Blackstone beats its own Asia RE fundraising record

Blackstone has corralled over $5 billion in a first close for its latest Asia opportunistic fund, making it the largest vehicle raised yet for the region, PERE understands.

The New York-based firm launched Blackstone Real Estate Partners Asia II four months ago with a $5 billion target, PERE previously reported.

BREP Asia closed in December 2014 on its $5 billion hard-cap, making it the largest fund closed to date for Asian real estate. Global Logistic Properties raised the next-biggest regional fund, closing China Logistics Fund II in July 2015 on $3.7 billion, according to PERE data.

Blackstone declined to comment on the capital raise, but PERE understands that BREP Asia II has a $7 billion hard-cap.

In July, Michael Chae, the firm’s chief financial officer, said Blackstone expected to hold “significant closings” in the second half of the year for several vehicles across strategies, including BREP Asia II.

“They have significantly more capital through this fund than their next competitor, and so they are able to seize on opportunities that only really sovereign wealth funds for the most part can compete with.”

– Nick Tramontana

BREP Asia generated a 17 percent IRR as of June 30, according to the second-quarter earnings. The successor vehicle has not yet been listed on the firm’s earnings statements.

Investors in BREP Asia II include the South Dakota Investment Council, which committed $300 million; the Illinois Municipal Retirement Fund and the Teachers’ Retirement System of the State of Illinois, which each earmarked $100 million; and the Texas Permanent School Fund, which allocated $75 million, according to PERE data.

At a September committee meeting of Texas PSF, Courtland Partners’ senior vice president Tom Hester, who advised the pension system on the investment, and Nick Tramontana, senior real estate portfolio manager at the Texan investor, said Blackstone’s target size for the fund puts it in a league of its own, PERE previously reported.

“They have significantly more capital through this fund than their next competitor, and so they are able to seize on opportunities that only really sovereign wealth funds for the most part can compete with,” said Tramontana.

Blackstone is committing $50 million to BREP Asia II, and the fund will have a six-year investment period, according to Texas PSF.

Hester said the longer investment period was a positive if geopolitical events, such as North Korea’s nuclear expansion, worsened.

“If this did deteriorate any further… the world does come back in situations like this, and because this fund in particular has such a long investment period to deploy the capital, they have years to wait the situation out if that was required,” he said.