How Long Until We Start Seeing Distressed Properties? Blackstone's Ken CaplanOct 21, 2020
"There is sometimes this expectation there's a shock or crisis, and then the next day you can buy anything you want at like half-price. That isn't really how it works." - Ken Caplan, Global co-Head of Blackstone Real Estate
If we look back to the last recession, Blackstone was able to make a fortune off of the eventual deals that came out of plummeting prices. The company's real estate portfolio is now valued at over $300B. When discussing the distressed deals of a COVID pandemic, Ken thinks it will take time. From experience, the types of distressed deals that come out of a recession don't surface overnight. While Blackstone still actively invests, some deals require a bit of a waiting game.
He said, "If you go back to the [Great Financial Crisis], it took a couple years before that activity really picked up in terms of what you think of as traditional investment opportunities, but I think we're going to see things coming up over time."
Caplan's thoughts during the webinar:
“We get a lot of data out of that portfolio that informs how we see the markets, how we see investment opportunities and, for us, developing our convictions because despite that scale of capital, we don’t just dribble a little bit of capital across the entire market," Caplan said. "We focus on where we have that highest conviction."
“I’m highly confident, given what we’re seeing and what our pipeline is now, that we’re going to see a lot of opportunities to invest across the real estate space, particularly in these areas that have been more disrupted and where there are more questions about,"
Ken Caplan also pointed out that there are likely good opportunities in retail and hospitality, as the sectors have been particularly damaged — but not uniformly.
“There are also opportunities that do get created from an entire sector being painted with a broad brush and being able to look through that into where there might be greater strength and opportunity," he said (focused on grocery-anchored shopping centers and home-improvement retail).
Regardless of distressed properties, Blackstone has "even stronger convictions" for distribution centers, life sciences space, and certain rental housing, especially U.S. suburban garden-style properties.
Lastly, they looked at the residential market. Blackstone has returned to rental housing by leading a $300M investment into Tricon Residential, an owner of more than 30,000 units across the U.S... [Original Article]