New York
Lofty ambitions: Blackstone president Jon Gray is playing “a dangerous game”, says Jonathan Guilford on Breakingviews. The asset manager is offering to pay a 25% premium to Apartment Income Reit’s closing share price as of last Friday to take the US rental housing firm, known as AIR Communities, private. Blackstone would pay $10bn in cash, including debt. With $30bn sitting in Blackstone’s tenth Real Estate Partners fund, it’s easy to see why Gray is feeling “itchy”. AIR oversees high-end buildings in Boston, Miami and elsewhere in the US, and the building of new developments, which “has been hot”, is easing. Rent growth in these locations has also outpaced the wider national average. Gray is “wary of being too cautious” while interest rates are elevated. But he risks “moving too quickly”. Betting on borrowing costs falling or incomes rising, and getting it wrong, could be disastrous. The price at least “looks reasonable”, with Blackstone “paying slightly under the odds for each dollar of income”.
Meanwhile, Blackstone is preparing financing for Austrian billionaire Reinold Geiger to take Hong Kong-listed French cosmetics brand L’Occitane private, says Bloomberg. Geiger could offer a 20% premium to the HK$43.6bn (£4.4bn) market-cap brand’s early February share price of HK$26.
Mountain View
Keeping the AI boom going: Google’s parent Alphabet “will be hitting” the artificial intelligence (AI) messaging hard over the next couple of months to dispel recent investor jitters, says Dan Gallagher in The Wall Street Journal. Investors fear Alphabet is falling behind AI leaders such as Microsoft, which is opening an office in London for AI research. Alphabet’s share price has underperformed the wider Nasdaq Composite index and other Big Tech firms for the second quarter in a row. The $1.9trn company is also facing a competition lawsuit, which could result in steep penalties or result in the break-up of the business, while the launch of its AI tool, Gemini, garnered widespread ridicule after it produced inaccurate pictures of historical figures. Online chatbots such as OpenAI’s ChatGPT (which is backed by Microsoft) and Perplexity haven’t yet been fatal to Google’s core search business, which retains 91% of the market. Advertising revenue has also increased, but it remains to be seen whether consumers or businesses will pay for AI tools. Alphabet has deep pockets to invest and build computing infrastructure, and, “more significantly, Google has access to the essential resour
