Blackstone Sees Uptick in Commercial Real Estate: CEO
Special to CNBC.com
Blackstone Group CEO Steve Schwarzman told CNBC Friday the commercial real estate market has reached a bottom and is already seeing an uptick.
Schwarzman, whose company bought U.S. shopping centers from Centro Properties in March for $9.4 billion in the biggest deal since the Lehman Brothers collapse, thinks in the long run the deal "will turn out to be a very conservative and a very good return investment."
"You’re much better off buying at a time when you think you’re seeing a bottom and it starts turning up," he said, adding the 8 percent yield Blackstone has already seen from the acquisition "is quite high in today's world."
There are vacancies in the shopping centers, he noted, but not necessarily because the individual stores failed. He said the "people who own those centers were under financial duress and couldn't do tenant improvements to attract new clients. We have sampled that market, and the tenants would like to come back to these centers."
Schwarzman said Blackstone continues to do deals in a number of regions, including Europe.
"We are seeing changes all over the world. It provides opportunities for growth, for us to put money in such surprising places as Europe, where confidence has been eroded," he said, giving no details on the investments.
"It is not an easy thing when you have 17 countries trying to solve a financial crisis simultaneiously," he said of the euro zone. "But I think at this point the finance ministers and heads of countries recognize that they have got a serious issue and they’re starting to move to address it."
Blackstone is also investing in the U.S., particularly the energy sector, "and prices are down in asia. For us problems sometimes turn into opportunities on a longer-term basis."
He said Blackstone doesn't feel pressured by its investors — which include public and private pension funds and endowments — to do these deals.
"We don’t buy securities, so when we make a mistake we just can’t sell those assets and look for something else," he said. "We have to make sure that when we’re buying a business, our objective is to improve that business" while increasing profits for investors.
"We have to be careful," Schwarzman said.