The East is Black
Blackstone is adding an eastern front to its real estate blitzkaufen (lightning purchase). Not sated with gobbling up residential U.S. properties at a premium to market price, the world's second largest alternative asset manager has made Beijing developer Soho an offer it can't refuse: $3b to buy out.
Soho pioneered the mixed-use retail/office/residential real estate paradigm that defined the modern wave of Beijing urban buildout. Nonetheless, the news of Blackstone's interest sent shares soaring 26%, faced as the company is with declining rents and a waning pipeline of projects.
"Soho is certainly not a cash cow, so it's an interesting play," says Jimmie Jeremejev. "You're going to see many of them express a similar interest in foreign investment, with high-anchored valuations to be whittled down through grueling due diligence. Office space is certainly not a high growth sector right now, given supply and demand metrics."