Given that Blackstone is America's no 1 homeowner with billions invested in real estate and managing nearly 100 billion in properties, they own or operate massive amount of inventory, what is their strategy when prices drop? Just hold onto it and weather the storm?
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Maybe they'll send out and Invitation of some sort, inviting you to invest in their Homes. Possibly like a single family REIT.
Best guess: sell in markets where value drops slightly and there isn't long term growth projected (SF bay?) and buy in markets where there is 3-5 yr growth projected and value has dropped.
I think Blackstone will be A-okay considering they absolutely slaughtered post 2007 in RE. They will probably fund raise even better when RE value goes down because of their track record in that environment.
On a side note, Blackstone's funds typically have a 3-4 year investment period followed by a 7-8 commitment period, which typically can be extended with the consent of their investors. For example, if Blackstone bought a hotel tomorrow, they wouldn't be legally obligated to sell the hotel until 2027, or potentially later if they get an extension approved by their investors.
What are you talking about?
The post had to do with what is Blackstone's strategy when the price of real estate drops. My response was pointing out if the price of real estate drops Blackstone (like almost all fund managers) have the ability to be somewhat long-term holders (~10ish years) to whether the storm or better time the market, which to some degree negates the drop price drop in the interim.
They can ride out the cycle, unlike your uncle who's levered to the eyeballs on that Houston garden style reno he's doing
They also have these single home buyouts. If you are renting your house from them, they will offer to sell it to you for a price similar mortgage payment to rent. You buy the home yourself ( A Higher price for them since it isn't a portfolio deal) and they take home the cash. If they go crunched they have tenants who will buy them out.
( A Higher price for them since it isn't a portfolio deal) - Can you please ELI5 on this point, please? Thanks!
BX buys in bulk (ig. portfolios of assets), fixes w/e is wrong with them, then sell assets individually to maximize profits.
Wouldn't anyone else imagine they would want to keep their best properties, surrounded by high-paying job submarkets and great school districts long term? The millennial cohort will eventually form for-sale households as the cohort ages. I'm thinking there's going to be a ton of demand for SFR in good neighborhoods when this cohort gets older.
Blackstone had bought thousands of homes after the recession. They've held them since and consolidated a huge portion of their single-family portfolio into the Invitation Homes platform that they just floated (25.49%) through an IPO. Going public is one of the better PE exit strategies.
For their other portfolios and funds, they've had the capital to do deals that other shops simply cannot do. A lot of the key assets they hold won't have a massive price hit like other riskier assets in riskier markets. And like someone else said, they have the capital to ride anything out.
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