Inside Strategy at Blackstone’s Crown Jewel

“Now is the time to be aggressive.”

That’s the thinking from Nadeem Meghji, the global co-head of real estate at Blackstone Inc. The property business has long been a crown jewel at the money manager, and they’re ready to start deploying big sums.

“Our pipeline today is as big as we’ve seen in 18 months,” Meghji said this week in a Bloomberg Television interview. “It’s one of the most exciting opportunities we’ve seen in a long time.”

Blackstone’s Meghji speaks as the real estate market grapples with some real pain. His boss, Blackstone President Jon Gray, has been saying for months now that property prices are bottoming. Blackstone has deployed roughly $20 billion in equity investments throughout the real estate world in the past six months, and Meghji says the next six months could lead to a similar scale of dealmaking.

When you look across the industry, “sentiment will remain negative, because there will be losses associated with deals that were financed in a different environment,” Meghji said. “When you see green shoots, and you see negative sentiment, you play offense.”

But some investors in the real estate world have become impatient. That negative sentiment was on full display at a Blackstone rival. Starwood Real Estate Income Trust said in May that it would limit investor redemptions further, helping the vehicle avoid selling property in a real estate market that’s still tough.

Billionaire Barry Sternlicht, Starwood Capital Group’s chief executive officer, told CNBC this week that it was “a very tough decision” to limit withdrawals.

“We knew we were going to get a lot of flack,” he said.

That mood fueled an uptick in investors wanting to pull money from a similar vehicle at Blackstone. The vehicle, Blackstone Real Estate Income Trust, allowed investors to pull money beyond the typical monthly limit of 2% of the trust’s net asset value.

Meghji said it’s too hard to speculate what June’s redemption requests will look like, but added that the limits are ultimately decided by the board of the $59 billion property trust. Meghji said that they have more than $7 billion of liquidity, and no plans to change the repurchase program.

“Coming out of the global financial crisis, most of our competitors were struggling to return their investors’ original capital back,” Meghji said, adding that some of Blackstone’s most notable periods of gains came out of that 2008 downturn. “There are others who will have challenges in this environment.”

Blackstone’s moves are being closely watched across the entire investment industry. More rivals are considering semi-liquid vehicles, sometimes far beyond the world of real estate. Private credit and buyout funds are looking to package their investment strategies in ways that could draw more retail investors, a crowd that often seeks more liquidity than big institutions that will agree to invest capital for years at a time.

The next 12 months will determine whether that gold rush will be possible.

More to come. Next week, we'll have a series of great exclusives in the 12 pm hour New York time -- including Morgan Stanley's Tom Miles, one of their top dealmakers, on Tuesday. Kayne Anderson CEO Al Rabil is joining the following day. Also on Wednesday, we'll be speaking with Carlyle executives at the firm's "Washington Day." It'll be a timely moment, just before the Federal Reserve's long-awaited June meeting. Tips, opinions and ideas are always welcome at [email protected].

AND IT'S THE COUNTDOWN: Bloomberg Invest in New York City on June 25-26. We are in all-hands mode as the event is now just weeks away. Register here. Looking forward to seeing you.