The past two months have seen a barrage of negative news coverage focusing on the US casing market…
- Is The Housing Crash Starting?
- Why The Housing Bubble Bust Will be Baked-In
- The One Housing Graph That Shows A ‘ Buyer’s Market’ Has Returned
- As Mortgage Rates Explode Price Cuts Soar Plus Buyer Demand Collapses
- Housing Market Peaks: Home Prices Finally Drop From All-Time Levels
… which is predictable: in the end, with mortgage rates soaring at the fastest pace on record to decade levels, and sending US housing affordability to the lowest in history…
… only a handful of the “ 1%” can afford the American Dream.
Alas, it also means that just like within 2007, a housing crash is now just a matter of time.
That much is famous. What is also know, is the fact that once housing craters, the largest US residential and commercial landlord – private equity giant Blackstone – is about to get a great deal larger. That’s when it will deploy some (or all) associated with the record $50 billion dollars in dry powder they have raised to prepare for just the coming housing crash.
According to the WSJ , Blackstone will be the final stages of raising a new real-estate fund that could set a record because the biggest vehicle of its kind, defying market volatility and a crowded landscape designed for fundraising.
The particular private-equity giant said in a regulatory filing Wednesday it offers closed on commitments totaling $24. 1 billion meant for Blackstone Real Estate Partners By, the latest iteration of its primary real-estate fund.
According to the WSJ , Blackstone is carrying out about $300 million from the own capital and has allotted an additional $5. 9 billion dollars to investors, that will bring the fund to $30. 3 billion when it is completed. The firm raised the fund, expected to be the largest traditional private-equity vehicle in history, in just three month. It was also Blackstone that will set the prior record, using the $26 billion buyout finance it raised in 2019. The new real-estate fund will be 50% larger than its predecessor, a $20. 5 billion dollars pool raised in 2019.
Together with funds dedicated to real estate in Asian countries and Europe, Blackstone may have a war chest greater than $50 billion to do so-called opportunistic investments, which usually tend to be higher-risk deals with the potential for higher returns.
That, according to the WSJ, “ could allow the firm to consider advantage of a downturn in the public markets. ” Translation: at a time when Americans are usually liquidating their housing en masse to shore up liquidity when the bottom falls out from the economic climate, Blackstone will step in and buy all the distressed properties with pennies on the dollar, becoming an even bigger presence in US, and global, real-estate.
Not surprisingly, many of Blackstone’s best-performing deals— such as its 2014 purchase of the Cosmopolitan casino and resort in Las Vegas and its 2016 deal for life-sciences buildings owner BioMed Realty Trust — were struck during periods of market turmoil.
It won’t end up being just Blackstone that will go bottom fishing in a few weeks: a slew of private-equity funds are in the market this season, with many trying to raise huge sums even after stocks dropped and deal-making dried up. The surge in requests for new cash has overcome investment teams at organizations such as pension funds plus endowments and has meant many have delayed making commitments to all but the top supervisors.
The size of Blackstone’s new fund and the rate at which it was able to raise the money demonstrate that institutional investors are still eager to participate in vehicles being offered by set up managers with good information. And while the ranks associated with $20 billion-plus buyout money have been growing, there are still fairly few real-estate megafunds comparable with Blackstone’s.
As the WSJ adds, just like the firm as a whole, Blackstone’s $298 billion real-estate business has embraced a thematic investment strategy with the objective of targeting areas of the economy where growth is certainly outpacing inflation. Which has led it to focus on 4 key areas: warehouses used for e-commerce; life-sciences office buildings; rental housing; plus hospitality tied to travel plus leisure. It has furthermore excelled in all four locations, long ago becoming the largest US residential landlord much to the chagrin of tens of millions of Us citizens who dutifully pay Steve Schwarzman for the privilege of getting a roof over their own head.
The revolution will not be televised .