Blackstone bets big on US housing market recovery
The group has agreed to buy control of 80 apartment complexes in the US from General Electric, valuing the properties at about $US2.7 billion ($2.94 billion)
The US reports say the deal reflects a gamble by Blackstone that the US residential housing market is on an upswing. Blackstone's real estate arm is its largest operation, and the deal with GE is the company's biggest investment in apartments in recent history.
Blackstone was also said to have made a big bet on traditional homes, spending more than $US5.5 billion to buy houses to rent for now and sell later.
GE, whose finance arm is selling the apartment properties, has been looking to reduce its real estate holdings, as part of an overall effort to reduce its size and risks.
Blackstone is nearing the completion of a deal to buy about $300 million worth of office buildings in Australia from GE Capital.
The assets include 90 Arthur Street in North Sydney, 127 Creek Street in Brisbane and 636 St Kilda Road in Melbourne. GE Capital is also selling a tranche of assets to the Pacific Alliance Group as it focuses on its property lending business.
Following the completion of the long-running sales program, Blackstone will have spent $2.5 billion on Australian property - including shopping centres, office buildings, logistics centres and bulky goods in the past two years.
Its largest single asset is the Top Ryde shopping centre in Sydney and the recently acquired Greensborough centre in Melbourne. It has also been touted as a possible buyer of a hotel portfolio belonging to Brookfield.
In addition, it owns the former Valad Property Group, which has several office assets that could be redeveloped into apartments.
On a recent visit, Blackstone global head of real estate Jonathan Gray said Australia had become a very important market to the group. "We have moved key people here, we have a platform in Valad, we intend to be big investors," Mr Gray said.
"I think we have the foundations of a really good business here."
Blackstone recently lodged a registration statement in the US, relating to the proposed float of Brixmor Property Group, formerly Centro Properties Group US.
Analysts said Blackstone could raise as much as $US700 million from the sale of 522 US shopping centres it acquired in 2011 as part of its $US9 billion rescue of Centro Properties.
If successful, it would be one of the biggest offers by a shopping centre real estate investment trust since the Simon Property Group's $US840 million float in 1993.
Frequently Asked Questions about this Article…
Blackstone agreed to buy control of 80 apartment complexes from General Electric’s finance arm, a package valued at about US$2.7 billion (around A$2.94 billion). The purchase is described as the company’s biggest recent investment in apartments.
According to reports, Blackstone’s move reflects a wager that the US residential housing market is on an upswing. The firm’s real estate arm is its largest operation, and management has been buying apartments and single-family homes to rent (more than US$5.5 billion spent on houses) with the view of renting now and potentially selling later.
The article says GE, through its finance arm GE Capital, has been selling apartment properties and some office buildings as part of an effort to reduce its real-estate holdings, size and overall risk.
Blackstone is very active in Australia. It is nearing completion of a deal to buy about US$300 million of office buildings from GE Capital (including properties in North Sydney, Brisbane and Melbourne), and after recent transactions it will have spent about A$2.5 billion on Australian property over the past two years across shopping centres, offices, logistics centres and bulky-goods assets.
Yes. The article notes Blackstone owns the former Valad Property Group, which holds several office assets that could be redeveloped into apartments. Blackstone’s global head of real estate has also said Australia is an important market where the firm intends to be a big investor.
Blackstone lodged a registration statement in the US related to a proposed float of Brixmor Property Group, the company formerly known as Centro Properties Group US. Analysts said Blackstone could raise as much as US$700 million from the planned sale of 522 US shopping centres it acquired in 2011 as part of its rescue of Centro.
While the article doesn’t give market predictions, it highlights that institutional buying—like Blackstone’s purchases of apartments and homes to rent—can shift supply dynamics in local rental markets and influence investor opportunities. For everyday investors, these moves are a sign that large managers see value in residential and retail property sectors right now.
The article mentions Blackstone’s assets such as the Top Ryde shopping centre in Sydney and the Greensborough centre in Melbourne, its potential interest in a Brookfield hotel portfolio, and that it has purchased a large portfolio of US shopping centres that could fund a significant Brixmor float—one of the largest retail REIT offers since the Simon Property Group float in 1993.
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