Blackstone Names New Co-CIOs, New Co-Head of Real Estate
Blackstone has $66B in dry powder for commercial real estate deals across the globe, and it has made changes to the leadership team in charge of spending it.
Ken Caplan, previously global co-head of real estate, and Lionel Assant, who heads private equity investing in Europe, were named Thursday as co-chief investment officers of Blackstone, months after the firm became the first alternative investment platform to hit $1T in assets under management.
Caplan, who has been at the firm since 1997, has led the firm’s global real estate business alongside Global co-Head Kathleen McCarthy since 2018 and will continue to work with Blackstone’s real estate leaders on investment oversight over real estate and credit and insurance, the firm announced.
Blackstone tapped its current head of real estate Americas, Nadeem Meghji, to Caplan’s former role. Meghji will continue to work alongside McCarthy as co-head of global real estate.
Assant has been with Blackstone since 2003 and has headed its private equity business in Europe since 2012. While named as co-CIO, where he will oversee private equity investing firmwide, Assant will also continue in his previous capacity, Blackstone announced.
“We are delighted to elevate three of our longest-tenured investors into these critical positions, as the firm readies itself for an active investment period,” Blackstone Chairman and CEO Stephen Schwarzman said in a statement. “They bring strong track records of delivering for our customers, considerable institutional knowledge, and exceptional investment acumen to these new roles.”
The reorganization of top leadership comes as Blackstone reached the $1T asset milestone in July, fueled by a 10% growth in the credit and insurance sectors. Management fees also grew 6% to $1.6B in the third quarter of last year compared to 2022, Blackstone Chief Financial Officer Michael Chae said during the company's most recent earnings call in October.
High interest rates are creating headwinds for private equity. While deal activity slowed overall, on the real estate side, Blackstone did win the bidding for the $17B commercial real estate loan portfolio of the failed Signature Bank from the FDIC last month, paying $1.2B for a 20% stake. It entered into a $7B partnership with Digital Realty to develop data centers, the Wall Street Journal reported.
“We’re trying to create a more enduring institution. These are people who are incredibly well-trained Blackstone investors who are able to synthesize information and see the forest for the trees,” Blackstone President Jonathan Gray told the WSJ about the promotions.
Firm leaders also said in October that 2024 will provide a lot of opportunities for Blackstone to invest in real estate, especially in the sectors it's focused on: industrial, student housing and data centers. Its data center business, QTS, has a $15B development pipeline, a spokesperson said.
Blackstone President Jonathan Gray said in the October earnings call that the firm is sitting on more than $200B of investment capital, of which $66B is targeted for real estate. Last year, Blackstone raised more than $3B in less than three months for its seventh opportunistic real estate fund focused on Europe.
“At a moment like this, dislocation comes about. And so when you're sitting on $201B of dry powder, there can be situations where people need to raise capital in a hurry, need to sell something quickly,” Gray said on the call. “We have the ability to move very quickly when there is dislocation to take advantage of an opportunity.”
Blackstone's existing real estate investments haven't been immune to that dislocation. Blackstone Real Estate Income Trust, the company's nontraded REIT, has had to restrict share repurchases for more than a year as investors have clamored to take their money out of the fund with property values collapsing.
BREIT has paid out more than $14B to investors since Nov. 30, 2022, a spokesperson told Bisnow earlier this month. That was the day before BREIT first started limiting withdrawals, sparking a panic that left its share price down 20% by the end of December 2022.
The pace of these requests has slowed dramatically, but the fund still only paid out $569M of the $1.1B in redemption requests it received in December. Blackstone's corporate stock has risen 44% over the past year.
