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Tag: Blackstone

  • Trump’s proposed ban on institutional home ownership raises more questions than answers  – Houston Agent Magazine

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    President Trump’s pledge to ban large investment firms from buying single-family homes dinged the stock prices of some of the biggest institutional landlords, but the impact it would have on the housing affordability crisis is debatable. 

    Observers noted that major investors like Blackstone, Invitations Homes and American Homes 4 Rent own only about 1% of the single-family homes in the United States, and their holdings are concentrated in the South and Sunbelt, so the impact on overall U.S. home prices would vary widely by geography. Additionally, in the markets with relatively high concentrations of institutional ownership, home prices are already declining. 

    “The administration’s proposed ban on large institutional investors buying single-family homes aims to curb Wall Street’s role in housing, but evidence shows little connection between institutional ownership and affordability,” Jonathan Miller, president and CEO of property appraisal firm Miller Samuel, wrote in his HousingNotes blog. 

    “Their holdings are concentrated mostly in the South and Sunbelt, where inventory is relatively high and home prices have actually fallen, undermining claims that these investors drive housing costs higher. With most investor-owned homes held by small, local landlords, the proposed restriction is unlikely to meaningfully improve affordability or housing supply.” 

    Nevertheless, others expressed optimism that a ban would indeed have an impact in markets with high levels of institutional ownership.  

    “Because the Dallas–Fort Worth market has long been a hotspot for institutional ownership, any new restrictions from the Trump administration would likely be felt here sooner and more acutely than in markets with lower investor activity,” said Todd Luong of REMAX DFW Associates. “In many price ranges, especially entry-level and mid-priced homes, buyers have been competing against all-cash offers from large investment groups. Reducing that competition could give local buyers a better chance to secure a home with less pressure and more favorable pricing.”   

    Details about the ban have been scarce, and many questions remain. In a post on his Truth Social site announcing the proposed ban, Trump said, “I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it. People live in homes, not corporations.” 

    He added that he would provide more information on the proposal when he speaks at the upcoming World Economic Forum in Davos, Switzerland, in two weeks. 

    In a subsequent post, Trump said he would instruct Fannie Mae and Freddie Mac to use a purported $200 million in cash holdings to purchase mortgage bonds to bring mortgage rates down. 

    Timing of that proposal is everything, according to Victor Kuznetsov, managing director and co-founder of Imperial Fund Asset Management. 

    “In the short term, expect mortgage rates to level tighter than 2025 averages, but investment bank researchers tend to agree that most of these [mortgage-backed security] purchases have already been priced into rates, so the timing of the [government-sponsored enterprises’] MBS purchases will be important,” Kuznetsov said. “Will the GSEs purchase $200 [billion] over 2026’s calendar year, spreading out the tightening effects over a full year? Details on deployment timing have been sparse so far.”   

    According to the housing blog ResiClub, the most significant questions about the ban include: 

    • What constitutes an “institutional investor”? 
    • Would the investors be required to sell existing properties, or would they just be prohibited from purchasing additional ones? 
    • Would the ban apply to existing properties scattered throughout a market, or also to build-to-rent development? 
    • What would happen to existing tenants if the owners were forced to sell their homes? 

    In the end, industry observers agree that the ban would have a limited effect on overall housing affordability, and the key to bringing down costs is by increasing inventory. 

    “The first thing to do is build more housing starting now,” Miller said. 

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    John Yellig

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  • Is Trump’s Private-Equity Housing Ban a Bust?

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    Trump and Blackstone CEO Stephen Schwarzman in 2017.
    Photo: Getty Images

    It’s not too often that Tucker Carlson, J.D. Vance, and Elizabeth Warren end up on the same side of an issue, but private equity’s intrusion into the housing market tends to have that effect on people across the political aisle. Since 2008, trillion-dollar-asset managers like Blackstone have been buying up single-family homes for their portfolios and raising rent on properties in fast-growing cities like Atlanta that cut young families out of homeownership. “If you want a revolution, keep that up,” Carlson has quipped, while Warren has said this practice “tanked the dream of homeownership.” To Vance, these firms “completely crowd out the availability for homes for people who want to just buy a piece of their community.”

    After nearly two decades of private equity in the single-family-housing market, our luxury-real-estate-licenser president is wading in. In a Truth Social post on Wednesday, President Trump said he would be “immediately taking steps” to ban large institutional investors like Blackstone and JPMorgan Chase from buying single-family homes. “People live in homes, not corporations,” he wrote.

