) announced its decision to acquire independently-managed
private equity real estate investment advisory firm MGPA early
Tuesday morning in what comes as the latest move by the asset
management giant to increase its presence in the growing
global real estate investment industry. BlackRock already has
a strong position in the U.S. and the U.K. real estate investment
markets, and thanks to the complementary nature of MGPA's business,
the acquisition will give it a sizable presence in the Asia-Pacific
and European regions.
While the financial details of the acquisition have not been
disclosed, the deal is likely to close in the third quarter of the
year and will double the size of BlackRock's real estate assets
under management to $25 billion.
We are in the process of updating our
$267 price estimate for BlackRock's stock
to include the impact of this acquisition.
See our full analysis for BlackRock
BlackRock has been growing its real estate solutions business
steadily over the recent past largely through acquisitions. Last
December, the company announced that it was buying U.K. real estate
funds with about half a billion dollars in managed assets from
Deutsche Bank (see
BlackRock Acquires U.K. Real Estate Funds From Deutsche Bank
). But almost all the expansion in the past was restricted to the
real estate markets of the U.S. and the U.K. The MGPA acquisition
will change this scenario by the end of this year and BlackRock
will boast of a sizable presence in each of the six
biggest commercial real estate markets which make up nearly
three-fourths of the global industry.
BlackRock's focus on alternate investment solutions like real
estate is largely justified given the growing demand among
investors for high-yield investment options in the current low
interest rate environment. As is evident from the chart above,
alternate investment funds were not high on investor preference
lists over the last few years. But this situation is expected to
change going forward - something we capture in our forecast for
BlackRock's alternative assets under management.
The MGPA deal will bring in $12 billion in real estate assets
under management to add to BlackRock's existing $13 billion pool
besides increasing its 10,600+ workforce by 220.
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