Blackstone Group Third Quarter Earnings Call and BREIT Capital Raise
October 23, 2019 | James Sprow | Blue Vault
In Blackstone Group’s October 23 Earnings Call Transcript, Jonathan D. Gray, General Partner, President, COO and Director mentioned that inflows to Blackstone Real Estate Income Trust (“BREIT”) reached $2.4 billion in the third quarter, and AUM now exceeds $10 billion, up 2.5X in one year. He stated that demand is growing as they add new distribution channels and partners. “This reflects a potent combination of retail investors’ desire to access private real estate, the Blackstone brand, and our differentiated investment approach. We believe BREIT has the potential to become one of the largest economic contributors to Blackstone as a firm.”
As a firm, Blackstone is expecting capital inflows of approximately $190 billion for the full year 2019. The firm’s four largest flagship funds totaling $67 billion have essentially been raised, with demand beyond the caps placed on them, according to Gray. “Our real estate core+ platform has grown to $42 billion, up 25% over the past year across four perpetual capital vehicles, including BREIT, our non-traded REIT.”
Chairman Stephen Schwarzman stated that Blackstone’s scale is their biggest advantage in today’s investment environment. “The other thing I would say is, we are increasingly thematic in the way we’re deploying capital. So in a world where economic growth is pretty muted and multiples are high, what you want to find is a sector to have real conviction around. And so for us, global logistics has been a major theme. We’ve talked about it at length. We bought more than $1 billion square feet around the world over the last nine years, and we continue to like that area and we saw two big transactions. We’re also a big fan around live entertainment because even though many things are moving online, people still need physical activities, things they want to do, and so you see that with Great Wolf and the water park space, you see that with Merlin as the second-largest theme park operator and even the Bellagio, which we did in BREIT.”
He continued, “It’s an emphasis on scale and as always, businesses we think we can intervene to make a difference. … If you just merely focused in private equity or in certain parts of the credit universe, you can’t do as much. But because we have capital that runs up and down the risk return spectrum, BREIT is a great example. Two years ago, we could not have done the Bellagio sale leaseback. So as the platform broadened, it gives us a broader universe to invest in. So overall headline, we’re still finding interesting things, but it’s not an easy environment to find them.”
Source: S&P Global Market Intelligence
