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  • Date of publication: 31 August 2020
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  • The king of square meters: what is known the new president of Blackstone


    Billionaire John Gray built a $ 115 billion real estate management business in Blackstone, and is now appointed president of the investment company

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Billionaire John Gray built a $ 115 billion real estate management business in Blackstone, and is now appointed president of the investment company


When the investment giant Blackstone Group entered the stock exchange in 2007, less than a quarter of the $ 79 billion assets under management for real estate accounted for. Soon after the listing, the worst for the whole generation was the decline in the real estate market, which hit the epicenter of the most severe financial crisis. This chaos was a good opportunity for the head of the Blackstone real estate division, billionaire Jonathan Gray .

The unit took advantage of the crisis in its own interests, while the position of other firms was shaken. Epochal Gray deals like the acquisition of Equity Office Properties and Hilton were successful against the backdrop of the difficulties of competitors. After that, Gray contributed to the creation of a real estate rental company Invitation Homes and logistics operator Logicor and led mega-deals for such properties as the GE real estate portfolio, the Uilis-Tower in Chicago and the Peter-Cooper Steijvesant-Town in Manhattan. For these successes, Blackstone was generously rewarded. Gray's division now manages assets in real estate worth $ 115 billion, which is six times higher than pre-crisis figures. Only last year the unit sold real estate for $ 24.5 billion and attracted $ 20 billion of new investments. The division earned about $ 24 billion, which is half the total revenue of Blackstone.

The significant success of the Blackstone real estate division means that Wall Street believes: Gray, who graduated from the University of Pennsylvania, worked for 26 years at the firm, one day he will take over the reins. On Tuesday, these assumptions had additional grounds, when Blackstone appointed Gray as president and operations director, handing him over the management of the daily activities of the investment giant, which manages assets worth $ 434 billion.

Gray will replace long-time company president Tony James , who became executive vice president. This reshuffle is part of a gradual change of leadership in Blackstone. "John's appointment as president and chief operating officer lays the foundation for the next generation of senior executives and strengthens the firm's position on the future leadership," said billionaire Stephen Schwartzman , co-founder and CEO of Blackstone. "Over the past 26 years, I realized that John Gray has a wonderful instinct, tremendous energy and unique personal charisma, which has earned him tremendous respect in the global financial community," he added.

Tony James, also a billionaire, adds: "I feel my responsibility for the transfer of authority, and I'm happy that I can transfer the reins of government to such an outstanding leader and investor as John Gray."

Gray's successes

Gray began working at Blackstone in 1992, the company hired him as an analyst in the practice of private capital and M & A. Soon he moved to the real estate division, established in the early 1990s. He attracted the attention of Wall Street in the course of the LBO (Leveraged Buy-Out) campaign in the mid-2000s, when he directed the acquisition of Trizec and Equity Office Properties and the Hilton hotel operator.

Together with Equity Office Properties, Gray's team quickly sold off non-core assets, approached the crisis in good financial condition. In the end, the deal brought a profit that many times exceeded the costs of Blackstone. In the case of Hilton, Blackstone and Gray paused several times, and as a result, the value of the deal doubled, eventually bringing in more than $ 10 billion in profits.

After the crisis, Gray's unit led the creation of Invitation Homes, the country's largest rental company, whose capitalization now exceeds $ 11 billion. In addition, it combined logistics assets and formed Logicor, the leading logistics and distribution operator in Europe. Last year, Logicor was sold for $ 14 billion.

Other major recent deals include the acquisition of GE assets in real estate for $ 18 billion and the purchase of the Styvesant Town - Peter Cooper Village, a 32-hectare site in Manhattan with 11,200 buildings. In that deal, Gray skillfully took advantage of the political turmoil in New York and the consequences of Staitown's bankruptcy after the 2007 LBO. In addition, it has become the basis for a new key investment platform in the long term.

Now Gray, whose fortune is $ 2.6 billion, will leave the role of real estate specialist, creating a heavyweight industry. He will lead Blackstone's operations, which includes private equity management, investment banking and hedge funds, and report directly to CEO Shvartsman. 

"Despite our impressive successes, I am pleased with the opportunity to continue to innovate for our investors and shareholders," Gray said.

Meanwhile, Tony James will take on more responsibilities at the board level as an executive vice president. Shvartsman said: "Tony James influenced Blackstone more than anyone in the history of the firm ... He developed the internal processes that formed the basis for the institutionalization of our company."

Among Gray's major charitable initiatives is his alma mater, the University of Pennsylvania, to which he donated $ 30 million for cancer research.

Changes occur not only in Blackstone, but also in most leading financial institutions. A month ago, JPMorgan named two co-presidents and COO, specifying plans to change the leadership by the time when CEO Jamie Dimon will leave his post. A little over a year ago, Goldman Sachs, led by Lloyd Blankfein, appointed investment banker David Solomon and CFO Harvey Schwartz as co-presidents, confirming plans for a change of leadership.

In the investment sphere, companies like KKR, Carlyle, Apollo Global and Ares announced the emergence of a second generation of leaders or are preparing for it. Now Blackstone, the largest player in the industry, also announces plans to change leadership.