Blackstone becomes a real estate powerhouse

Blackstone Group (BX -1.01% ) once again made headlines this week by taking another big dip in the real estate market. This time, the leader in alternative asset management has acquired American university communities, a real estate investment trust (REIT) focused on student housing. The nearly $13 billion deal is the latest in a series of deals that are making headlines for the company.

It becomes a dominant force in the real estate industry. Here’s a look at how Blackstone Group compares to its rivals in the real estate sector.

Image source: Getty Images.

A juggernaut among alternative asset managers

Blackstone is the world’s largest asset manager. It manages $881 billion in assets across four key areas: real estate, private equity, hedge fund solutions, credit and insurance.

Real estate is its primary focus area, with $279 billion of investor capital under management in a $514 billion global real estate portfolio. This makes it the world leader in real estate investment:

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

Data source: company websites. Author’s table.

Blackstone has splurged on real estate over the past year, completing several headline-grabbing deals:

  • Data Center REITs QTS Realty for $10 billion
  • Home Partners of America single-family home rental platform for $6 billion
  • Industrial REIT WPT Industrial Real Estate Investment Trust for $3.1 billion
  • Focused on the apartment Residential REIT Bluerock Residential Growth REIT for $3.6 billion
  • Not listed Resource REIT apartment REIT for $3.7 billion
  • Apartment REITs Preferred apartment communities for $5.8 billion
  • US university communities for $12.8 billion

Several of these transactions are still not concluded. When they do, they will widen Blackstone’s lead over Brookfield Asset Management ( BAM 0.95% )Starwood Capital and KKR (KKR -2.31% ).

Bringing private real estate to retail investors

A key driver of Blackstone’s real estate buying spree has been its success in raising capital from retail investors over the past year. Blackstone formed an unlisted REIT, Blackstone Real Estate Income Trust (BREIT), five years ago to attract retail investors who wanted to access the private real estate market.

It is a resounding success. Blackstone’s ability to generate outsized returns for BREIT investors has made it a magnet for investor capital over the past year:

Fundraising from unlisted REIT sponsors in 2021.

Data source: Stanger Investment Banking. Author’s table.

by Blackstone BREIT raised 68.4% of all capital transported by non-traded REITs last year, an average of $2 billion per month. Blackstone’s big haul is leading more alternative asset managers to launch rival non-traded REITs targeting retail investors.

KKR launched its non-traded REIT – KKR Real Estate Select Securities, or KREST – in May 2021. Meanwhile, Brookfield took over the advisory role of the non-traded REIT from Oaktree in November by endowing it with new assets and renaming it Brookfield REIT.

However, Blackstone’s non-traded REIT stands out from the pack due to its yield success. It has outperformed all other non-traded REITs with a total return of 30.2% over the past year.

A significant driver has been its strategy of investing in high conviction themes such as data proliferation, Sun Belt migration, affordable housing and e-commerce. His ability to generate outsized returns from these buzzwords has allowed him to raise more money from investors. This gives it the capital to make larger acquisitions, allowing it to further increase its returns through its growing scale.

Blackstone’s success is driving its growth

Blackstone is one of the biggest names in real estate. Its thematic investment approach has helped the company generate strong returns, leading investors to entrust it with more money. This allows him to acquire more real estate, thereby strengthening his real estate dominance.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.