For the past decade, Steve Schwarzman and Tony James led Blackstone Group LP as it grew into the dominant private-equity and alternative-asset manager. Now the firm is taking its first step toward anointing a future leader.
Blackstone on Tuesday named Jon Gray, its 48-year-old real estate head who’s never worked anywhere else, as president and chief operating officer. James, a dealmaking legend who came to the firm in 2002 after a career on Wall Street and was named president in 2006, will become executive vice chairman. The duo will report to CEO Schwarzman.
“The appointment of Jon as president and COO lays the foundation for the next generation of senior management and positions the firm well for future leadership,” Schwarzman, Blackstone’s co-founder, said in a statement.
The marathon to win the president role has shaken out a dealmaker modest in public but commanding of one’s attention. Under Gray, Blackstone’s real estate business became the largest owner of property globally, accounting for half of the firm’s pretax profit last year.
Gray joined Blackstone as an analyst out of college in 1992. After stints in the firm’s private-equity and merger advisory groups, he signed on to help with Blackstone’s then-nascent real estate effort, led by John Schreiber.
Gray and Chad Pike were put in charge of the group in 2005. The duo shifted away from buying individual buildings and toward acquiring whole companies, an approach that gave them greater flexibility with assets and compelled bigger bets.
That’s when a buyout of Equity Office Properties Trust came across Gray’s desk at Blackstone’s Park Avenue headquarters. The $39 billion deal for the nation’s largest owner of office properties was the biggest Blackstone had ever pulled off, spotlighting the young co-head and the thriving business he was building around him.
“He’s one of the toughest-minded businesspeople you’ll meet,” Laurence Tosi, Blackstone’s chief financial officer from 2008 to 2015, said in an interview. “But he’s always honest, direct and interested in what you have to say. If he disagrees he stays quiet and stares harder—he never interrupts.”
Gray’s streak continued. He led the firm’s 2007 deal for hotel operator Hilton Worldwide Holdings Inc., which after a global financial crisis and U.S. recession has generated about $14 billion in partly realized profit—a record in private equity.
He has “amazing courage of being able to always go where they’re not,” said fellow real estate investor Tom Barrack, the billionaire executive chairman of Colony NorthStar Inc. “To go public to private, to go bulk to individual, to be able to have a balance sheet, to be able to bridge large transactions and then co-invest.”
For all his boldness, a casualness about Gray puts people at ease. He treasures family dinners when his four daughters are home, leaving work for the meal and resuming calls at 11 p.m. When Blackstone bought the Cosmopolitan of Las Vegas hotel and casino for $1.7 billion in 2014 and Gray applied for a casino license, he listed his six-year-old minivan as his primary vehicle, a person with knowledge of the matter said. In an industry filled with Rolex and Patek Philippe watches, Gray is known to wear a G-Shock.
That sets him apart from Schwarzman, whose multimillion-dollar, celebrity-studded birthdays have long made headlines. Gray, who celebrates his birthday just 10 days earlier than his boss, prefers the event to pass with little fanfare.
“He says it the way it is,” said Barrack. “And he does what he says.”
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