Blackstone to hold follow-up close for Fund VII

Following its $4 billion first close in August, the New York-based alternative asset manager is said to be holding an additional close of up to $700 million this week on its latest global real estate fund.

Private equity giant The Blackstone Group is said to have raised an additional $500 million to $700 million in its latest closing for Blackstone Real Estate Partners (BREP) VII, PERE has learned. Sources familiar with the matter said the closing, which is expected to occur later this week, is the most recent in a series of smaller closings that have occurred since the New York-based alternative asset manager held its first close of $4 billion in August, just four months after launching the mega-fund.

While it is unclear how much Blackstone, which declined to comment, has raised with BREP VII since August, the expectation is that the fund will top $8 billion by mid-February, sources said. In an earnings call last month, Blackstone chairman Stephen Schwarzman said BREP VII is likely to equal or exceed Blackstone’s previous real estate opportunity fund, BREP VI, which closed on $10.9 billion in February 2007.

Investors in the latest round of closings could not be determined by press time. However, at the time of its first closing, investors in BREP VII included the New Jersey Division of Investment, which agreed to commit $300 million in July, and the Pennsylvania Public School Employees’ Retirement System, which approved a commitment of up to $300 million to the fund in June.

BREP VII has not yet funded a transaction, but Blackstone is set to make two acquisitions on behalf of the fund. In September, Blackstone agreed to buy 36 shopping centres, located primarily in the Southeastern US, for $473.1 million from Equity One, and last month it signed a deal  to acquire a 10.1 million-square-foot office portfolio from Duke Realty for $1.08 billion. Both transactions are expected to close in December.