Blackstone’s global head of real estate, Jonathan Gray, will take the reins as president and chief operating officer of the US private equity giant effective March 1. The 26-year Blackstone veteran will take over day-to-day management of the New York-based firm from Tony James, who has served as president and COO until now and will become executive vice-chairman.
Both executives will be reporting to Blackstone chairman and CEO Stephen A Schwarzman, who co-founded the firm. Gray has led the company’s real estate business since 2005, building the world’s largest real estate platform with $115 billion of investor capital under management across North America, Latin America, Europe, and Asia.
As part of the org chart reboot, real estate group senior managing directors Kenneth Caplan and Kathleen McCarthy will jointly succeed Gray as Global Co-heads of Real Estate for the alternative investment titan. Caplan currently serves as global chief investment officer of the real estate division, while McCarthy is the property team’s global chief operating officer.
Gray Named President After Building $115B Property Platform
“I’ve learned over the last 26 years that Jon Gray has great judgment, enormous energy and unique personal charisma, which has enabled him to garner enormous respect within the global financial community,” Schwarzman commented in a statement.
Schwarzman suggested in a video on the company’s YouTube channel that Gray was being set up as his successor. “What this does is it provides a next generation of leadership which is really important,” he said. “I think I can go on forever. Probably not true, but that‘s, you know, my delusion.”
Gray, who studied English at the University of Pennsylvania and economics at the Wharton School, joined Blackstone in 1992, starting out in private equity and mergers and acquisitions before moving to the real estate group at its formation.
Following the leadership change, Gray will remain chairman of the Real Estate Investment Committee to work with his successors on maintaining the growth of the business. The leading specialist in opportunistic, core plus and debt investing is also a member of Blackstone’s board of directors.
Blackstone Becomes Asian Property Powerhouse
Blackstone, which is America’s biggest landlord, has emerged as a colossus of the Asian real estate sector over the past decade, becoming a major investor in Japanese apartments and shopping malls, Chinese retail, residential and logistics properties, and offices in Australia and India.
Last October, the company held a first close of its second Asia-focussed opportunistic real estate fund at over $5 billion, targetting warehouse and retail assets in China, India, Southeast Asia and Australia. Its predecessor fund, the $5.1 billion Blackstone Real Estate Partners (BREP) Asia which closed in 2014, is the biggest such vehicle dedicated to the region.
The investment firm has a total of $434 billion in assets under management as of year-end 2017, including private equity, hedge fund and credit investments along with its real estate business.
US Alternative Investment Giant Sells to China
Blackstone has also been a serial seller of assets to Chinese partners. Gray helped create Blackstone’s European logistics platform Logicor, which was sold to mainland sovereign wealth fund China Investment Corporation (CIC) in June of last year for $13.8 billion, marking the biggest-ever real estate deal.
The Blackstone executive is also said to have personally negotiated the historic $1.95 billion sale of New York’s Waldorf Astoria hotel to China’s Anbang Insurance Group in 2014. Anbang’s real estate purchases from Blackstone ultimately totalled more than $8.2 billion, including the Strategic Hotels & Resort Inc portfolio for which the insurer paid $5.5 billion.
Blackstone is now said to be deliberating on buying back assets it sold to Anbang, as the once-acquisitive mainland firm buckles under financial pressure and regulatory scrutiny.
Among its other disposals, funds managed by Blackstone sold SCPG, a mainland community mall operator to China Vanke and other investors for $1.9 billion in 2016.