Blackstone is poised to close its latest pan-Asia opportunistic real estate fund at around $7 billion, making it the biggest closed-ended real estate fund ever raised in the region to date by an overwhelming margin.
In less than one year since the fund’s launch, the New York-based firm will be closing Blackstone Real Estate Partners Asia II at its hard-cap target, sources familiar with the fundraising have confirmed to PERE.
Last October, the firm corralled $5.51 billion – nearly the entire fundraising target for BREP Asia II – within the first closing, PERE previously reported.
The target size of the fund, which Blackstone is now set to exceed, has put it “in a league of its own”, Courtland Partners’ senior vice president Tom Hester and Nick Tramontana, senior real estate portfolio manager at the Texas Permanent School Fund (PSF) had said a PSF’s committee meeting last September. The US endowment approved a $75 million commitment to the vehicle. It cited BREP Asia II’s size as a positive differentiator.
“They have significantly more capital through this fund than their next competitor, and so they are able to seize on opportunities that only really sovereign wealth funds for the most part can compete with,” said Tramontana.
Some of the other US investors that have invested in BREP Asia II include the South Dakota Investment Council, which committed $300 million; the Illinois Municipal Retirement Fund and the Teachers’ Retirement System of the State of Illinois, which earmarked $100 million, according to PERE data. Ivanhoé Cambridge, the real estate investment business of Canadian pension manager, Caisse de dépôt et placement du Québec, also contributed $300 million, PERE understands.
Ivanhoé Cambridge is one of a number of repeat investors for Blackstone’s Asia opportunity fund series having previously committed to BREP Asia I.
BREP Asia II will have a considerably longer investment period than most traditional commingled blind-pool opportunistic vehicles. According to an earlier PERE report citing details of PSF’s committee meeting, BREP Asia II will have a six-year investment period. However, this is understood to be in line with Blackstone’s wider BREP series globally.
With the latest fundraise, the New York asset manager has retained the record of the largest Asia private equity real estate vehicle, which until now was held by its $5.08 billion predecessor vehicle BREP Asia that closed in December 2014. That fund is understood to be projecting returns in excess of 20 percent IRR, the typically accepted standard for opportunity funds.