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Blackstone’s real estate business raced past the €200bn asset mark for the first time in 2018 in a surge that helped the New York-listed group keep its crown as the world’s largest property landlord for a third year.
Real estate has enjoyed a bull run lasting almost a decade but rising property values and huge investor inflows have fuelled fears of unsustainable pricing bubbles in some markets.
Assets managed by Blackstone’s property arm jumped by almost a quarter to nearly €202bn ($231bn) last year, according to an annual ranking by Inrev, the European association that represents investors in non-listed real estate vehicles.
Kathleen McCarthy, co-head of real estate at Blackstone, said “property valuations today mean we have to work hard to find good deals” but she was confident her unit would continue to deliver attractive risk-adjusted returns to investors.
“Our large real estate investment team, access to proprietary information and capacity to do deals that other managers cannot, help us to create value for our investors in any economic environment,” she said.
Four themes have been targeted for further investment: logistics where ecommerce businesses are increasing demand for warehouses; so-called innovation cities such as Seattle where tech companies need office space; rental housing in regions where there are supply shortages including the US west coast and Spain, and hospitality assets in order to meet the expected global increase in spending on travel.
Blackstone has created five “permanent capital” real estate investment vehicles that do not have a fixed expiry date unlike traditional closed end funds.
“Permanent capital vehicles allow Blackstone to hold real estate assets over a longer term which helps investors to compound returns,” said Ms McCarthy.
Toronto-based Brookfield, the number two ranked player, saw its property assets increase 27 per cent last year … Read More...