisors

Blackstone is the world’s greatest asset manager. It has $881 billion of property under administration across 4 critical parts: true estate, personal fairness, hedge fund methods, and credit rating and insurance plan.

Actual estate is its most significant emphasis region, with $279 billion of trader capital underneath administration throughout a $514 billion global real estate portfolio. That would make it the world-wide chief in serious estate investing:

Real estate assets under management by some of the leading alternative asset managers.

Facts source: Corporation web sites. Chart by the writer. 

Blackstone has been splurging on true estate about the past 12 months, making numerous headline-grabbing discounts:

  • Knowledge center REIT QTS Realty for $10 billion
  • Single-relatives house rental platform Dwelling Partners of America for $6 billion
  • Industrial REIT WPT Industrial Actual Estate Investment Trust for $3.1 billion
  • Condominium-focused residential REIT Bluerock Residential Progress REIT for $3.6 billion
  • Non-traded apartment REIT Source REIT for $3.7 billion
  • Condominium REIT Favored Condominium Communities for $5.8 billion
  • American Campus Communities for $12.8 billion

Numerous of these bargains however have not closed still. When they do, they’ll widen Blackstone’s direct over Brookfield Asset Administration ( BAM -5.09% ), Starwood Cash, and KKR ( KKR -3.90% )

Getting non-public serious estate to retail buyers

Just one of the key motorists of Blackstone’s actual estate browsing spree has been its achievement in raising funds from retail investors around the past calendar year. Blackstone fashioned a non-traded REIT, Blackstone True Estate Money Believe in (BREIT), five years back to attraction to retail investors who desired obtain to the personal genuine estate market place. 

It’s been a smashing achievements. Blackstone’s capacity to crank out outsized returns for BREIT buyers has produced it a magnet for trader money in excess of the past 12 months:

Non-traded REIT sponsor fundraising in 2021.

Facts supply: Stanger Financial commitment Banking. Chart by the writer. 

Blackstone’s BREIT elevated a whopping 68.4% of all the capital hauled in by non-traded REITs last calendar year, an normal of $2 billion per thirty day period. Blackstone’s big haul is top more substitute asset professionals to start rival non-traded REITs focusing on retail traders.

KKR released its non-traded REIT — KKR Genuine Estate Choose Securities, or KREST — in May perhaps 2021. In the meantime, Brookfield took in excess of the advisory position of Oaktree’s non-traded REIT in November by seeding it with new belongings and renaming it Brookfield REIT.

Having said that, Blackstone’s non-traded REIT stands out from the pack due to the fact of its results in delivering returns. It outpaced all other non-traded REITs with a 30.2% complete return above the previous yr.

A significant driver has been its method of investing in large-conviction themes like details proliferation, Sunshine Belt migration, inexpensive housing, and e-commerce. Its ability to generate outsized returns from people stylish themes has enabled it to elevate more funds from buyers. Which is providing it the money to make larger sized acquisitions, permitting it to even further raise returns by way of its expanding scale.

Blackstone’s success is driving its growth

Blackstone is a person of the most important names in serious estate. Its thematic investing technique has enabled the firm to deliver robust returns, which has traders entrusting it with a lot more funds. That’s allowing for it to receive extra true estate, furthering its true estate dominance.

This short article represents the impression of the writer, who might disagree with the “official” advice position of a Motley Fool top quality advisory assistance. We’re motley! Questioning an investing thesis – even just one of our personal – helps us all think critically about investing and make choices that assist us develop into smarter, happier, and richer.