Blackstone raises $588m for BREP V Europe – Exclusive

The Blackstone Group has corralled an extra $588 million in capital commitments for its fifth pan-European real estate fund, PERE can reveal.

The New York-based asset manager began marketing the vehicle, Blackstone Real Estate Partners (BREP) Europe V, in November last year with a €7 billion equity goal.

This latest fundraising update indicates that Blackstone is well on course to achieve its original target of €7 billion and could yet eclipse the fund’s predecessor. During a media call earlier in the year, Blackstone’s president Tony James (pictured) said he was confident BREP Europe V would be larger than its predecessor.

In March 2014, Blackstone closed BREP Europe IV after raising $8.8 billion in just six months, making it the largest opportunistic real estate fund to ever be raised in Europe. As of September 30, 2015, the fund was generating a 21 percent net IRR.

The firm is targeting a 15 percent net internal rate of return (IRR) and a 1.7x net multiple for BREP Europe V. In July, PERE reported that Blackstone had held a second close for the fund after raising $6.3 billion. This followed a first close in March when the firm had raised $4.97 billion. At the time it was understood that Blackstone was planning to close the vehicle at the end of 2016.

So far, BREP Europe V has received capital from a selection of US plans pensions plans including $300 million from the South Dakota Investment Council; $300 million from the Teacher Retirement System of Texas; $110 million from the San Francisco Employees Retirement System; and $100 million from the Florida State Board of Administration; $100 million from the California State Teachers’ Retirement System. Blackstone would not comment on any other investors in the fund.

The firm has said it will 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 Italy. Target sectors include industrial, office, residential and hotel. It is understood that none of the capital raised has been invested yet.

The asset manager will also reportedly be 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 that have been working on the fund were New York-based Park Hill Group; NH Investments from Seoul; Compass Private Equity XIV Fondo De Iversion from Montevideo, Uruguay; and Bank Julius Baer & Co. from Zurich.