Blackstone’s Real Estate Deal a Great Move for Equity
Blackstone recently diversified its portfolio, funneling investments into real estate, a market where liquidity and deals were abundant. According to Bloomberg, others are following Blackstone's examples, most notably the private equity sector.
Blackstone latest investments included the 800 Fifth tower in Seattle, which sold for $540 million. The purchase appeared to solidify its status as a leader when talking about private equity. Additional purchases included office blocks and a mall in Shanghai worth $1.3 billion and an area in England which had been turned from railroad arches to retail spaces, which sold for $1.9 billion.
Notwithstanding the current environment of the real estate sector, Blackstone Group LP became the world's largest landlord. Its portfolio is at $136 billion and it is also the holder of the largest real estate investment trust, listed in the S&P 500.
Blackstone didn't relax one bit in adding properties to their considerable portfolio. It has diverted funds to close a $480 million deal for the Taubman Centers' interests in a few Asia-based shopping centers, Real Assets reported.
The investment will pass through Blackstone's core-plus real estate subsidiary. This subsidiary targets logistics, office space, residential and retail assets. Following this sale, the company will also gain possession of a 17.15% stake in Starfield Hanam, located in Korea and another 25% stake in CityOn.Xi'an and 24.5% in CityOn.Zhengzhou in China.
Taubman had clarified its role as the partner who will be responsible for joint management of these shopping centers. Robert Taubman, the chairman, president, and CEO of Taubman, said that the move was in line with the company's previous policy of 'recycling capital for growth' and creating value for different projects.
As for Blackstone, the chairman said that the company is envisioned to become a 'valuable strategic partner' for Taubman. He is of the idea that the firm will also help Taubman grow their platform further in the Asian region.
Fruitful partnerships like this are part of the reason why other companies are copying the Blackstone method. Real estate always held more liquidity and deals have always been easy to make for the firm. The model provided the platform for companies such as Carlyle, closest rival KKR & Co., as well as other private equity companies.
If there are any risks, it might be private equity's weakness--big employment which may provide more risks to the companies rather than rewards.