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Leveraged Breakdowns

Top Real Estate Private Equity Firms, Part One: Blackstone

This series will cover the top real estate private equity firms. Each post will briefly describe the subject fund’s size, history, and key real estate equity investments. At the end of each post, you will develop your investing mindset by critically reviewing the firm’s key transactions.

Part One: Blackstone

The Facts

Blackstone manages $472B of assets, according to their website. However, Blackstone pursues many diversified strategies outside of real estate equity investment. Of their grand total $472B AUM, about 29% of their total AUM, or $136B, is committed to real estate per their website.

Once dubbed the undisputed king of the private equity industry by Forbes magazine, Steven Schwarzman created Blackstone in 1985. Two years later, in 1987, Schwarzman raised $800M for Blackstone’s first fund, Blackstone Capital Partners I, L.P. Following decades of success, Blackstone closed its record-setting $20B real estate fund in 2019. How did Blackstone grow in two decades from an initial $800M commitment to now raising multiple behemoth sector funds in the tens of billions each?

If you are looking for deep detail, plenty of firm history can be found on Blackstone’s website and literature such as “King of Capital” by David Carey and John E. Morris. Instead, this post will analyze Blackstone from the investor’s perspective. To think like an investor, we must critically review Blackstone’s most notable real estate equity investments.

Blackstone’s Most Notable Real Estate Equity Investments

Investments characterize real estate private equity funds more than anything else. To know a fund is to know its past successes and failures. Each deal below represents a book in the Blackstone Bible. You should understand Blackstone’s investments even if you are not interested in working at the fund itself. Steven Schwarzman and Jon Gray have shaped modern real estate investment, and their deals are well known across the industry.

  • EQ Office: How Blackstone Tripled its Initial Real Estate Equity Investment through its 2007 Buyout of Equity Office Properties (more here)
  • Hilton: Blackstone Exits Hilton, Earning $14B After 11 Years (more here)
  • Invitation Homes: How Blackstone acquired 50,000 single family homes between 2012 and 2016, earning a profit thus far of $2.3B (more here)
  • Center Parcs: Blackstone agrees to sell UK Center Parcs to Brookfield for 2.4B GPB (more here, here, and here)
  • La Quinta: Wyndham to Buy La Quinta from Blackstone for $2B (more here, and here)
  • Wyndham Worldwide: Blackstone Group will Purchase Wyndham Chain for $1.44B (more here)
  • Southern Cross Health Care: Blackstone Acquires Southern Cross Healthcare for 162M NZP

Think like an investor — why did these deals make sense?

Real estate private equity firms must think objectively when choosing between investment alternatives. Pick a deal from the list above, or any other notable Blackstone real estate equity investment, and answer the following questions. You will need to research the deals in greater detail on your own to answer these questions.

For the questions tagged as [Past], presume you are in charge of Blackstone at the time of investment. Ignore any knowledge of future events. For those marked [Present], feel free to support your response with current information.

  1. [Past] Why is now the best time to invest in this company? Why not earlier, why not wait?
  2. [Past] What macroeconomic risks, unsystematic to our own investment, could threaten our return?
  3. [Past] What microeconomic risks, systematic to our own investment, can we carefully manage to de-risk our return?
  4. [Present] Why did Blackstone choose their particular exit strategy? Was it the most logical exit for this investment?
  5. [Present] What was the original investment thesis? Did it evolve between close and exit? If so, how?
  6. [Present] What is the investment thesis of the firm that later acquired the investment from Blackstone? How does it compare with Blackstone’s original investment thesis?


Share your investment analysis with our community, you could win three months of our course!

Share your responses to each point in our Deal Talk forums, where current and aspiring real estate private equity investors meet to critically discuss all notable transactions past, present, and future. The best response, as judged by our team, will win three free months of our course, Breaking Down Real Estate Private Equity.

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