Back in the early days of the “tablet market,” some consumer electronics analysts would say, “What tablet market? There is no tablet market, there’s just the iPad.” That eventually changed when companies such as Amazon and Samsung jumped into the space with both feet.
Similarly, one can imagine the real estate and financial analysts of today saying, “What nonlisted REIT market? There’s just Blackstone.” Hopefully, like the tablet market, nonlisted REITs will eventually become a bona fide market. In the meantime, for all practical purposes, there’s just Blackstone.
The New York City–based private equity giant just underscored its dominance of the space when Blackstone Real Estate Investment Trust eclipsed the $20 billion cumulative fundraising mark during November, the most money ever raised by a nonlisted REIT. Year-to-date through November, Blackstone has raised $6.95 billion, a whopping 71.4 percent of total 2020 fundraising among nonlisted REITs, according to statistics released by Robert A. Stanger & Co., an investment banking and research firm. The only other organization sporting a double-digit share of the market is Black Creek Group, which raised $998.6 million or 10.3 percent of total capital raised.
Stanger predicted this day would come, after the fund broke escrow back in 2017. In a meeting with the senior Blackstone team, Kevin Gannon, chairman and CEO of Stanger, was asked how he thought the REIT would be received in the marketplace. Gannon told Jonathan Gray, president and COO of Blackstone, and his team, “If BREIT does not raise $20 billion, you should be ashamed of yourselves.”
To emphasize the point, Gannon had Rawlings, the sporting goods manufacturer, make a half-dozen catcher’s mitts branded “BREIT $20B” for the BREIT team. Now, fewer than four years later, Stanger has placed an order for a dozen catcher’s mitts with a new, more challenging fundraising target for Blackstone. The new figure? Stanger says that will be a surprise on Jonathan Gray’s doorstep this holiday season.
Overall, the nonlisted REIT market raised $859 million in November, a 30 percent increase from $657 million in October. Year-to-date through November 2020, investment in nonlisted REITs totals $9.727 billion, down 3.1 percent from the same period 2019.
“The recovery of nonlisted REIT investment is well under way, and 2020 fundraising is set to break through our post-COVID projection of $10 billion,” says Gannon. “We anticipate a strong finish to 2020 for the alternative investment space.”
Call it a market in the making.
Mike Consol (firstname.lastname@example.org) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.