Blackstone Tops $100B in Global RE AUM

Blackstone headquarters; commercial real estate is now its first segment to top $100 billion in assets under management.

NEW YORK CITY—Given the Blackstone Group’s extensive global activity in commercial real estate, it was only a matter of time before its assets under management in the sector exceeded $100 billion. In the first quarter of this year, the company’s real estate AUM reached $101.1 billion worldwide, making it Blackstone’s first segment to surpass the $100-billion threshold. Across the board, Blackstone’s AUM reached record levels, ending Q1 at $344 billion. However, in common with many companies in the asset management and private equity space, the quarter was a challenging one. Blackstone reported Thursday that Q1′s economic net income dropped to $370.7 million, or 31 cents a share, from $1.62 billion in the year-ago period, a decline of about 77%. Bloomberg Business quoted Blackstone president Tony James as saying Thursday that “currencies, commodities, energy, emerging markets and low-rated credit were all hit, some hard. This volatility was reflected in the quarter’s carrying value of our assets, despite their solid underlying operating performance.” Within the real estate segment, Blackstone’s investment pace remained strong during Q1, highlighted by the closing of its acquisition of life sciences REIT BioMed Realty Trust. The $3.8 billion of acquisitions slightly outweighed $3.5 billion in dispositions during the quarter. A subsequent quarter will tell a different story, though. At the NYU Schack Institute of Real Estate’s 21st Annual REIT Symposium in New York City last week, Jonathan Gray, Blackstone’s global head of real estate, confirmed published reports that Anbang Insurance Group Co. was under contract to pay $6.5 billion for Strategic Hotels & Resorts, a REIT that Blackstone had taken private at the end of 2015. It was also a strong quarter for fundraising within the real estate segment. The company raised $8.4 billion globally during Q1, including $5.2 billion for the first closing of its fifth European opportunistic fund and $1.7 billion for the third mezzanine debt fund.