Blackstone chief executive Stephen Schwarzman is preparing for what he believes is the “most fun” stage of the investment cycle.
Schwarzman’s comments came as the private equity giant published its third-quarter results, which revealed that it had some $55bn (£42bn) of dry powder to spend on real estate deals.
Schwarzman said that over the past 12 months the business had deployed some $123bn, representing one of the most active periods in its history and more than double its activity a year earlier.
“We have been planting the seeds of future value at what we believe is a favourable time,” he said.
President and chief operating officer Jon Gray added that the business had invested a total of $22bn into real estate in the first nine months of the year, which was almost 2.5 times the amount invested in the same period in 2023.
“With the cost of capital moving lower, we have previously discussed our expectation of a new cycle of increasing values and improving investor sentiment towards the sector,” said Schwarzman. “Looking forward, our business is accelerating, and we are in the early days of penetrating markets of enormous size and potential. We have established leading platforms in what we view as the most compelling high-growth areas.”
He said Blackstone had been a net buyer of commercial real estate over the past nine months and that while sentiment around the sector was improving, it remained negative.
“People look at the headlines, sort of the wreckage from the past and that concerns them and they are waiting to see if it is safe to go back in,” he said. “We tend to be in the seed planting mode for that. But at the same time, as we look into next year, as debt becomes more available at lower costs, we are seeing more people show up. We have seen two or three times the number of buyers showing up to buy things like apartments and logistics.”
Schwarzman added that Blackstone had been heavily swayed towards investing in the sector rather than “harvesting” but expected that to start to change.
“I think that will start to balance out,” he said. “Still probably more investing earlier on as we work through the year, but I would then expect to see more realisations.”
Schwarzman said the group would continue to invest heavily into logistics, data centres and rented housing.
He also refused to rule out a return to office investment.
“I think we will find interesting places to deploy capital and it is possible in offices, on a selected basis, that you could find some interesting things, particularly higher quality buildings and even retail around the grocery-anchored space as opposed to the enclosed malls,” he said.
“I think we are in the middle of a broad-based recovery in real estate. We are trying to capture that as much as possible. US, Europe and Asia deploying capital. As we work through the cycle and values recover, you will see a pick-up in sales and you can feel that happening now,” he added.
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