Full transcript of “Why Blackstone Is Buying Homes In The U.S. Again”. Click a timestamp to open the video at that moment. Need another video? Use the YouTube transcript generator.
0:01 Blackstone is an American financial giant with over $1 trillion in assets under management. What we do is we buy assets, say we buy a company, and we make them better. Real estate is one of Blackstone's major divisions. Blackstone is really in the business of marketing investment products. A byproduct of that is they became a very large landlord. The company has an ownership interest in at least 274,000 rental housing units. That likely makes it one of the largest landlords in the United States. In every market where we operate. We own less than 1% of of the housing available. Their portfolio of rental housing is concentrated in Sunbelt regions like Texas, Georgia and Florida. Many of these units are apartments.
0:48 A smaller portion are single family homes. The company also has stakes in mobile home parks, student housing, and more. I have to give credit because they went after, you know, like apartment housing and sort of residential housing, as opposed to going into, you know, malls or retail side of the business, which is really just a struggle. Rents keep rising in many parts of the US, particularly major cities that aren't building enough housing. As a result, some cities are considering policies that protect tenants from rent hikes. If these measures pass, they could affect Blackstone's bottom line. I just think that it's time for the landlords to accept that they can't always make as much as they would like. So how did Blackstone become one of the largest landlords in the United
1:35 States? Most of the rentals Blackstone owns are in massive multifamily buildings. Take, for example, Stuyvesant Town Peter Cooper Village. Blackstone acquired this property in 2015. Stuy Town is a city within the city. It was built in 1947 for returning veterans. There are 11,242 units and approximately 30,000 residents. Today, all of the apartments in Star Town are rent stabilized. That's a big benefit for long term tenants like Susan. She pays significantly less than the market rate of rent in New York City. I moved into Stuyvesant Town in January of 1980, after having been on the waiting list for a little more than three
2:22 years. But the rents at Stuy Town have climbed over the years. Just dealing with one bedrooms and one bathrooms like I have. The rents now start at more than 4700 and they go up depending on where the apartment is located. In 2020, the tenants at Stuy Town sued their landlord. Their claim: Blackstone's subsidiary planned to convert units to market rates, raising rents beyond what the city allows for stabilized units. The New York State Supreme Court reviewed the case and ruled in favor of the tenants. Blackstone withdrew its protest of the findings following court orders in 2024. Still, the company sees rent control policies as a risk. What we see consistently across the globe is that policies that focus
3:11 on rent restrictions actually have a counterproductive outcome in that they really lead to higher housing costs overall. Restrictive policies really chill the environment as far as encouraging new development and even investment in existing housing. When Blackstone buys property, it tends to spend a lot of cash improving their asset. The video intercom system was something that Blackstone installed. They've improved elevators. We've invested $425 million of capital since we acquired Sky town. That shows up in lots of different ways. Everything from the quality of the apartments themselves. We have created a new bedrooms and many,
3:58 many of them. It's like the equivalent of creating a whole new building. When you look at the number of bedrooms we've been able to add. This can in some cases lead to an increase in rent. I think that Blackstone had a vision for their ownership of the property, which was not always the best in terms of property management. The people that they hired came from the leisure industry or the hotel industry. There are a lot of fun things that Blackstone did. I mean, there are times when you walk out on a summer evening and there are movies going on and people are lying around in the oval. On the other hand, the tenants association gets calls from tenants that are going crazy because they have an unusable sink
4:44 and they can't get an appointment for a month to do something about it. Those are the kind of basics that we really like, maybe more than having ice cream available on site. In response, Blackstone told CNBC that it reduced Stuy Town's average work order time by 65% since 2015. A work order is a document that provides detail for a maintenance request. Blackstone makes money by charging fees for managing their various funds. Their stock has outperformed the broader market over the past five years. They make money in two ways, really. There are what we call assets under management fees. So they get a certain percent each year of the assets they manage.
