Thoughts on this deal? Is this the pinnacle of the E-Commerce hype or just the beginning? How can they deploy that much capital that late in the cycle?
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Low cost of capital
Intrinsic value associated with scaling
"feedback loop" has been achieved. When you control enough product you can heavily influence the marketplace
Is this the same stuff they sold to them with the IndCor deal...?
Yes, I think it is a good portion of that portfolio they unloaded in 2014.
yes lol
You shush your mouth
We've been in the "9th inning" of this cycle since 2016.
So spot on
We're surrounded by pessimists
Blackstone needs to deploy $ extremely fast, with their new funds they have to invest an absurd amount of dough into industrial real estate
Obviously huge, but this isn’t the largest deal. That was stated incorrectly in Bloomberg (if that’s where you saw it). The largest deal was their https://www.bloomberg.com/news/articles/2019-02-13/private-equity-likes…</a">$39 billion purchase of the Equity Office portfolio in 2007.
> The value of its property business more than doubled in 2007 with the $39 billion acquisition of Sam Zell’s Equity Office Properties.
Though https://www.reuters.com/article/us-equityoffice-blackstone/blackstone-w…</a">this Reuters link says it was $23 billion…
I think they called it largest private RE deal (as opposed to a take private like EOP).
Apparently they are spreading the assets around into a couple of funds and their private reit - seems like some potential conflict of interest there?
What is the conflict of interest that you see?
I doubt it's a conflict of interest. When you buy a portfolio of this size, you can carve it up into different risk buckets and allocate it to different pools of capital with different risk profiles.
I'm not suggesting this would be the case by any means, but in theory: you have different buckets of capital that pay you differently. You could allocate the purchase price of assets in a way that works to maximize the promote to the firm as opposed to maximizing returns for all investors. There's potential that you are on the brink of a promote threshold in a fund so you allocate a little less of the purchase price to the assets going in there - OR, you have another fund that pays you primarily on cash flow or AUM, that would stand to absorb a higher purchase price...
Again not suggesting that this is the case, but risk profiles aren't always black and white and you likely have a bit of room to move around within appraisals. Outside of 3rd party appraisals, what mechanisms do they use to help align their incentives?
From their website (BREIT): "Blackstone Real Estate’s global opportunistic BREP strategy will acquire 115 million square feet for $13.4 billion and its income-oriented non-listed REIT, Blackstone Real Estate Income Trust (BREIT), will acquire 64 million square feet for $5.3 billion."
Link: https://www.breit.com/updates/press-releases/blackstone-to-buy-u.s.-log…</a">BLACKSTONE TO BUY U.S. LOGISTICS ASSETS FROM GLP FOR $18.7 BILLION
Something to note - BREIT's portfolio is (was) 55% multifamily and 34% industrial. So I think they just have a strategy (industrial and multifamily) and are trying to focus on growing their positions in those asset classes rather than timing the market like a PE fund might try to do.
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