In an article for Seeking Alpha, Jussi Askola covered the aggressive buying of REITs by the Blackstone group and bullish comments from Steve Schwartzman and John Gray, who are the CEO and COOs of the Blackstone group, respectively. Their investment decisions are monitored due to their leadership of the private equity giant, and its successful long-term investing track record. Additionally, private equity groups are large owners of real estate, so they could have particular insight into the sector.
This is evident in public filings of REITs whose shares fell precipitously last year due to the rise in rates and weakness in real estate. The company has built up a portfolio of REIT assets, totaling nearly $30 billion. Essentially, the company sees a discrepancy between real estate assets in private and public markets with public markets offering more favorable valuations.
And, it signaled on a recent conference call that it says more upside in other types of liquid real estate securities as other investors pull back from the asset class. And, they note that these opportunities present themselves in REITs that are exposed to strong sectors with no distress. One factor that may appeal to Blackstone is that many REITs currently have a nearly 30% discount to their market value.
Finsum: Blackstone is being contrarian with its aggressive buying of REITs while most investors flee the sector.