Blackstone's Gray sees opportunities in sports team financing
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Blackstone Group sees trouble in the office sector and opportunities in the professional sports arena, the company's President Jonathan Gray tells Axios, adding that there are no plans in place for any changes to his current role.
Why it matters: Blackstone, the world's largest alternative asset manager, with $1 trillion in AUM, has investments stretched across wide swaths of the global economy and Gray is bullish about what lies ahead, despite macro headwinds.
Of note: Gray's name is high on the list of eventual successors for Blackstone CEO and co-founder, Steve Schwarzman. On Thursday Gray said neither he nor Schwarzman are going anywhere.
- Regarding Schwarzman's comment around a potential presidential endorsement that "America needs a new, younger generation of leaders" . Axios' Dan Primack pointed out that the CEO is one year younger than Trump, and five years younger than Biden. "If America needs new leaders Blackstone doesn't?"
- After laughter from the crowd, Gray smiled and cited the strong investment returns Blackstone is producing.
- "This seems to be working well. When things are working well, you want to stick with it," Gray responded.
Details: Gray, who has worked at Blackstone for 32 years, said that private equity firms can thrive in the current macro economic climate. The high interest, high cost of capital environment does pose challenges but also is meaningfully lowering valuations of investment targets, he said.
Yes, but: The real estate sector faces challenges in certain areas, Gray noted, office buildings topping that list.
- "There are structural headwinds. Values have fallen, there's going to be significant losses," he said, speaking on stage at the Axios BFD event in New York. "The good news it will be mainly equity losses and that this will take a long time, and the market will be able to absorb it."
Zoom in: "We've been under-building significantly since the financial crisis," Gray says, referring to the tight residential housing market and limited supply.
What we're watching: When asked if Blackstone would ever invest in a sports team, Gray said that a direct investment was not a path the firm would go down.
- But investing or lending into various parts of a sports franchise's capital structure is something the firm would consider, he added, listing debt or preferred equity as examples.
- Sports franchises are super valuable and huge in size, which is what drives the need for a financing partner like Blackstone.
- "Within those capital structures, opportunities exist. I'd say definitely never say never."
Go deeper: Watch live: Axios BFD featuring key leaders in business and tech
