The real estate space has seen a relatively strong performance when compared to other asset classes. Alternative asset managers (IYF) have seen a 3%–5% rise in carry fund valuations over the past couple of quarters mainly due to improving broad fundamentals and rising wage income, which has supported house ownership.
Among alternatives, Blackstone (BX) has been a strong and consistent performer in the real estate space mainly due to a strong network, liquidity, and access to global markets. In 3Q16, the company reported a 234% rise in its real estate division’s revenue from the prior-year quarter. It rose to $630 million from $188 million.
Blackstone’s opportunistic funds’ carrying value rose 3.7% during the September quarter mainly due to gains in public and private investment values. The company’s core funds’ carrying value grew 2.9%. The division’s assets under management grew 9% over 3Q15 to $102 billion, and fee earning assets rose 1% to $65.8 billion.
Carlyle and KKR
The Carlyle Group (CG) has had a strong performance in the September quarter with real estate holding valuations rising 4%, which included real estate, natural resources, and legacy energy.
KKR (KKR) engages in real estate investment mainly through Real Estate Partners Americas and Real Estate Partners Europe. The company’s real estate holdings form 11% of the total portfolio as of September 30, 2016. Apollo Global Management (APO) has also managed growth in its real estate holdings during the September quarter. The company saw a rise of 16.3% during 2015, which reflects a strong recovery.
In the next part of the series, we’ll see how the rebound in oil prices has impacted alternative managers.