Blackstone's Jon Gray Sees Low Returns And Faltering CMBS
Blackstone’s real estate kingpin, Jon Gray, says market volatility and slow growth will mean slumping rates of return from US commercial real estate.
Jon says it's too early to say the US economic recovery is at its end, but the real estate cycle is on the mature side, Bloomberg reports. "Rates of return are definitely coming down," Jon says.
However, new CMBS regulations will make it harder to bundle and sell real estate loans, says Jon, which slows debt financing for new deals.
Data from research firm Green Street Advisors backs Jon up, showing that US commercial property price gains have slowed after climbing to record highs, with prices 24% above their 2007 peak. [Bloomberg]