The Financial Company That's Really Just a Massive Landlord

Key Points

• Falling interest rates should benefit real estate holders.

• A national housing shortage is also a boost.

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Blackstone (NYSE: BX) is often viewed as a giant investment manager. Indeed, the company is the world's largest alternative asset manager, with $1.2 trillion in assets under management.

The majority of that is in real estate, which makes the investment company more of a massive landlord. It is the largest commercial real estate owner on the planet.

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A massive real estate portfolio

Blackstone's real estate portfolio was worth $611 billion as of the end of June. The company has over 12,500 real estate assets. About 87% of those are in rental housing, industrial properties, and data centers. Multifamily, single family, student housing, and affordable housing make up 46% of its total portfolio.

70% of Blackstone's real estate holdings are in Sunbelt markets, like Florida (13%), Georgia (11%), and Texas (10%). Blackstone says it believes properties in those states will continue to benefit from favorable demographics, including higher population growth, higher job growth, and higher wage growth.

This bodes well for Blackstone

Two current trends favor Blackstone because of its massive real estate portfolio: An ongoing housing shortage and falling interest rates.

The Federal Reserve began a new rate-cutting cycle in September, and futures markets expect two more quarter-point cuts by the end of this year. Lower rates could be beneficial for commercial real estate companies, as they typically use short-term debt and floating-rate loans to finance their properties. Mortgage rates have also been trending lower since January. The 30-year fixed rate is now down to 6.3%, which makes residential properties more appealing.

Image source: Getty Images.

In the background, of course, is the ongoing U.S. housing shortage. It hit a record high in July, with a deficit of 4.7 million homes nationwide.

Thus, it may be a good time for investors to consider putting some money into what is really a giant real estate company.

Blackstone has a market cap of about $216 billion. The stock is up 2% year to date (from Jan. 1, 2025) and up almost 14% over the past 52 weeks. It currently trades at around 27 times forward earnings.

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Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Blackstone. The Motley Fool has a disclosure policy.