Billionaire Stephen A. Schwarzman recently made some intriguing remarks about investment opportunities during his attendance at the Davos World Economic Forum.

In case you are not familiar with Steve Schwarzman, he is the co-founder and CEO of Blackstone Inc. (BX), the largest private equity group globally, managing over $1 trillion in investments with a stellar track record.

Blackstone’s Bet on REITs

Blackstone has been actively investing in real estate investment trusts (REITs) in recent years. In 2022, they acquired 4 major REITs for about $30 billion, and in 2023, they made another significant acquisition with Tricon Residential (TCN). Schwarzman emphasized in a recent Q4 conference call that Blackstone Real Estate has $65 billion of dry powder to invest in this dislocated market, stating, “the best investments are made during times of uncertainty.”

They are investing in REITs because valuations are low. Even as property prices remained stable, REITs crashed in 2022 leading to substantial discounts relative to the fair value of their properties.

Schwarzman highlighted the favorable market conditions for REITs, pointing out that interest rates are expected to drop lower later this year. He believes this will reset the narrative due to its impact on REITs. Consequently, REITs remain heavily discounted, presenting a window of opportunity that may be closing.

Potential Buyout Candidates

Schwarzman indicated a strong interest in European real estate despite the geopolitical situation. He noted that European real estate is compelling due to low valuations and distress caused by overleverage. He mentioned, “We’re one of the few people in the world who have a lot of money and like to buy things.”

To underscore the attractive valuations, Schwarzman referenced the case of Branicks Group (BRNK / OTCPK:DDCCF), a major industrial and office landlord.