The pandemic has hit some of the main types of properties, but the changes that Blackstone Group Inc. has made to its property portfolio over time have helped the investment firm overcome the consequences.
In the years prior to Covid-19’s success, Blackstone changed its mix of properties based on changes in the economy and technologies. Although the company’s investors were not preparing for a pandemic, their moves to gradually reduce exposure to certain categories of real estate have since served them well.
Retail and accommodation, for example, were the two types of commercial property hardest hit during the pandemic, as travel plummeted and consumers migrated to online shopping with many stores closed or limiting capacity because of Covid-19.
In a global real estate portfolio that Blackstone values at $ 341 billion, retail real estate holdings represent just 5% of equity value, compared with 19% in 2015, according to the company. Changes in equity value result both from the company’s investment decisions and changes in market assessments.
Hotels account for 7% of book value, compared to 23% in 2015. Hotels were almost half of the portfolio’s book value in 2010, when Blackstone controlled Hilton Worldwide Holdings Inc. and owned many hosting properties.