Chad Pike, who was one of Blackstone’s senior executives responsible for growing the firm’s real estate business, has returned to the sector to capitalize on widespread, current capital dislocation in the US, affiliate title PERE can reveal.
More than three years after retiring from the New York-based powerhouse, he has launched a real estate investment management business called Makarora in advance of raising investing capital for both private debt and equity as well as public market opportunities resulting from stressed situations initially stateside, according to a launch document obtained by PERE.
To execute the strategy, the firm is targeting as many as 40 hires and already has recruited 12 executives. Among the senior recruits is Adam Brooks, who joins as head of credit. Brooks was previously a managing director at Prospect Ridge, a real estate manager he launched alongside former colleagues at asset management giant AllianceBernstein.
Makarora stated in the document: “An interest rate-induced commercial real estate valuation reset, exacerbated by regional banking distress, creates what Makarora anticipates to be a major cyclical investment opportunity.”
“While some existing firms are burdened with challenges in their legacy portfolios, Makarora will be focused on new investments unencumbered by distractions,” the document read.
Pike had been actively investing on an individual deal basis since he called time on his 25-year Blackstone career in July 2020, most notably in Acme Marinas, a management business focused on the Marina sector which included $500 million of equity investment.
But it is his time at Blackstone for which he is best known, racking up numerous high-profile and sizable transactions, particularly in Europe, and opening five of the firm’s offices around the world, including gateway hubs in London and Hong Kong. He co-ran the real estate platform alongside current president and chief operating officer Jon Gray between 2005 and 2011.
He is widely accredited for playing an instrumental role in growing the real estate business into the mega-manager it is today and for the performance of its signature Blackstone Real Estate Partners fund series, which was generating a 16 percent net IRR and a 2x equity multiple at the time of his departure.
As part of a senior team reshuffle at the end of 2011, which saw Gray become sole head of real estate, Pike started the firm’s tactical opportunities business alongside Blackstone’s former co-private equity head, David Blitzer, assuming the position of vice-chairman for Europe in the process.
According to the document, Pike led approximately $26 billion of property acquisitions across Blackstone’s real estate and tactical opportunities platforms and was a designated key person for five of the firm’s BREP funds and three of its Tactical Opportunities Funds.
The tactical opportunities business is regarded as Blackstone’s most flexible and it is this approach that is expected to define the investment strategy of Makarora, with credit deals targeted initially, followed by special situations and then private equity real estate outlays as the cycle develops. It is understood a first investment vehicle will be introduced to the market in the new year with the expectation it corrals multiple billions of dollars from institutional investors.
“Makarora anticipates a prolonged cycle similar to the 1990s Savings and Loans crisis,” the document said before outlining parallels between that crisis and market conditions today.
The firm declined to comment.