Update from Jon Gray: A New Cycle for Real Estate

Summary

The recent recovery in capital markets has led to increased deal volume at Blackstone, as the Fed's policies lower inflation and tighten spreads. Real estate values are beginning to recover, despite ongoing weakness in the office market. A decline in new supply supports this recovery, prompting Blackstone to invest significantly in real estate. Additionally, the firm is positioning itself as a leader in AI infrastructure, focusing on data centers and financing companies that enhance AI capabilities. Overall, the outlook is positive, with expectations of more investment activity in the coming months.

Takeaways

• 📈 The healing of capital markets has led to increased deal volume at Blackstone.
• 💊 The Federal Reserve's actions are positively impacting the economy, as inflation decreases.
• 🔍 A recovery in real estate values is occurring, although the office building market remains weak.
• 📉 New supply in the real estate market is declining, supporting a foundation for recovery.
• 🏗️ Blackstone has been actively investing in real estate for the past six months and plans to continue.
• 🤖 AI is set to transform various aspects of life and work, and Blackstone aims to be a key player in AI infrastructure.
• 🌐 Blackstone wants to become the largest global investor in data centers.
• 💰 The firm is also focusing on financing companies involved in AI infrastructure.
• 🔌 Recent financing efforts include a significant investment in a company called CoreWeave.
• 🚀 Blackstone is committed to investing across the AI ecosystem through both equity and credit funds.

Q & A

What recent changes in the capital markets have impacted Blackstone's deal volume?

The healing of the capital markets, driven by the Fed's policies, has increased deal volume at Blackstone, as inflation decreases and treasury spreads tighten.

How does the speaker view the future of the IPO market?

The speaker believes the IPO market will eventually reopen, contributing to a virtuous cycle that boosts deal activity.

What is the current state of real estate values according to the transcript?

Real estate values are recovering overall, except for the office building market, which remains weak.

What factors are contributing to the recovery of real estate values?

The decline in the cost of capital, greater availability of debt, and a sharp decline in new supply are key factors driving the recovery.

What investment strategy is Blackstone pursuing in real estate?

Blackstone has been actively investing capital in real estate over the past six months and expects to continue doing so in the latter half of the year.

How does the speaker view the impact of AI on business and life?

The speaker sees AI as a transformative force that will significantly affect various aspects of life and work.

What specific investments is Blackstone making in relation to AI?

Blackstone aims to invest heavily in data centers and companies involved in AI infrastructure, including recent financing with CoreWeave.

What role does Blackstone want to play in the AI ecosystem?

Blackstone seeks to be a major investor in the infrastructure supporting AI, including lending to relevant companies and enhancing digital infrastructure.

What does the speaker mean by 'creating superhighways' for AI?

The speaker refers to developing the necessary infrastructure that facilitates the operation and integration of AI technologies.

What is the overall outlook for investment in AI according to the transcript?

The outlook for investment in AI is positive, with the speaker emphasizing the importance of being invested in AI infrastructure as it represents the future.