Blackstone Capitalizes On Market Turmoil In Europe

Blackstone took advantage of bargains from market turmoil and distressed sellers as it snapped up more real estate in Europe than in any other region in 2023.

Skyrocketing interest rates caused deals to collapse in a sector that relies on cheap debt, creating investment opportunities for well-capitalized companies like Blackstone. With rates hovering around 6%, some property owners want to get rid of their assets.

"The borrowing cost to own real estate was next to nothing, and now it's closer to 6%," Blackstone Founder Steve Schwarzman told Bloomberg in November. "So if you have to carry a whole portfolio that used to cost you next to nothing at 6% they need to sell things. It's necessary to just hold the other properties."

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With $1 trillion in assets under management, Blackstone is the world's biggest alternative asset manager. It has 12,500 real estate assets and more than 230 portfolio companies, which enables it to invest in sectors positioned for long-term growth.

Blackstone reduced its investments in real estate from $47 billion in 2022 to about $9 billion in the first three quarters of 2023. The company usually invests the most in U.S. real estate, but this year, it spent 55% of its global investments on European assets, according to a report in the Financial Times.

"In Europe, our sector picks are intersecting with distress and dislocation, explaining why we have been more active in Europe this year relative to other regions," Kathleen McCarthy, Blackstone's global co-head of real estate, told the Financial Times.

Blackstone has raised $40 billion, McCarthy said. The company is targeting markets with strong cash flow growth and strong supply-demand fundamentals, including logistics warehouses, data centers, apartments and student housing.

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