Blackstone Begins Rental Housing Empire in Spain

Blackstone Group, builder of the biggest single-family rental home business in the U.S., is using its experience to replicate the model in Spain, where property prices have dropped 40 percent since the 2007 peak. The world’s largest private equity firm agreed in July to purchase 18 apartment buildings from the city of Madrid for €125.5 million ($173 million). “Building a business from scratch without a single employee and buying something like $150 million in homes per week requires a learning process,” Anthony Myers, senior managing director of real estate at Blackstone, said at a conference in Barcelona in mid-October. “When we looked at the situation in Spain, we thought we could see something similar, where we could replicate a lot of the systems and technology that we created in the U.S.”

Spending $7.5 billion to buy 40,000 homes in the U.S., Blackstone has targeted mainly foreclosed single-family properties, renovated them, and sought tenants. The firm is taking a different approach in Spain, where it’s competing with foreign and domestic distressed property investors who are seeking to make bulk purchases of low-cost housing units, mainly already-occupied apartments, in cities where local governments need to sell assets to trim deficits. “They’re focusing on homes complete with tenants and assured rental income in large urban areas like Madrid, where there’s high demand and most people’s salaries can meet the rent,” says Fernando Encinar, co-founder of Idealista.com, Spain’s largest property website.