Blackstone's Jonathan Gray—the largest private equity real estate investor in the world—says stock investors are too bearish on US real estate.
In addition to recent interest rate concerns, a recent market report says REITs are trading at a 15% discount—the biggest in five years—compared to what buildings would go for individually. (This decline, Jonathan says, will lead to more REIT takeovers.)
Investors also worry that interest rates, once they jump, will make it more expensive for REITs to raise money. "In the public markets, you've seen REITs just get smashed with these expectations that the Fed is going to raise interest rates," Bloomberg's Betty Liu says.
But those fears could be without merit as an incoming rate hike appears unlikely for this year. The longer the Fed holds off on raising rates, Jonathan says, there is a growing risk of fueling asset bubbles.
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