Blackstone’s Keenan Calls Current Conditions “a Compelling Backdrop” for Real Estate at Institutional Investor Forum

Blackstone’s Keenan Calls Current Conditions “a Compelling Backdrop” for Real Estate at Institutional Investor Forum

Commercial real estate investors gathered at 237 Park Avenue in Midtown Manhattan on Sept. 16 for Commercial Observer’s annual Institutional Investor & Private Equity Forum, where capital markets took center stage against a backdrop of monetary policy change: the Federal Reserve raised short-term interest rates that same afternoon for the first time in three years.

Katie Keenan, global head of core-plus real estate at Blackstone and chief executive of Blackstone Real Estate Income Trust (BREIT), delivered the opening keynote in a conversation with Jennifer Recine, a partner at King & Spalding.

Keenan laid out several reasons she views the U.S. market favorably, pointing to a broad reset in asset values, growing cash flows, and supply in asset classes such as multifamily and retail at levels not seen in decades. She also cited rising demand tied to artificial intelligence, digitalization, and e-commerce.

“When you have growing demand and flat, or down, supply, it’s a meaningful impact on what you see from a cash flow and growth perspective,” Keenan said, adding that debt capital markets are “as healthy as I’ve seen them in a long time” with capital readily available and well priced.

Core-Plus Strategy in Focus

Keenan said 90 percent of Blackstone’s core-plus portfolio is concentrated in logistics, data centers, and multifamily — sectors she argued benefit from the lower-leverage, cash-flow-driven approach that core-plus investing emphasizes.

“It’s driven by that cash-flow growth, it doesn’t rely on leverage,” she said. “And it’s not about cap-rate compression. … This is really about buying good assets that can compound over time and deliver a significant portion of their return along the way.”

Keenan also highlighted BREIT’s long-term record, noting the private REIT has delivered a 9.4 percent net return over the past 10 years — a figure she said is 35 percent higher than the public REIT market.

In trading, Blackstone shares recently changed hands at $124.52, down 0.9 percent from the prior close of $125.65, valuing the asset manager at roughly $153.6 billion.

What to watch

• Blackstone’s upcoming quarterly earnings and updates on BREIT performance and flows.
• How the Fed’s first rate hike in three years shapes transaction activity and debt availability in commercial real estate.
• Future editions of Commercial Observer’s Institutional Investor & Private Equity Forum for further commentary on capital markets.

Source: original release.