Real Estate

How’s this for irony: Just days before President Trump announced a ban on institutional investors buying single-family homes, the American Real Estate and Urban Economics Association announced the winner of its annual award for best doctoral dissertation. The co-winner? A paper titled: “The Impact of Institutional Investors on Homeownership and Neighborhood Access” by NYU’s Josh Coven, who is now a professor of real estate at Baruch College in New York City. Here were the three key findings from Professor Coven’s paper: 1) "I find that institutional investors increase the quantity of rentals and lower rents on net because their ability to operate large portfolios at scale outweighs the incentive to use market power to decrease the rental supply." Translation: Institutions add rental supply and therefore put downward pressure on rents. And because rents are just one component of what really matters to investors (net income), scale turns out to be a win/win – lower costs for operators and lower rents for renters … not something to be feared as headlines often suggest. 2) "Institutional investors decrease the quantity of homes available for homeownership and raised prices, however the homeownership impact is 1/5th of what it would be if there were no supply response and the price impact is far below the observed association between institutional investor purchases and actual price increases." Translation: Yes, every sale – even at the margins – impacts home prices. But the impact is much less than people think. Additionally, Professor Coven found that even if institutional investors were not buyers, more than half those homes would have gone NOT to individual homebuyers, but to smaller investors. 3) "I find that renters from regions with lower median incomes, worse school test scores, and lower historic economic mobility move into institutional investor rentals." Translation: Aligning with other research on this topic, single-family rentals diversify neighborhoods with families who otherwise wouldn’t be able to afford to live there – providing upward mobility via access to better schools. Facts > Rhetoric. Lastly: I'm thrilled to share that Professor Coven graciously agreed to come onto The Rent Roll with Jay Parsons podcast this week. Hear directly from him in a new episode just released entitled: "Top 10 Myths About Institutional Investors in Housing."

BlackRock and aramco Sign Landmark $11 Billion Midstream Deal. Global Infrastructure Partners (GIP), a firm recently acquired by BlackRock, led a consortium of international investors, which included prominent institutional investors from Asia and the Middle East, to invest in Aramco's Jafurah midstream assets. This strategic transaction, one of the region’s largest lease and leaseback deals, stands out for its impressive scale and innovative structure. The deal is structured through a new entity, JMGC, which will acquire the development and usage rights for the assets through a 20-year lease agreement, and lease them back to Aramco. In return, JMGC will receive a fee from Aramco for the right to process, treat, and receive gas from the Jafurah field. Upon completion, Aramco is set to receive $11 billion in proceeds. This transaction values JMGC at a striking $22 billion, with Aramco retaining a 51% stake and the remaining 49% held by the GIP-led consortium. This landmark transaction is a clear sign of Saudi Arabia's growing appeal to global private capital. It highlights the Kingdom's ability to attract top-tier institutional investors seeking exposure to assets that offer strong, risk-adjusted returns. The involvement of a global giant like BlackRock, via GIP, indicates a deepening of financial ties between the world’s largest asset managers and key players in the Middle East's energy sector, and illustrates the maturity and increasing appeal of the GCC’s private markets. #saudi #privateequity #investing #realestate #investmentbanking