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Blackstone holds $15.8bn final close for BREP VIII

The New York-based private equity real estate giant, which completed its institutional capital raise in March, has now closed on the retail portion of its largest-ever property fund.

The Blackstone Group announced on Thursday the final close of its latest global real estate fund, Blackstone Real Estate Partners VIII (BREP VIII), at $15.8 billion. The New York-based alternative asset manager has now closed on $1.3 billion in commitments from retail investors. PERE understands that the retail investors in BREP VIII took several more months to close than the fund’s institutional investors because the retail capital was collected from the wealth management businesses of multiple investment banks.

Blackstone previously closed on $14.5 billion of institutional capital in March after just four months in market. It was the first time the firm had amassed all of its institutional capital for a fund in a single close. Nearly all of the capital in BREP VIII – which is the largest closed-end property vehicle ever raised – comes from US and foreign investors that had previously participated in Blackstone’s real estate funds, including the New Mexico State Investment Council, Pennsylvania Public School Employees’ Retirement System, the New Jersey Division of Investment, Ohio Police & Fire Pension Fund and the Teachers’ Retirement System of the State of Illinois.

Blackstone also currently manages two regional opportunistic real estate funds, the $8.2 billion Blackstone Real Estate Partners Europe IV and the $5 billion Blackstone Real Estate Partners Asia. Both vehicles also broke fundraising records in their respective regions.

“We are grateful to our limited partners for their continued support, and remain committed to delivering favorable returns,” said Jon Gray, Blackstone’s global head of real estate, in a statement. The size of this fund gives us the ability to commit capital in scale with speed and certainty.”

Added Kathleen McCarthy, global chief operating officer of Blackstone’s real estate group: “This fundraise reflects the strong relationship we’ve had with our limited partners for more than two decades. The fund is already 20 percent committed and we continue to see compelling opportunities to deploy capital.”

The fund’s initial investments have included two blockbuster real estate deals: the purchase of GE Capital Real Estate’s US equity real estate assets, which was part of a larger $23 billion transaction that also involved Wells Fargo and two other Blackstone vehicles, and the agreement to acquire Strategic Hotels, a publicly traded real estate investment trust, for $3.9 billion in cash, in a deal with a total value of roughly $6 billion, including the assumption of debt.