New York
Lofty ambitions: Blackstone president Jon Gray is playing “a dangerous game”, says Jonathan Guilford on Breakingviews. The asset manager is offering to pay a 25% premium to Apartment Income Reit’s closing share price as of last Friday to take the US rental housing firm, known as AIR Communities, private. Blackstone would pay $10bn in cash, including debt. With $30bn sitting in Blackstone’s tenth Real Estate Partners fund, it’s easy to see why Gray is feeling “itchy”. AIR oversees high-end buildings in Boston, Miami and elsewhere in the US, and the building of new developments, which “has been hot”, is easing. Rent growth in these locations has also outpaced the wider national average. Gray is “wary of being too cautious” while interest rates are elevated. But he risks “moving too quickly”. Betting on borrowing costs falling or incomes rising, and getting it wrong, could be disastrous. The price at least “looks reasonable”, with Blackstone “paying slightly under the odds for each dollar of income”.
