Blackstone Real Estate Culture

“Those sharper edges were on display in a recent shake-up of Blackstone's underperforming $78 billion hedge-fund unit, BAAM, when Gray relieved the fund's head, John McCormick, of investing duties and handed them over to Joe Dowling, the head of Brown University's investment office. Another senior BAAM executive was pushed out in the shake-up.

"If I'm not on top of my business and my issues, he'll know it and we'll be talking about it," David Blitzer, a longtime Blackstone executive, said of Gray's attention to detail. "We all have to be all in, no question."

Gray can be cold and calculating when dealing with those he feels are underperformers. He exhibited those tendencies during a notable episode a decade ago, when he quietly facilitated the exit of the executive who co-led the company's real-estate group with him.

The story was recounted by a person with direct knowledge of the events and confirmed by another person close to the situation. 

By then, Gray was responsible for two of the largest real-estate buyouts ever, the $39 billion and $26 billion respective acquisitions of Equity Office Properties and Hilton, both in 2007, and had built Blackstone's real-estate investment business into a juggernaut. His counterpart, Chad Pike, was in London and presided over a European arm that was just a fraction of the size.

Gray labored around the clock, answering emails through the night and weekends. He used daily walks from his home on the Upper East Side to Blackstone's office to devour market intelligence, internal investment memos, and field calls with Wall Street glitterati.

Pike, meanwhile, had hobbies he wasn't hesitant to indulge in. He traveled with his family to exotic locales to heli-ski and became so passionate about the outdoors that he launched a side business of small luxury lodges and tours catering to sports like fly-fishing and mountain biking.

The differences between the two men had begun to grate on Gray, but at the time he didn't yet have the clout to push Pike out on his own.

Instead, he went behind Pike's back and triggered a series of events that would force his colleague's ouster, according to the people familiar with the events.

Gray turned to James, whose job included sorting through internal rivalries and conflicts. The partnership between him and Pike had frayed, Gray told him, and leadership of the group could no longer remain bifurcated. Pike, he believed, had lost focus.

Gray described the fissure in a way that gave James the impression that Pike felt not only a mutual disaffection but also a readiness to discuss his exit from the group. James flew to London to find the young executive blindsided by the whole affair.

Schwarzman was asked to step in. Pike, Schwarzman quickly decided, would be reassigned to a group within a new investment arm called tactical opportunities. Gray would be named the singular head of real estate.

"Yes, of course, I did go to London. That's a fact," James said. "But you have too much drama around it."

James declined to go into specifics about the incident, but he did not dispute any of its broad details. Pike, who quietly retired in 2020, declined to comment for this story.

"I think if you talk to Chad, the tac-opps era was the most fun he has had in his career," James said.”