Blackstone buys showroom owner via two funds

The sellers included Oaktree Capital Management and Bain Capital, which owned a majority stake, and Related Companies, which owned a minority interest.

Blackstone is betting on exhibition space in its latest opportunistic real estate purchase.

The New York-based investment firm said Thursday it has agreed to acquire International Market Centers, a showroom space owner and operator with 12.2 million square feet of property in Las Vegas and High Point, North Carolina. Private equity firms Bain Capital and Oaktree Capital Management sold their majority stake in IMC, and New York-based private real estate firm Related Companies sold its minority interest, PERE understands.

Blackstone is making the investment through its latest Blackstone Real Estate Partners and Blackstone Tactical Opportunities funds. The firm’s eighth opportunistic real estate fund, a $15.8 billion, 2015-vintage vehicle, had about $6 billion deployed and generated an 18 percent net internal rate of return as of March 31, according to the firm’s first-quarter earnings report. Tactical Opportunities, a $13.9 billion private equity fund, had about $7.5 billion deployed and produced an 11 percent net IRR as of the end of the first quarter.

“By leveraging the scale of Blackstone’s platform and expertise in real estate investing, we look forward to partnering with IMC to help drive the company’s continued growth in the years ahead,” Tyler Henritze, Blackstone’s head of US acquisitions, said in Thursday’s statement.

Blackstone is partnering with Fireside Investments for the acquisition. The private investment firm was founded by Jonathan Langer, who stepped down as the chief executive of NorthStar Realty Finance in March, following that firm’s merger with Colony Capital. Langer worked at Bain in 2011 during IMC’s formation, according to his LinkedIn profile.

Bain and Oaktree teamed up to lead a $1 billion recapitalization to form the company in 2011, PERE’s sister publication, Private Equity International, reported at the time. The partners’ investment came via a series of significant recapitalizations of the Las Vegas and High Point assets. Under the consortium’s watch, IMC has since added about two million square feet of exhibition space for the home furniture and gift industries.

Capital for Oaktree’s original investment came from one of its opportunistic real estate funds and its distressed debt vehicle, a source with knowledge of the deal said. It is unclear through which vehicle or vehicles Bain and Related made their investments in IMC.

Terms of the deal were not disclosed. Blackstone, Oaktree and Related declined to comment, while Bain could not be reached for comment. The transaction is expected to close in the third quarter.