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Blackstone closes BREP Europe V on €7.8bn

The firm has not only surpassed its target of €7bn but has also smashed the record for a dedicated European real estate fund. 

Blackstone, the New York-based private equity real estate giant, has closed its fifth Europe-focused opportunistic real estate vehicle after collecting €7.8 billion of equity commitments from investors. The firm said the haul was the largest ever raised for a dedicated European real estate fund.

Blackstone launched the vehicle, Blackstone Real Estate Partners (BREP) Europe V, in November 2015 with a target of €7 billion and hard cap of €7.8 billion. In March last year the firm held a first close after collecting $4.97 billion and a second close four months later, when the fund had reached $6.3 billion.

During a media call last year, Blackstone’s president Tony James said he was confident BREP Europe V would be larger than its predecessor. In March 2014, the firm closed BREP Europe IV after raising €6.7 billion in just six months, already making it the largest opportunistic real estate fund to ever be raised in Europe at the time.

Blackstone is targeting a 15 percent net IRR and a 1.7x net multiple for BREP Europe V, according to documents from one of its investors, the San Francisco Employees Retirement System (SFERS). In the media call, James said the previous fund was generated a net IRR of 24 percent and a 1x multiple as of December 31, 2016.

Commitments to the fifth vehicle include $300 million from the South Dakota Investment Council; $300 million from the Teacher Retirement System of Texas; $110 million from SFERS; and $100 million each from the Florida State Board of Administration and the California State Teachers’ Retirement System, according to PERE data.

“We are grateful to our limited partners for their continued support. The fund is already over 20 percent invested or committed, and we continue to see compelling opportunities to deploy capital across the continent, while delivering certainty to sellers and adding value to our properties,” said Anthony Myers, Blackstone’s European head of real estate.

Blackstone plans to invest 60 percent of the fund’s capital into the core European markets of the UK, Germany and France, but it will also pursue distressed assets in Ireland, Italy and Spain, according to SFERS. Target sectors include industrial, office, residential and hotels. The alternative asset manager is charging tiered management fees for BREP Europe V, with a fee of 1.5 percent for investors committing less than $250 million, 1.25 percent for investors committing between $250 million and $500 million, and 1.1 percent for those investors allocating more than $500 million.

The placement agents for the fund were New York-based Park Hill Group; NH Investments from Seoul; Compass Private Equity XIV Fondo De Inversion from Montevideo, Uruguay; and Bank Julius Baer & Co. from Zurich.