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Blackstone holds $1.5bn first closing for BREP Asia

The New York-based real estate and private equity firm has demonstrated its favor with institutional investors yet again, this time pulling capital for its maiden Asia opportunity real estate fund.

The equity pulling power of The Blackstone Group has continued in Asia after the firm closed on the first $1.5 billion for its debut Asia private equity real estate fund, Blackstone Real Estate Partners Asia.

The New York-based real estate and private equity firm last year raised a record $13.3 billion for its seventh global opportunity fund and has followed up quickly by almost matching the highest capital-raising in Asia for private real estate since the global financial crisis started – $1.65 billion by Fortress Investment Group for its Fortress Japan Opportunity Fund II last December.

Blackstone, however, is expected to surpass Fortress’ total shortly and ultimately is targeting a capital haul of $3.5 billion for BREP Asia. Among BREP Asia’s investors are US pensions such as the New Jersey Division of Investment (NJ DOI), which allocated to its largest ever ticket to a private real estate fund of $500 million, and the Illinois Municipal Retirement Fund, which committed $100 million.

According to Bloomberg, which cited in a report on the closing a letter sent to investors, the capital of BREP Asia is being invested immediately. The fund’s focus is on China, India, Australia and Japan. It will invest alongside Blackstone’s main BREP opportunity fund series, which is capped in terms of how much equity can be invested outside of the US.

According to a document by NJ DOI recommending its $500 million commitment to BREP Asia, the firm’s $1.46 billion of investments in Asian real estate to date are projecting a 15 percent net IRR and a 1.8x equity multiple. 

The firm opened its first Asia office in Mumbai in 2006, but it invested little capital in the region until 2010, when the bulk of the $1.46 billion was invested in 15 transactions. Blackstone has since added to that total, investing into a 6.45 million-square-foot township near Shanghai in January with China Resources Land, the Hong Kong-listed developer. In India, it has struck another partnership, with Bangalore and Pune-based developer Embassy Property Developments, to build business parks. Further single-asset purchases in China and Sydney also have added to its rapidly-expanding property book in the region.