The firms with money to spend first have to figure out what do do with some of their more vulnerable recent investments. Blackstone said last month that its real estate portfolio, which represents about 30% of its assets under management, is concentrated in “sectors that have shown greater resilience to Covid-related headwinds.”
Still, not all its bets look like winners. In late February, Blackstone announced a deal to buy a $6 billion portfolio of university dormitories in the U.K. popular with international students.
Head Scratching
“Are they scratching their heads about having put money into the student business?” Chris Grigg, CEO of British Land Co., one of the U.K.’s largest commercial landlords, said. “You’d guess they probably are a bit.”
Blackstone said in a statement that U.K. student housing will benefit from “incredible long-term demand trends that are not going away.”
Brookfield made waves with a $15 billion bet on malls in 2018. But with retail stores shuttered and more consumers shopping online, the company recently announced a $5 billion retail revitalization program.
Until shopping, commuting and travel become routine again, it will be hard for investors to agree on what malls, hotels, offices and other properties are worth.
“Proof is really going to be when the markets start to reopen when buyers and sellers find a middle ground with what’s going to happen with pricing,” Real Capital’s Leahy said. “It’s going to be asymmetrical. Different sectors and different geographies are going to be factors. There’s not going to be a uniform recovery.”
--With assistance from Christine Maurus.
This article was provided by Bloomberg News.