Asset recycling needed in US, Blackstone infra chief says

Sean Klimczak said that, while the Trump administration has made progress on regulatory reform, a legislative fix has stalled and the country should look to Australia for inspiration.

Sean Klimczak, Blackstone’s global head of infrastructure, believes a programme similar to Australia’s asset recycling initiative is needed in the US.

Speaking at the Schack Institute’s Conference on Capital Markets in Real Estate, Klimczak gave the administration mixed reviews on its progress in boosting infrastructure. On the positive side, he pointed to moves in the right direction on regulatory reform.

“It is quite evident to us that the regulatory process today is broken and needs to be fixed,” Klimczak said. “The administration has heard that loud and clear and already to date is making very good progress on that.”

On the policy front, however, progress on legislation to bring more capital into the sector has been disappointing, especially given President Donald Trump’s promises to spur $1 trillion in infrastructure spending.

“I think that is probably going to take longer than most of us would have liked, but we remain optimistic that something will be done,” he said.

As a potential model for the administration to follow, Klimczak pointed to Australia’s asset recycling scheme. Through the ARI, Australian states that privatised an infrastructure asset and reinvested the proceeds towards infrastructure received a payment from the federal government totalling 15 percent of the price of the sale and reinvestment.

“It gives us a fair bit of hope,” Klimczak said. “I think the only way that we are going to see that $1 trillion to $2 trillion of capital that will be needed in US infrastructure is if we get some form of an asset recycling programme together here.”

Klimczak is heading the firm’s infrastructure fund, which received an anchor commitment of up to $20 billion from Saudi Arabia’s sovereign wealth fund. In May, the fund was announced to be targeting a record-breaking $40 billion.