    Donald Trump’s preview was vague, but he said he would provide more details on this affordability push in a couple of weeks at the World Economic Forum in Davos, Switzerland, where some parties in attendance probably will not be happy about the ban. (Companies with serious housing stock were totally blindsided by the news, and the stock prices of Blackstone and Invitation Homes — two of the biggest names in the sector — fell in the hours after the announcement by as much as 9 and 10 percent, respectively.)

    Even if Trump manages to prevent investment firms from buying up single-family houses, the affordable-housing crisis will not be fixed by executive order. As of 2023, large investors with 100 homes or more owned only 3 percent of the housing stock. And an order from Trump — or a law passed by Congress — would not initiate a sudden Maoist land reform in Las Vegas and Atlanta, the cities where private equity does have an outsize influence on housing.

    Additionally, while private equity has significantly changed the single-family-home rental market in these fast-growing cities, its current growth is not necessarily coming from expansion into purchases of suburban three-bedrooms. “The largest corporate owners are at saturation,” says Eric Seymour, a Rutgers associate professor who studies private equity in the housing market. “Some of the largest actors, like Invitation Homes and Blackstone, grew to scale in the aftermath of the foreclosure crisis when they are able to buy large numbers of homes at low costs. That window has closed.” In recent years, Seymour says, these companies still buy homes but mostly through acquisitions of smaller corporate landlords — or by investing in build-to-rent housing that, by definition, does not affect homeownership.

    “Prohibiting these companies from additional acquisitions of single-family housing is not going to lead to the housing outcomes people are desiring,” Seymour says. “The demand is coming from other channels. And we have a deeply constrained housing supply nationally.”

    Suzanne Lanyi Charles, an associate professor at Cornell, agrees: “This is not going to have a huge effect on house prices.” But she notes that restrictions on massive landlords could “combat negative effects on tenants — whether they can renew leases or are locked out of certain homes.” And that the outsize focus on institutional firms that control a single-digit percentage of the national single-family-housing stock still makes sense. “When someone goes out to buy a house and there are multiple bidders, then a company with an advantage can come in and pay in cash and waive an inspection, that’s infuriating,” she says.

    If Trump has embraced affordability messaging here, its not quite to the extent of the abundance agenda popularized by centrist Democrats last year. In December, he said building new housing — the most obvious fix to the affordability problem — could be a problem for current homeowners, be they Blackstone or Family Stone, because it could cause the value of their homes to decrease. “I don’t want to knock those numbers down because I want them to continue to have a big value for their house,” Trump said.

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    Matt Stieb

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  • One of Wall Street’s most feared short sellers takes aim at Blackstone Mortgage Trust, warning it could be ‘completely wiped out’ by rising losses

    One of Wall Street’s most feared short sellers takes aim at Blackstone Mortgage Trust, warning it could be ‘completely wiped out’ by rising losses

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    Carson Block, the founder of the famed short-selling investment firm Muddy Waters, revealed he’s betting against Blackstone Mortgage Trust on Wednesday, in a sign that he expects commercial real estate’s woes to drag on into next year. In a report titled “Here Comes the Cliff!,” Block suggested that the publicly traded real estate investment trust (REIT), which provides loans for the ailing commercial real estate sector, faces a “perfect macro storm” of rising interest rates and office vacancies. 

    Despite many CEOs’ pleas and threats for their employees to return to the office, office vacancies hit a record high of 13.3% in August, according to the National Association of Realtors. And overdue commercial real estate loans also hit a 10-year high last month as property values in the sector continue to sink amid higher interest rates.

    Muddy Waters fears that this means “a large number” of Blackstone Mortgage Trust’s borrowers will be unable to refinance or repay their loans in 2024. The investment firm estimates that between 70% and 75% of Blackstone Mortgage Trust’s U.S. borrowers are currently “unable to cover interest expense from property cash flows.” That could, per Muddy Waters’ estimates, lead to losses of between $2.5 billion and $4.5 billion for the REIT. 

    In other words, Blackstone Mortgage Trust’s $4 billion market cap is “at risk of being completely wiped out by these losses,” the short-seller’s report warns. While the REIT hasn’t faced issues yet because it has been able to extend and modify loans for clients, that can’t last forever, according to Block.

    “There’s been a lot of extending and pretending when things have been backed by paper profits,” he told Bloomberg at the Sohn investment conference in London on Wednesday. “It’ll be the second half of next year that we’ll really start to see losses.”

