Blackstone eyes first Asia real estate fund

The New York based alternative asset and advisory firm told a conference hosted by investment bank Goldman Sachs its first Asia focused real estate fund is in the offing.

The Blackstone Group is planning to raise its first Asia-focused opportunity fund.

The New York firm’s president and chief operating officer Hamilton “Tony” James reportedly told a conference organised by the investment bank Goldman Sachs: “Right now we are offering an Asian real estate fund. There is not another Pan-Asia real estate fund in existence.”

News service Reuters said James did not offer details about the fund although PERE understands marketing is likely to start in earnest next year.

Blackstone declined to comment when approached about the fundraising.

Should the fund operate in a similar way to Blackstone’s European opportunistic vehicles, the last of which, Blackstone Real Estate Partners Europe III, closed on $4.79 billion in 2009, it would invest in deals alongside Blackstone’s better known Blackstone Real Estate Partners global opportunity funds.

Blackstone has $54 billion of assets under management but has invested approximately just $1.5 billion of equity in Asia since making its first Asian hire in 2006. The advent of the global financial crisis kept the firm on the market sidelines until two years ago when the majority of its investments have been made.

In India, for example, Blackstone invested very little before last year. Today it has invested approximately $480 million in the country.

While an Asia real estate fund would be a company first for Blackstone, the firm has experience managing a pan-regional fund in the region after it assumed responsibility for Bank of America Merrill Lynch’s (BoAML) ill-fated Asian Real Estate Opportunity Fund, a vehicle which attracted $2.65 billion of equity in late 2008 months before Bank of America merged with Merrill Lynch. The fund changed hands after BoAML agreed a settlement of about $650 million with the fund’s investors following accusations of not behaving in a fiduciary manner in relation to an foreign exchange trading and valuations.

Reuters reported previously that Stephen Schwarzman, Blackstone’s co-founder, had previously said he expected the firm to be among the largest buyers of commercial real estate in India and Australia. Sources familiar with Blackstone suggest the firm is also plotting an increased presence in the Japan and China markets.

Look out for the February issue of PERE for an exclusive interview with Blackstone’s Asia real estate heads in which we explore its efforts to date and its strategy going forward in the region.