During a Blackstone Group (BX) media call in 2012, a reporter used the term “private equity firm” when asking a question. Firm president Tony James quickly interjected, to say that Blackstone really is an alternative asset management firm but, if the reporter insisted on characterizing it more granularly, a better term would be “real estate firm.”
At the time, Blackstone’s real estate assets under management had just surpassed its private equity AUM for the first time ever. And it was notable, given that Blackstone was formed in 1985 to make private equity deals, and didn’t diversify into real estate until nine years later.
Fast forward two-plus years, and Blackstone’s real estate/private equity delta has only increased. At year-end 2014, Blackstone had $80.9 billion in total real estate assets compared to $73.1 billion in private equity assets. And that doesn’t even include all of the $15.8 billion that Blackstone recently raised for its eighth flagship real estate fund.
A lot of that new fund likely will be invested into two deals announced last Friday:
- Blackstone agreed to pay around $14.1 billion for a majority of GE Capital Real Estate’s assets from General Electric (GE) , with Wells Fargo and other buyers picking up the remaining $8.9 billion of assets.
- Blackstone agreed to acquire Excel Trust Inc. (EXL) for around $2 billion.
Perhaps it’s no surprise that Blackstone’s real estate boss, Jonathan Gray, is widely viewed as the firm’s future CEO.
For years, Blackstone has been among the world’s largest private equity firms. Now, however, it is the world’s single largest real estate investor. And, with days like last Friday, it’s a reputation that it will continue to cement going forward. Just like Tony James said back in 2012.
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