Blackstone pulled out of the hotels just in time.
“It wasn’t because we anticipated the pandemic,” President Jonathan Gray said during the company’s second-quarter earnings call on Thursday. On the contrary, the investment giant has seen more promise in rental housing, life sciences and industrial buildings than it has purchased in the past year – investments that have helped it nearly double. its distributable profits from one year to the next.
Now the company is betting on the recovery, with plans to bring the hospitality industry, which currently represents around 7% of its real estate portfolio, into the mix.
“I think that number will increase,” Gray said. “We think people will come back to travel – individual and leisure travel first and over time business and group travel, so it’s an industry we love.”
This plan is already being implemented. In March, Blackstone reached a $ 6 billion deal to acquire the Extended Stay America budget hotel fleet in a joint venture with Starwood Capital.
Overall, real estate investing has proven to be the workhorse behind Blackstone’s second quarter profit surge.
Net income for the quarter more than doubled from $ 568 million a year ago to $ 1.3 billion this year. Since the start of the year, cash returned to shareholders has increased 105% compared to the same period last year, with real estate accounting for almost half of total returns. Revenue also more than doubled year-over-year, reaching $ 5.3 billion in the second quarter, from $ 2.5 billion in the same period last year.
“The single largest driver of perpetual capital and fee income for the business is our core + real estate business,” said Gray.
The company’s core-plus strategy targets long-term investments in the residential, office and life sciences sectors, encompassing Blackstone’s private real estate investment trust, BREIT.
Over the past year, BREIT has added West Coast warehouses, Silicon Valley offices and mobile homes in Florida for a combined $ 1.8 billion. These types of investments helped generate a record inflow of $ 5.8 billion from BREIT in the second quarter. As of July 1, the company had recorded an additional $ 2.6 billion from BREIT not included in the second quarter report.
Logistics real estate, which accounts for 40% of the company’s portfolio, generated gains in the second quarter, alongside suburban multi-family buildings, life science offices and hospitality in the United States, has said CFO Michael Chae.
The company is the largest owner of private labs in the country, Private Equity News reported, with more than 16 million square feet of space, the demand for which has skyrocketed during the pandemic.
Blackstone has also caused a stir in the growing single-family home rental market, committing
$ 6 billion in June to acquire Home Partners of America.
This month, the company bought $ 5.1 billion in affordable housing under a deal with AIG.