    Once losses begin to pile up in the second half of 2024, Muddy Waters expects Blackstone Mortgage Trust will be forced to cut its dividend, which has soared to nearly 12%. Even the increasing prospect of interest rate cuts from the Fed that could provide relief for the commercial real estate sector in the form of cheaper loans would be “too little, too late,” according to the short-seller.

    Blackstone Mortgage Trust did not immediately respond to Fortune’s request for comment, but a spokesperson told Bloomberg in a statement that the REIT is “well positioned to navigate this environment,” adding that they believe ”Muddy Waters’ report was “self-interested,”  “misleading,” and “designed solely…for the short seller’s own benefit.”

    Blackstone Mortgage Trust’s stock sank 8% on Wednesday after the release of Muddy Waters’ report.

    Block’s Muddy Waters is one of a few noted short-sellers who have risen to fame over the past decade for making large, and often quite profitable, bets against a myriad of companies, foreign and domestic. 

    Founded in 2010, the investment firm burst onto the scene in its first year of operation by shorting shares of China’s Rino International, a formerly Nasdaq-listed maker of desulfurization gear for steel plants. Block warned at the time that the company was misstating its revenue and making misleading claims about its status as an industry leader in key steel markets. 

    Rino International was eventually delisted from the Nasdaq, and the CEO and his wife, the company chairman, faced U.S. Securities and Exchange Commission charges of overstating revenues and diverting money for personal use.

    Since then, Block has made big bets against a number of firms, including the medical supplier St. Jude and the European real estate company Corestate Capital Holding SA. However, in an interview with Bloomberg earlier this year, Block said that his short-selling days may be ending in the next few years, noting that the toll of corporate lawsuits against his firm for its negative reports is taking its toll.

    Of short-selling, he said, “It is a decent living, but per unit of brain damage, it’s definitely one of the worst businesses in the asset management industry.”

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    Will Daniel

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  • Ontario Teachers’ fund backs Indian logistics unicorn Xpressbees in $80 million funding | TechCrunch

    Ontario Teachers’ fund backs Indian logistics unicorn Xpressbees in $80 million funding | TechCrunch

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    Xpressbees, an Indian logistics firm that works with several e-commerce firms in the country, has raised $80 million in a new funding round led by Ontario Teachers’ late-stage venture growth fund amid a surge in the country’s online shopping activity.

    The Canadian pension fund has acquired a stake in the Pune-headquartered startup at about $1.4 billion valuation, same value at which the startup raised a Series F tranche earlier. With the latest investment round, Xpressbees’ cumulative funding has reached approximately $680 million. It didn’t share a name for the round, and also didn’t disclose how much of the new raise came via secondary transactions.

    Xpressbees, which also counts Malaysian sovereign wealth fund Khazanah, TPG, Alibaba and Blackstone among backers, works with more than 1,000 clients — including financial and e-commerce services giant Paytm, social commerce startup Meesho, eyewear seller Lenskart, phone maker Xiaomi, and online pharmacy NetMeds — deliver their products across the country.

    It has presence in over 2,000 cities and towns and it processes more than 2.5 million orders a day. The loss-making startup posted a revenue of about $300 million in the financial year ending March. The arrival of the Canadian pension fund is indicative that Xpressbees is readying itself for an initial public offering within a year to two.

    Xpressbees started its journey within FirstCry, an e-commerce for baby products, in 2012. But in 2015, it became an independent company with Amitava Saha, co-founder and chief operating officer of FirstCry, moving out of FirstCry to become chief executive of Xpressbees. Supam Maheshwari, who co-founded FirstCry and serves as its chief executive, is the other co-founder of Xpressbees.

    “We are excited about the market opportunity for end-to-end logistics and supply chain solutions that can meet the needs of a diversified customer base across industries, including e-commerce in India,” said Deepak Dara of Ontario Teachers, in a statement. “Led by a strong team, Xpressbees has established a highly scalable and efficient asset-light model with proven execution capabilities.”

    Ontario Teachers’ has invested over $3 billion in India, and identifies it as one its “key strategic” countries.

    Xpressbees competes with a handful of established firms and startups, including publicly listed firm Delhivery and Shadowfax, which is in advanced stages of talks to raise about $60 million in a round led by TPG NewQuest, TechCrunch earlier reported.

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    Manish Singh

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