Jonathan Gray, Blackstone Group


2013 Owners MagazineThis year has been one of internal and external development for Jonathan Gray and his team at Blackstone (BX) Group’s real estate division. Between several big debt and equity deals, the team of 250 launched its new floating-rate commercial mortgage REIT Blackstone Mortgage Trust in May, which closed $765 million of loans in the second quarter.

It has also been a year of major earnings for the division with Mr. Gray, Blackstone’s global head of real estate, becoming a real estate billionaire after his stock in the company shot up more than 40 percent.

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Mr. Gray, who keeps a low profile in the media, spoke to The Commercial Observer about his division’s biggest accomplishments and challenges this year—though mostly on background. Modest or strategic, the affable 43-year-old knowingly has enough to boast about.

On top of the acquisition and reoffering of Capital Trust’s investment management platform as Blackstone Mortgage Trust, significantly growing its debt business, Mr. Gray and his team closed several major deals in the U.S., Europe, Asia and Latin America. In August, the real estate heavyweights agreed to buy 80 apartment complexes in Atlanta and Dallas, among other cities in the south, from General Electric’s GE Capital unit for $2.7 billion. That acquisition marks one of the largest bets on apartments since the market collapse and gives Blackstone a much firmer grip on the U.S. multifamily market.

On the hotel front, a mainstay for the company, Mr. Gray and his team are in the process of taking their Hilton brand public again in a proposed IPO that is expected to raise $1.25 billion in equity. At the same time, the Blackstone executives are reportedly exploring a sale of the company’s budget hotel chain, La Quinta Inns & Suites, which is valued at around $4.5 billion.

In part due to the paring down of big banks, Blackstone has grown into one of the largest private owners of commercial and residential real estate in the U.S with more than $100 billion in assets under management, between equity and debt, including about 8 million square feet of Manhattan office and hotel space. As Mr. Gray has said in the recent past, the crisis was a blessing in disguise for his group, as much as it has been a curse on the country as a whole and individually. The disappearance and reduction of some of Blackstone’s top competitors bolstered the company’s already strong position in the market and allowed his team to capitalize on discounted properties post-2008.

Mr. Gray, who joined the private equity investment firm right out of college in 1992, has overseen the acquisition of publicly held real estate companies totaling more than $100 billion. Two of those biggest deals closed right before the crisis hit, including the $26 billion purchase of Hilton Worldwide in July 2007 and the leveraged buyout of Equity Office Properties in February 2007 for $39 billion.

Going forward, Mr. Gray is as focused on the development of his team, which has nearly doubled over the past six years, as he is on property.

“On a global basis, as we get bigger, one of my priorities is to make sure that we maintain the same standards and that we continue to have open communication and integration,” he told The Commercial Observer last month. “Whether you’re in our New York office or Mumbai office, it’s a must that we focus on our people and our standards and that we continue to do things the same way across the business.”—Damian Ghigliotty