How blackstone became china’s real estate connection – bloomberg can acid reflux cause chest pain on left side

The troubles of Chinese companies aren’t great news for anyone with real estate to sell—some big buyers have left the market. But with $32 billion in so-called dry powder earmarked for new real estate investments, Blackstone could be positioned to grab back some of its favorite assets, if the price is right. Beyond valuations, a key factor that might weigh on Blackstone is perception. Is it going to be viewed as saving these companies or humiliating them? If it’s the latter, which could tarnish the firm’s reputation among potential buyers or sellers, as well as among its bevy of foreign fund investors, it may well decide to abstain.

As RXR Realty LLC Chief Executive Officer Scott Rechler, who’s sold real estate to Blackstone, explains, the firm takes a long-term approach. “They respect their relationships as part of that approach,” he says.


Still, it’s possible the firm would proceed with purchases if it viewed any intervention as helpful. “Blackstone could come in in one fell swoop, if the [Chinese] government wants to take the pain and call it a day,” Rechler says.

Schwarzman, the New York firm’s co-founder, chairman, and CEO, has personal ties to China—ties so close that the Washington Post dubbed him the president’s “China whisperer,” a moniker he has disavowed on Bloomberg Television. The billionaire has funded the Schwarzman Scholars program—modeled on the Rhodes scholarships—that sends promising students to study in Beijing. He’s put up at least $100 million, roughly a fifth of the funding. Perhaps to forge a closer bond, HNA has thrown its weight behind Schwarzman’s program, committing to fly those students around China and providing a library.

Where Blackstone is perhaps most likely to reenter the picture is as a partner or buyer for all or part of Anbang’s stake in Strategic Hotels Resorts Inc. Initial talks have already been held, Bloomberg News has reported. A partnership-type structure would give Anbang some cash now and the ability to achieve a better outcome for later sales. Potential buyers might take comfort in Blackstone’s involvement, since Anbang has had bigger problems in China than its peers. The government has accused Wu Xiaohui, the former chairman, of fraud, and in February it took temporary control of the insurer.

Outside the real estate world, Blackstone has already benefited from Anbang’s misfortunes in at least one way. A year ago, Iowa-based insurer Fidelity Guaranty Life abandoned a deal with Anbang, in part because it failed to obtain necessary U.S. regulatory approvals for the transaction. That made it possible for a group comprising Blackstone and its affiliated funds to buy the company for $1.8 billion.

Some market observers believe Blackstone’s ability to move fast could work to its advantage. “If you want to get out of an asset quickly, the fastest buyer is the person you purchased it from, because they know it better than anybody else,” says Woody Heller, vice chairman and co-head of capital markets at property brokerage Savills Studley. “Blackstone is famously and fabulously known for making large decisions quickly.” But just how fast the companies will have to sell is uncertain. Anbang has received a $9.7 billion injection from the Chinese government.

While it’s not exactly commonplace for investment firms such as Blackstone to revisit prior holdings, it does occur. The firm in December repurchased a 10 percent stake in European warehouse owner Logicor Ltd., half a year after selling the company to China Investment Corp. for €12.3 billion ($15 billion). Separately, it purchased Mumbai-based outsourcing company Intelenet Global Services Pvt. in late 2016, some five and a half years after it sold its initial stake in the company.

Other companies that sold real estate to Chinese groups have a chance to retrace their footsteps, too. Perhaps Brookfield Property Partners LP could once again own a share of 245 Park Ave., the New York office tower that HNA bought for an eye-popping $2.2 billion last March. That deal is just one of many examples of HNA far outbidding sophisticated longtime investors. The company reached on price to prove its credibility within the U.S. market.

A key unanswered question is how low Chinese companies such as HNA and Anbang will be willing to go as they sell real estate holdings. The prospect of deep bargains may draw Blackstone in, but to date it’s played only a minor role. It has bought from HNA a small office tower in Sydney—one that it didn’t previously own. All eyes in the real estate world are on whether Blackstone will veer from this quiet approach. —With Amanda L. Gordon