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Blackstone Group Inc has inked a US$1.2 billion deal to purchase the real estate startup Simply Self Storage.
Per the Wall Street Journal, the acquisition of Simply Self Storage by the Blackstone Group Inc (NYSE: BX) is from the Canadian firm Brookfield Asset Management Inc (NYSE: BAM) and will form for Blackstone a consolidation of its dive into the expanding real estate business.
The coronavirus pandemic has caused a remarkable shift in real estate demand across the United States and the world at large. With most businesses affecting a work from home policy to help stem the spread of the virus, Real Estate demand in the expensive cities took a deep plunge as workers who work from home reportedly chose to go stay with family and friends in a bid to reduce real estate costs. Nonetheless, the sector is such that attracts a longer-term prospect thus informing Blackstone Group’s move to perfect the deal.
Blackstone is a publicly-traded company and its unlisted real estate trust known as the BREIT will be in charge of the acquisitions. With the total worth of the assets under the BREIT summed at about $19 billion dollars, the outfit’s acquisition of Simply Self Storage comes as part of its undying effort to continue to acquire such smaller real estate holdings and run them al under the Simply Storage brand.
“The opportunity to acquire a $1 billion-plus storage portfolio, including a brand and a team, is incredibly rare,” Tyler Henritze of Blackstone’s real-estate group. He also noted that the fact that people are always moving around also makes the storage business a lucrative one. The acquisition of Simply Self Storage thus follows from the recorded performance of the Blackstone Group’s owned storage facilities over time.
Blackstone Deal: a Testament of Trust in Real Estate
The investment terrain has imbibed quite an uncertainty as a result of the coronavirus pandemic. The highly contagious viral disease caused amongst other things a fluctuation in the interest of investors in certain industries as the negative economic plunge was experienced all over.
Blackstone as an asset management firm has a lot of interest in several promising investment niches including Hedge Fund Solutions, Real Estate, Credit and Insurance as well as Private Equity. Of these, the real estate arm is the second biggest with a total worth of $168 billion. Despite the strain most markets have experienced, the firm is all the more bullish in its bid to acquire Simply Self Storage and the deal will Blackstone take up the 120 locations of Simply Storage across 23 U.S. states.
While Brookfield did a remarkable job in growing the outfit from 90 locations to 120 when it bought it for $830 million back in 2016, the current acquisition by Blackstone is poised to drive the company to new heights in the coming years.