May 28, 2022

Blackstone Group ( BX -0.17% ) made headlines once again this week by making another big splash in the real estate market. This time, the leading alternative asset manager scooped up American Campus Communities, a real estate investment trust (REIT) focused on student housing. The nearly $13 billion deal is the latest in a string of headline-grabbing transactions by the company.

It’s becoming a dominant force in the real estate industry. Here’s a closer look at how Blackstone Group compares to its rivals in the real estate sector.

Two people shaking hands with an office skyline in the background.

Image source: Getty Images.

A behemoth among asset alternative managers

Blackstone is the world’s largest asset manager. It has $881 billion of assets under management across four key areas: real estate, private equity, hedge fund solutions, and credit and insurance.

Real estate is its largest focus area, with $279 billion of investor capital under management across a $514 billion global real estate portfolio. That makes it the global leader in real estate investing:

Real estate assets under management by some of the leading alternative asset managers.

Data source: Company websites. Chart by the author. 

Blackstone has been splurging on real estate over the past year, making several headline-grabbing deals:

  • Data center REIT QTS Realty for $10 billion
  • Single-family home rental platform Home Partners of America for $6 billion
  • Industrial REIT WPT Industrial Real Estate Investment Trust for $3.1 billion
  • Apartment-focused residential REIT Bluerock Residential Growth REIT for $3.6 billion
  • Non-traded apartment REIT Resource REIT for $3.7 billion
  • Apartment REIT Preferred Apartment Communities for $5.8 billion
  • American Campus Communities for $12.8 billion

Several of these deals still haven’t closed yet. When they do, they’ll widen Blackstone’s lead over Brookfield Asset Management ( BAM -2.98% ), Starwood Capital, and KKR ( KKR -1.86% )

Taking private real estate to retail investors

One of the key drivers of Blackstone’s real estate shopping spree has been its success in raising capital from retail investors over the past year. Blackstone formed a non-traded REIT, Blackstone Real Estate Income Trust (BREIT), five years ago to appeal to retail investors who wanted access to the private real estate market. 

It’s been a smashing success. Blackstone’s ability to generate outsized returns for BREIT investors has made it a magnet for investor capital over the past year:

Non-traded REIT sponsor fundraising in 2021.

Data source: Stanger Investment Banking. Chart by the author. 

Blackstone’s BREIT raised a whopping 68.4% of all the capital hauled in by non-traded REITs last year, an average of $2 billion per month. Blackstone’s big haul is leading more alternative asset managers to launch rival non-traded REITs targeting retail investors.

KKR launched its non-traded REIT — KKR Real Estate Select Securities, or KREST — in May 2021. Meanwhile, Brookfield took over the advisory role of Oaktree’s non-traded REIT in November by seeding it with new assets and renaming it Brookfield REIT.

However, Blackstone’s non-traded REIT stands out from the pack because of its success in delivering returns. It outpaced all other non-traded REITs with a 30.2% total return over the past year.

A big driver has been its strategy of investing in high-conviction themes like data proliferation, Sun Belt migration, affordable housing, and e-commerce. Its ability to generate outsized returns from those trendy themes has enabled it to raise more money from investors. That’s giving it the capital to make larger acquisitions, allowing it to further boost returns through its growing scale.

Blackstone’s success is driving its growth

Blackstone is one of the biggest names in real estate. Its thematic investing approach has enabled the company to deliver strong returns, which has investors entrusting it with more money. That’s allowing it to acquire more real estate, furthering its real estate dominance.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.