Blueprint: Blackstone’s first sustainability-linked loan in Asia-Pacific, PGIM Real Estate’s innovation initiative, Invesco and Longpoint fund closes

Blackstone hits a borrowing milestone

Sustainability-linked financing – referring to a loan whose interest rate is linked to the borrower meeting an agreed set of sustainability targets – has been proliferating across the globe as more investors prioritize ESG. In the latest high-profile example of this type of financing, Blackstone, the world’s largest real estate manager, has secured the largest sustainability-linked loan in Australia’s industrial sector to date, at A$1.45 billion ($930 million; €882 million). The loan was originated by a four-bank consortium comprising Morgan Stanley, National Australia Bank, United Overseas Bank and MUFG Bank. The loan is a refinancing of some of Blackstone’s existing industrial assets in Australia, where the firm has amassed a portfolio of more than 140 properties in the sector. The syndicated financing also represents Blackstone’s first sustainability-linked loan in Asia-Pacific, according to an announcement. “We’re thrilled to secure our first third-party verified sustainability-linked loan in the region, which we believe will improve the performance of our assets, the overall experience for our occupiers, and drive long-term value for our investors,” said Eric Duchon, Blackstone Real Estate’s global head of ESG.

PGIM Real Estate catches the innovation wave

A month after announcing new senior leadership, PGIM Real Estate has marked another milestone in its business. Last week, the real estate asset management arm of New Jersey-based insurer Prudential Financial launched RealAssetX, an innovation lab to research, develop and invest in new technologies that can be eventually adopted by owners, operators and managers of real assets. RealAssetX will consist of three key components: data intelligence, focused on building unique datasets and advanced analytics; research & development, which involves collaborating with universities in the UK, US and Asia-Pacific; and investments, which will be executed through partnerships with venture capital firms. Through RealAssetX, PGIM Real Estate intends to develop differentiated datasets, which are essential to a successful adoption of artificial intelligence in real estate, as we noted in last week’s Friday Letter.

What’s in a fundraising number?

Industrial may be one of the most-favored strategies among sector-specific funds, but in a challenging fundraising environment, few vehicles have reached a final close in 2023 to date. One of the few is Boston-based manager Longpoint Realty Partners’s just-closed Longpoint Fund III, which at $940 million is the second-largest US industrial fund to close this year after EQT Exeter’s $4.9 billion EQT Exeter Industrial Value Fund VI, according to PERE data. Managing and founding partner Dwight Angelini acknowledges “940 is kind of a weird number” for a final close amount. He explains some of Longpoint’s investors were uncertain about how much capital they could commit to Fund III, because of changing conditions that included the denominator effect, portfolio write-downs and fewer than expected distributions from managers. That uncertainty led a couple of investors to commit to the fund at the last minute. The firm had originally planned to close the fund on $850 million, but then accommodated an additional $90 million from last-minute investors. For more on the fundraise, read the full story here.

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