BlackRock Real Estate is expanding its value-add fund strategy to North America, PERE has learned.
The New York-based manager is in the market with BlackRock North America Property Fund, which is understood to have a $750 million target and $1 billion hard-cap, according to people familiar with the matter.
The firm is aiming to hold a first close of $200 million to $300 million at year-end or in early 2021. BlackRock declined to comment, but PERE understands that investors in the first close will receive a portion of the fund’s carried interest and will be entitled to no catch-up and a hurdle rate above 10 percent.
The firm will target value-add real estate investments across property types in North America for the vehicle, but with limited exposure to retail or hospitality. In a North America regional outlook, BlackRock said it favored investments in the industrial sector and primary, urban office markets. Geographically, “markets such as Denver, Seattle, Austin and Nashville are positioned for sustained performance,” the firm stated in its report. “These markets are beneficiaries of corporate expansions seeking the right mixture of talent access, quality of life and business climate.”
The vehicle is the first North America offering in BlackRock’s value-add real estate fund series, which also includes four Europe-focused funds and two Asia-focused funds. For the most recent Europe fund, BlackRock Europe Property V, the firm closed on a total of €1.49 billion – €1.29 billion for the fund plus €200 million for co-investments – in May.
BlackRock North America Property Fund will be overseen by head of US real estate equity Benjamin Young, who is responsible for the strategy and portfolio management of real estate investments in the region. Prior to joining BlackRock in 2014, Young ran the real estate distressed debt business at Strategic Value Partners, a Greenwich, Connecticut-based private equity and hedge fund.
In an October 2018 interview with PERE, Jim Barry, head of real assets at BlackRock, spoke about the asset management giant’s wish to launch a US value-add fund. “When we look at the next 18 months, the one strategic gap is US value-add commingled funds,” he said, noting that the firm had previously raised and invested capital for US value-add through separate accounts. The firm would look to fill the gap either organically or through an acquisition of an existing platform with those strategies, Barry said.
At the time, BlackRock Real Estate had $24 billion in assets under management, but planned to aggressively expand the size of the business. “Over the next three to five years, the AUM will be double the business we have today, and then we’ll double it again,” said Barry. “We need to build one of the leading franchises to be relevant.”
BlackRock is the world’s largest asset manager, with $7.8 trillion in AUM as of September 30.