We also like non REIT stocks but are on the periphery of the real estate space. The stock has been on a tear but recently it has faced a number of headwinds in the underlying investment investment from Fed raising interest rates to potential increase in carried interest tax.
We have kept an eye of BX due to its real estate presence which has been felt in the performance of REITs that are takeover targets. The mandate for Blackstone real estate fund has always been to invest throughout the cycle in up and down markets.
This is seen from the Equity Office merger near the top of the market which it profess to made multiple of original investment as well as picking up assets in distressed environment around the globe.
BX has more than $300 billion asset under management with significant room to invest its dry power. The funds which have been committed by the limited partners but not drawn by the general partner for investment.
Blackstone Dividend History
BX has been collecting the performance fee at this stage of the cycle where the early funds are being harvested. We feel this can be sustained in the near future as underlying direct real estate markets is doing well on back of stronger economy.
We are however cautious in the medium term futures as current earnings are inflated due to low tax rates. If any revision to carry interest is made post the 2016 election. Then future Blackstone earnings will get hit and deflated by at least 10 to 20%. This is not helped by the issue being a rally cry in the election primaries.