Demand for gas and oil is increasing and so finding new sources in remote and untouched areas is a necessity. Do the advantages of this outweigh the disadvantages?

These massive deals have

also

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reshaped Blackstone itself. For most of its 35-year existence, the firm’s big profit spinner was its traditional private equity franchise, which focused on buying and fixing laggard industrial companies. But six years ago, real

estate

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jumped far ahead. That prominence is

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now reflected in

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Blackstone’s top ranks

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the Blackstone’s top ranks

. In 2018, Jonathan Gray, 50, the manager who built the real

estate

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business, was named president and COO, and he’s slated to eventually succeed longtime CEO and cofounder Steve Schwarzman. For a relatively young firm,

Blackstone’s

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culture feels old–Wall Street formal. Full business attire is de rigueur, and even on Fridays jackets mainly stay on. Conference rooms display paintings by

such

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artists as Jasper Johns and Ellsworth Kelly, whose work wouldn’t have been out of place in a boardroom in 1970. In conversation in his 44th floor office, Gray outlines an investment philosophy that’s as daring as the dress code is conservative. Property prices are elevated even as economic growth is slowing, he notes: “That makes it a lot more difficult to achieve big returns across the entire market.”

Blackstone’s

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challenge is to pick the right spots in the market to keep delivering steady returns. With his

firmwide

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role growing, Gray has handed

Blackstone’s

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property baton to global real

estate

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coheads

a straight line connecting two points on a curve

chords

Ken Caplan and Kathleen McCarthy. And their latest strategic pivot, with its emphasis on

unglamorous

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but lucrative properties in fast-growing cities, underscores how the broader economy is evolving. Newsletter-Blue-Line-15 Blackstone invests in real

estate

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through two basic categories of funds. The

first

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is its Blackstone Real

Estate

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Partners (or BREP) vehicles, which the firm calls “opportunistic.” BREP funds often buy distressed or partly empty properties that they can fix up quickly to earn big short-term returns. Since the

first

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BREP fund’s launch in 1994, the category has returned 15% a year on average, after fees. The

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category, Core+, is more conservative, targeting properties that

already generate

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have already generated

stable rental income. Core+ vehicles, which include the Blackstone Real

Estate

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Investment Trust (BREIT), currently hold $46.2 billion in capital, and have been producing annual returns of roughly 10%, including dividends.