5:29 And then if the assets pose significant returns, they get what are called performance fees or incentive fees. Blackstone was founded by Peter Peterson and Stephen Schwarzman in 1985. The investment bankers met while working together at Lehman Brothers. When we started in 1985, there weren't diversified private equity firms. Basically, there were just about 7 or 8 firms that just did leveraged buyouts. It's a slightly different business than it was maybe 20 years ago. The old knock against, you know, the private equity guys was they buy up companies. They load a ton of debt on them. They pay themselves a huge dividend and they, you know, throw them out to the market. That model really sort of stopped.
6:18 Since 1991, Blackstone raised funds for the private side of its real estate division at least ten times. They've been investing in real estate assets for decades, most of that through what are called private placements. These private placements are real estate investment opportunities available only to accredited investors. That actually is the bulk of Blackstone's real estate investments right now. Of their $315 billion in real estate, only roughly $55 billion is in the breed product, which is sold to retail investors. BREIT, Blackstone's Real Estate Income Trust, has significant interests in industrial developments, data centers, and, of course, rental housing. Many investors put money into the fund coming out of the pandemic.
7:06 But the pace of new investments into brick has slowed since 2022, with at least one notable exception. A $4 billion investment from the University of California. Breit had posted smooth returns every month for six years. Breit is a perpetual capital fund which holds for the long term. Blackstone holds town in another perpetual fund, but it's not included in BREIT. The community didn't know from one day to the next who was going to own it. The then mayor of the city, Bill de Blasio, determined that it would be good to sell it to a developer who was going to be in it for the long term, and that's where Blackstone came in. Blackstone says its U.S. portfolio is concentrated where it believes opportunities are highest.
7:53 There tends to be a high degree of consistency across our different pools of capital. As far as the nature of the investments, meaning which sector, warehouses, apartments, data centers, and then the geographies as well. Really what we try to follow across the globe is job and population growth. And that is part of why you see meaningful concentrations in the Sun Belt and also urban areas on the coast. Blackstone was an early pioneer in the market for single family rental homes. Remember, after the crisis, they quickly became the largest owner of single family homes in the country. They brought them all together. Then they created a company called Invitation Homes. They took it public and then they got out of it. They really had, I would say, the best period following the financial crisis, because they were actually able to
8:38 out there and sort of snatch up properties that have become distressed. In 2021, Blackstone reentered the single-family rental space with another major acquisition: Home Partners of America. Home Partners of America offered a lease to purchase program, which was criticized by some in the industry. In 2025, they shuttered that company. Where we have leased to purchase agreements. We continue to honor those agreements. I think the challenge in the housing market today is that high borrowing costs make it more difficult for folks to convert a lease into being a homeowner. Blackstone today is building its single family portfolio with Tricon Residential. The company was acquired in 2024. We purchased Tricon in a private transaction.
9:26 It was publicly traded both in the US and Canada and really had been undervalued in the public markets. Today, Blackstone's single family rental portfolio contains about 58,000 properties. The company says it's building thousands of new homes across the US. A lot of them still have so much dry powder sitting there, and they can sort of take advantage of the situations when they arise. Buying is still cheaper than building in many markets, according to analysts at MetLife Investment Management. As a result, construction is limited and rents are poised to keep growing. As the rate of new housing permits and construction starts sink. Market rate rents could increase at a relatively fast pace.
10:13 That's a major issue in cities like New York, where rental prices are already near record highs. This city can build plenty of affordable housing, and this city needs to be livable. We're going to be losing people left, right and center if something doesn't happen. Policymakers concerned with the soaring cost of rent increased how much they'll spend on building low income housing properties. That's a boost for Blackstone's affordable housing initiative. April housing April Housing started with about 70,000 government subsidized housing units. When the renovations are complete. Blackstone expects to be the single largest provider of affordable housing in the United States. We're feeling like we're just getting started. We're preserving units. We're doing that by extending the affordability through new
10:59 syndications of tax credits. That also allows us to invest in the communities at no cost to the resident, and we're just starting to build new communities as well in different parts of the country. Bringing private capital into subsidized housing could be a net positive. The vacancy rate for affordable projects is higher than the rest of the market. I just focus on the fact that we are a large owner, and with that scale brings the ability to have consistency of the quality of the rental housing that we operate and the new supply that we can help create, both by being an equity investor in new development, and that capital is really critical to addressing the supply and demand shortage we have in this country.
