Blackstone: Real Estate Partner or Predator?

Blackstone Inc. BX is an alternative investment company. As of last year, the company's total assets under management were approaching $900 billion. Its growth resulted primarily from its success in real estate.

When you’re as big as Blackstone, inflation, rising mortgage rates and looming recessions function as opportunities. Blackstone started out investing in Hilton Hotels and Resorts, La Quinta Inns, Motel 6, Southern Cross Group, EQ Office and Trizec Properties, among others.

After the subprime mortgage crisis at the end of the aughts in the United States, Blackstone made a move. It purchased $5.5 billion dollars worth of single-family homes and sold them as prices were rising.

History tends to repeat itself, and institutions are set to own 40% of single-family homes by 2030. Blackstone is among those ready to buy.

According to the Wall Street Journal, Blackstone will finalize what is likely to be the biggest traditional private-equity real estate investment fund in history. In a regulatory filing last month, Blackstone shared that it has secured over $24 billion of commitments for its latest real estate fund called Blackstone Real Estate Partners X. 

Gobbling up a market traditionally owned by individuals hardly seems like a partnership that people want to get behind. However, there remains an opportunity.

Purchasing homes during a downturn does seem predatory. However, if Blackstone is willing to invest despite higher interest rates and rising home prices, why not consider capitalizing on its historic success? Real estate has historically functioned as a lucrative alternative investment. You’ve been looking for investment opportunities — if you can’t beat ‘em, join ‘em. 

During this downturn, you could invest in real estate investment trusts (REITs) that are accomplishing what you may have been aiming to do on your own. Residential REITs can appreciate and pay dividends to boot. While they may not reach the same heights as this little-known REIT that has produced double-digit annual returns for the past five years, dividends are key and these two REITs have produced those at great rates.

NexPoint Residential Trust Inc. NXRT has a market value of $4 billion dollars. It has a dividend yield of 1.7% and a trailing twelve months (TTM) dividend growth of 10%. It owns multi-family real estate in fast-growing areas of the southeast and southwest. Apartment complexes appear to be a focus, and it has properties in hotbeds like Houston, Texas; Charlotte, North Carolina; Atlanta, Georgia; Nashville, Tennessee; Orlando, Florida; Tampa, Florida; Las Vegas, Nevada; and Phoenix, Arizona.

Invitation Homes Inc. INVH pays a dividend yield of 2.28%, which currently results in about $0.88 per share, annually. In February, the REIT had an increase of $0.05 per share. The company is growing, and it may be wise to get in on it now. Considering the shaky housing market and rising mortgage rates, this single-family home veteran knows how to navigate the climate. Focusing on single-family homes in planned unit developments, INVH has been able to secure nearly 65% stock growth over the past five years.

Returns from REITS are not guaranteed, and past performance is not an indicator of future success. However, if investing in a REIT fits your risk tolerance profile, it might be time to consider this type of investment.

Today’s Private Market Highlights

• Arrived Homes, the company that allows investors to buy shares of single-family rental homes, is set to launch 14 new rental properties on its platform with a minimum investment of $100. 
• Vacation rental investment platform Here set to launch new offering for San Diego property with $100 minimum investment.

Find more current offerings and news on Benzinga Alternative Investments

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