Blackstone’s size in Asia the difference for Texas PSF

The US endowment which has invested $75m in Blackstone’s latest Asia fund said the firm is able to seize on opportunities others cannot access due to its scale in the region.

Texas Permanent School Fund (PSF) has approved a $75 million commitment to Blackstone Real Estate Partners (BREP) Asia II, citing its size as a positive differentiator.

At a committee meeting of the endowment, Courtland Partners’ senior vice president Tom Hester – who advised Texas PSF on the investment – and Nick Tramontana, senior real estate portfolio manager at the Texan investor, said the New York-based investment giant’s $6 billion target for the fund puts it in a league of its own.

“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.

Other notable fundraises in the region this year include Gaw Capital Partners latest opportunistic vehicle – Gateway Real Estate Fund V – which hit a final close on $1.3 billion in March, and PAG Real Estate which raised $1.9 billion for its seventh opportunistic fund. Yet, Blackstone’s debut opportunistic fund in the region remains the region’s largest after it hit its hard-cap at $5.08 billion back in December 2014.

Tramontana cited the Blackstone’s 2014 deal in which it acquired 10,000 apartment units in 200 properties in Japan’s largest cities including Tokyo, Osaka and Nagoya for $1.6 billion from the property unit of General Electric as an example of the positives of Blackstone’s size.

“We believe they have a competitive advantage compared to others with capital in the region,” Tramontana added.

The committee meeting heard that Blackstone will provide a $50 million GP commitment to BREP Asia II, and that the fund will have a six-year investment period.

Hester said the long investment period was a positive in the event that geopolitical events, such as North Korea’s nuclear expansion, deteriorated.

“If this did deteriorate any further…the world does come back in situations like this, and because this fund in particular has such a long investment period to deploy the capital they have years to wait the situation out if that was required,” Hester said.

Texas PSF has $30 billion in assets under management and is currently overweighted to real estate. Its real estate allocation currently stands at 10 percent against a 7 percent target, according to PERE data.