Tim Johnson

Describe the past 12 months in one word, then tell us the key lending opportunities you and your team have uncovered. 

Capitalizing. When we spoke to investors 12 months ago, the picture in real estate was messy. But we were laying the groundwork for rates to stabilize, helping valuations and an increase in investment activity across our platform. Flash forward, and we’ve reached that inflection point in the cycle. Liquidity has improved, lowering the cost of capital and bringing transaction activity off the sidelines. Real estate valuations have bottomed, with three consecutive quarters of increasing values. And with new supply down 40 to 75 percent across major sectors, longer-term tailwinds are in place. We came off the sidelines well in advance of this stabilization and have been tremendously active, deploying capital across our platform and capitalizing on the moment. I’m super proud of that. 

Are rate cuts the silver bullet the industry has been waiting for to solve all woes?  

Silver bullet? No. Beneficial? Definitely. Blackstone started calling the bottom of the commercial real estate market in January. Across our global portfolio, we’re seeing increased debt availability coupled with lower borrowing costs, which, in turn, is helping prices recover. Meanwhile, looking ahead, fundamentals in our highest conviction themes are strong, setting the table for a strong recovery. 

How long will nonbank lenders continue to take increased market share? 

Alternative lenders have a relatively small but important share of the market, and our presence is growing. Our flexible and creative capital will continue to be valuable to borrowers. As one of the largest managers of insurance capital, Blackstone is also able to flex into the investment-grade space, bringing that same creativity to our borrowers on lower leverage transactions. So, we are growing as an industry for sure. 

Tougher market: GFC or these past four years? 

As someone who worked at Lehman Brothers, I feel well positioned to say that the past four years pale in comparison to the GFC, when we saw large financial institutions fold, a serious recession, and massive stress broadly across real estate. That’s not what we see today. We certainly see some negative outcomes in certain sectors, but holistically, strong fundamentals and significantly less leverage have helped paint a much more benign picture across the board.  

Who lent you your very first buck, and what was it for?

I’m not sure this counts, but probably my wife. She graduated college ahead of me and had a real job. She would help me out when I would inevitably run out of the money I had made over the summer. Honestly, I am not sure I really paid that back.

Are you still as enthusiastic about multifamily as you were three years ago?  

Yes. Multifamily remains a high conviction theme across our U.S. equity and debt portfolio, buoyed by strong demand fundamentals. 

Tell us about a deal you’re especially proud of this past year. 

Our BREDS business has been so active, it’s hard to pick just one. Over the last twelve months, we provided creative and comprehensive financing solutions across the capital structure and risk spectrum, with BREDS originating and purchasing a combined $22 billion worth of loans, and trading $14 billion worth of securities across our real estate business [which includes real estate debt securities purchased and sold by the real estate securities team]. It was a busy year, and we look forward to continuing this momentum.

Lightning Round:

If I could lend money to one person in the world, it would be…

Tom Brady. Rings as collateral (it’s OK if he defaults). 

AI: Helpful or fad? 

Helpful. At Blackstone, we view AI as a tool to add value to our companies and help accelerate growth. 

How many days are you in the office today? 

Wow, I haven’t heard that one in a while. Five — unless I’m traveling somewhere cool to meet with our partners. At Blackstone, we’re big believers that we do our best work together. From honing talent to developing culture to generating excellent outcomes for our investors, we prefer meeting IRL.  

Modify or foreclose? 

We always aim to find the best outcome for everyone involved, so modifying is usually Plan A. Given BREDS’s expertise and scale, we have plenty of experience across any number of scenarios.

Pref equity or mezz? 

Mezz. I like the security.

Song title that encapsulates your current mindset?  

“I Can See Clearly Now” by Johnny Nash.

Dream dinner date?

At home with my family catching up after a big trip.