Blackstone Makes Huge Bet on Residential Housing
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Overall Analyst Rating:
BUY (
Down)Dividend Yield: 1.7%
Revenue Growth %: +32.4%
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Private-equity firm, Blackstone (NYSE: BX), spent $250 million this year buying foreclosed single-family homes in the U.S. According to reports, the company might roll the foreclosed properties into a REIT or simply draw income from the rental earnings.
So far Blackstone has acquired more than 1,500 houses in Phoenix and Southern California, say reports from Bloomberg, and it plans on adding to holdings of distressed properties in Florida, Northern California, and Georgia.
As more homeowners enter foreclosure demand for rentals is rising, and this has many large real estate investors swooping in to buy distressed properties. Other large real estate companies are also in on the action, including the Pacific Investment Management Co.
"While a lot of people are talking about it, very few have actually built significant portfolios and even fewer, if any, have achieved significant economies of scale," Stephen Coyle, chief investment officer of Cohen & Steers Global Realty Partners in New York told Bloomberg, "The people who have made the most money at it are the guys who have, like, 20 houses or so."
So far Blackstone has raised an estimated $13 billion for its real estate fund, and this is giving the company an advantage in the increasingly competitive real estate market. Unlike the previous housing market boom, today's residential real estate market isn't about flipping. It's about rental income. Even so, the huge bet by Blackstone isn't likely to fair too well unless residential housing bottoms.
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So far Blackstone has acquired more than 1,500 houses in Phoenix and Southern California, say reports from Bloomberg, and it plans on adding to holdings of distressed properties in Florida, Northern California, and Georgia.
As more homeowners enter foreclosure demand for rentals is rising, and this has many large real estate investors swooping in to buy distressed properties. Other large real estate companies are also in on the action, including the Pacific Investment Management Co.
"While a lot of people are talking about it, very few have actually built significant portfolios and even fewer, if any, have achieved significant economies of scale," Stephen Coyle, chief investment officer of Cohen & Steers Global Realty Partners in New York told Bloomberg, "The people who have made the most money at it are the guys who have, like, 20 houses or so."
So far Blackstone has raised an estimated $13 billion for its real estate fund, and this is giving the company an advantage in the increasingly competitive real estate market. Unlike the previous housing market boom, today's residential real estate market isn't about flipping. It's about rental income. Even so, the huge bet by Blackstone isn't likely to fair too well unless residential housing bottoms.
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