Blackstone collects $10bn for real estate fund

The New York-based private equity and real estate giant has clinched an additional $4 billion in commitments since January and is expected to raise a total of $12 billion by year’s end.

 The Blackstone Groupalready has beat its target on its seventh opportunistic real estate fund, collecting more than $10 billion for its second close and anticipating another $2 billion by year’s end, according to people familiar with the fundraising.

The publicly listed firm raised $4 billion this year alone, according to sources. Blackstone’s initial target on Blackstone Real Estate Partners (BREP) VII was $10 billion, with a $13 billion hard cap.

PERE understands that the second close, which is expected to occur early next week, is significant for investors because limited partners that commit to BREP VII by that date will be able to invest in all of the transactions the fund has made since August. Investors who make commitments subsequent to the second close would be able to invest only in deals that are completed after that closing date. Blackstone declined to comment.

Fund VII, which focuses primarily on opportunistic real estate opportunities in the US and Canada, already has invested 10 percent of the capital it has raised in transactions that include the $473.1 million acquisition of 36 US shopping centers from Equity One; the purchase of a 10.1 million-square-foot suburban office portfolio in the US from Duke Realty Corporation for $1.08 billion; the $335 million purchase of a 3.5 million-square-foot portfolio of UK industrial properties from Prologis; and the acquisition of a portfolio of real estate debt and equity interests on assets in the US, Europe and Latin America from Bank of America Merrill Lynch.

The alternative asset manager previously offered a concession to investors in the first close of the fund, entitling them to a management fee waiver for four months, according to documents from the New Jersey Division of Investment, which made a $300 million commitment to BREP VII in July. For the state, that equaled a savings of approximately $1.25 million, the documents said.

Blackstone officially launched Fund VII in April and held a first close of $4 billion four months later, attracting capital from investors such as New Jersey and the Pennsylvania Public School Employees’ Retirement System. Other LPs, including the Teachers’ Retirement System of the State of Illinois and the State of Wisconsin Investment Board, later came onboard, boosting the amount of capital to $6 billion by year’s end.

As PERE reported earlier this month, the National Pension Service of Korea committed $300 million to BREP VII as part of a strategy to increase its exposure to opportunistic investments. Also, the Ohio Police & Fire Pension Fund approved a commitment of up to $60 million to the fund in January, while the Los Angeles Department of Water and Power Employees’ Retirement System agreed to commit $25 million at its 22 February board meeting.

Blackstone’s previous global real estate fund, BREP VI, closed on $10.9 billion in 2008, making it the largest closed-end real estate fund ever.