The COO of Blackstone told analysts that the business world is a good place to invest right now because there are early signs of recovery.
Jonathan Grey, chief operating officer at Blackstone, told a Bernstein conference on Wednesday, “Now I’m not saying this is some kind of sharp V-shaped recovery.” A transcript from S&P Global Market Intelligence shows that Grey said this. “But when you reach this bottoming point, you should try to put money into it.” Most people will be very careful because they will keep reading a lot of bad news from the past.
Last year, Blackstone closed its real estate investment fund because investors wanted to get their money out. A report in the Financial Times says that it then said in February that it could meet all of its investors’ redemption requests that month.
Up until the end of April, the fund had earned 2.2% this year.
The company has been putting money into the area. It led a deal last year to buy a 20% stake in a business that owned commercial real estate worth $17 billion from the old Signature Bank. It bought a group of multifamily, office, and hotel properties in the U.K. and the U.S. for $1 billion on Monday from Deutsche Pfandbriefbank.
Grey said the amount of new supply has been “dramatically” going down and the cost of capital is beginning to go down. He said that activity in commercial mortgage-backed securities went up five times in the first quarter.
“So I would say that where we are in the cycle, the fact that we have $64 billion in cash to invest in real estate, and how we position our assets will all make for very different outcomes.” But I’m sure the market will be very bad for real estate for a while longer. That’s how these cycles usually work, Grey said.
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For a bigger picture, Grey said that the company is more optimistic about inflation than some new data suggests. He said that because they own 230 businesses and 13,000 pieces of real estate, they think rental prices are “well below the stated data.” In companies that make things, input costs are “pretty flat.” He also said that wage growth is slowing down.
“I’m aware that there is a debate: is the economy picking up speed again?” Is inflation really going off? We wouldn’t see it that way. Inflation would likely be a little lower than what most people think, and growth would also be a little lower than what most people think. He said, “But we’re not talking about things falling off a cliff; we’re just seeing the economy slow down.”
This year, Blackstone shares BX, -4.19% have gone down by 11%.
