Steve Schwarzman, the founder of Blackstone—one of the world’s largest owners of commercial real estate—is doubling down on the asset class in which he made his name.
The private-equity firm with roughly $1 trillion in assets under management plans to invest in real estate across Europe, Schwarzman told Bloomberg on Monday after the Global Investment Summit in London. Blackstone has raised about $200 billion in recent months, according to Schwarzman, who called that war chest one of the biggest piles of unspent cash in the world. As of October, about $66 billion of those funds will be targeted for the real estate sector, according to Blackstone’s third quarter earnings release, and Blackstone will be particularly focused on the European real estate market, Schwarzman said.
“We’re seeing some very, very good buys in that kind of environment because, unlike most people, we have enormous capital and can buy the types of real estate that we like, whether they’re data centers, warehouses, student housing,” he said.
Blackstone did not respond to Fortune’s request for comment on Schwartzman’s remarks.
Scwharzman and Blackstone, where he also serves as chairman and CEO, have a long history of investing in commercial real estate. Despite the downturn in the office market, he’s stayed true to his roots and built up Blackstone’s portfolio in a coterie of other types of commercial properties across the continent now that the deal market is picking back up.
“The deal business is not totally in mothballs,” Schwarzman said. “These things start again. I think we’re more on that side of the cycle. Although it has been somewhat dreary for a year.”
Conditions for investing in European real estate have become favorable because interest rates in some countries have gone up after being very low, even negative, according to Schwarzman. Now that rates are hovering around 6%, some property owners are looking to shed their assets, making them ripe for the picking for seasoned real estate investors like Schwarzman.
“The borrowing cost to own real estate was next to nothing and now it’s closer to 6%,” Schwarzman told Bloomberg. “So if you have to carry a whole portfolio that used to cost you next to nothing at 6% they need to sell things. It’s necessary to just hold the other properties.”
In October, the European Central Bank raised interest rates for the tenth consecutive time, leaving them at a 22-year-high of 4%. Countries like Italy and the U.K. have pushed rates north of 5%, according to data from the European Central Bank. The Bank of England was even more aggressive than the ECB, with a run of 14 consecutive interest rate hikes before ending the streak in September.
Blackstone has been quite active across the U.K. as the nation has faced a business slowdown. Recent policies seem to have succeeded in turning around the country’s economy, although interest rate cuts aren’t imminent, which could benefit Schwarzman and Blackstone. At the beginning of the month, Blackstone bought some 2,900 not-yet-built housing units from homebuilder Vistry for $1.03 billion. As the housing market tightens because of low inventory, investors builders like Vistry have taken to selling units before they are even built, putting builders in the driver’s seat.
Earlier this month, Blackstone closed a $467 million deal for student housing in London and Edinburgh, two of the U.K.’s top destinations for college students. Dorms, despite serving as students’ residences for the time they are at school, are classified as commercial real estate, and student housing has become a rather lucrative investment because there’s a shortage of units close to university campuses.
Across Europe, Blackstone is working on several other deals outside of the real estate sector. Last week, it bid a mammoth $15 billion for Norwegian classified ads website Adevinta. A day later, Blackstone announced it had closed the acquisition of English software company Civica, which has an estimated $2.5 billion valuation.
