Blackstone Group LP is on the brink of launching a new real estate fund aimed at capturing the Asian market. This initiative reflects the firm’s strategic aspirations to dominate in real estate within Asia.
The world’s largest private real estate firm has announced plans to gather capital for this upcoming venture. Stephen Schwarzman, the CEO, revealed ambitions for the firm to emerge as a major buyer of commercial real estate specifically in India. In addition, he has expressed interest in the Australian real estate landscape as well.
Founded in 1985 by Stephen Schwarzman and Peter Peterson, Blackstone was initially recognized for its private equity endeavors. Despite that, it has evolved into the largest private real estate company globally, boasting real estate assets valued at an impressive $53.5 billion, considerably surpassing its competitors.
During a presentation at the Goldman Sachs financial services conference in New York, Blackstone President Tony James elaborated on the Asian real estate fund. However, he withheld specific details regarding its structure and objective.
Real estate holdings constitute merely a quarter of Blackstone’s total assets, yet these investments have proven to be incredibly lucrative. Recent estimates indicate that nearly half of the company's total profits in the third quarter stemmed from its real estate operations.
Officials disclosed that Blackstone successfully raised $13.3 billion for its most recent global real estate fund, a record amount in the industry. James emphasized the firm’s competitive edge in the real estate sector, noting how the failure of certain real estate markets has benefited Blackstone by removing competition.
The firm has become increasingly acquainted with Asian real estate transactions, leveraging its global funds, notably having taken over a $2 billion-plus real estate fund from Bank of America-Merrill Lynch back in 2010. Furthermore, Blackstone maintains a European real estate fund and another dedicated to U.S. real estate debt.
Discussing Blackstone’s strategy, James articulated the firm’s intent to acquire distressed real estate properties and enhance their value for resale, targeting an ambitious 20 percent return on these investments. He further explained that they plan to sell these revamped assets to investors seeking far lower returns of around five to six percent. James added, "The real estate market is unique in that buying and selling occur simultaneously."