Blueprint: Blackstone’s latest European mega-fund; EQT Exeter’s APAC logistics fund launch; ACORE’s $1.4bn capital raise for real estate credit

Blackstone reaches mega-fund status – and eyes another fundraising record – with Blackstone Real Estate Partners Europe VII, raising $7.6 billion to date; EQT Exeter focuses its closed-end fundraising efforts on Asia-Pacific with its latest logistics offering; ACORE closes on the largest real estate debt fund so far this year at $1.4 billion; and more in today’s briefing, exclusively for our valued subscribers.

-

They said it

“This is an ambitious business within an ambitious firm. To get the business to the next step, I want a partner”

Bill Benjamin, global co-head of real estate at Ares Management, on the new leadership structure for the firm’s global property business. Read our interview with Benjamin and Julie Solomon here.

What’s new

Blackstone’s Gray: eyeing new fundraising record for European real estate (Source: Blackstone)

Blackstone nears new fundraising record

The fundraising momentum for Blackstone’s latest European opportunistic real estate fund continues. President and chief operating officer Jon Gray said during the New York-based mega-manager’s Q1 2024 earnings call last week that the firm has now reached $7.6 billion in commitments for Blackstone Real Estate Partners Europe VII, after previously announcing closes of $1 billion in Q4 2023 and $3.2 billion in Q3 2023. The firm has now amassed roughly 70 percent of the €10 billion target for the fund after just over a year in market. If Blackstone is successful in hitting or beating its target for BREP Europe VII, the firm would break its own record for the largest Europe-focused real estate fund ever raised. Current record holder BREP VI attracted a total of $10.7 billion of equity in 2020. Helping to drive BREP Europe VII fundraising is deployment, which Gray said has been picking up in Europe and is related in part to distress emerging in the region. One potential transaction is the proposed purchase of the Northumberland Energy Park Phase 3 land site in the UK to build a hyperscale data center campus via its QTS subsidiary.

EQT Exeter zeroes in on APAC

Another top 10 firm on the PERE 100 ranking, EQT Exeter, is currently focusing its closed-end fundraising efforts in one region: Asia-Pacific. The real estate arm of Swedish private equity firm EQT has kicked off fundraising for its first logistics fund targeting the region, according to its earnings call last Thursday. The vehicle will have a value-add strategy inherited from Bear Logi, a Tokyo-headquartered logistics investment firm acquired by EQT Exeter in 2022, as PERE previously reported. Meanwhile, Olof Svensson, head of shareholder and bondholder relations at EQT, noted in the call that the firm’s need to raise capital for its other real estate strategies will be “relatively limited” as it sits on $12 billion of dry powder. Among its most recent real estate fund closes was the $4.9 billion EQT Exeter Industrial Value Fund VI in June 2023. Meanwhile, the firm is in market with its non-traded real estate investment trust, EQT Exeter Real Estate Income Trust, and expects to begin raising capital for the vehicle shortly, according to Gustav Segerberg, head of business development. Read the full story here.

ACORE takes credit

Since rates began rising and banks began retrenching from real estate, the industry has been awash with talk of an imminent golden age for credit investing. Investors have correspondingly indicated their appetite for the strategy, with almost a quarter of those surveyed for PERE’s Investor Perspectives 2024 Study intending to increase their allocation to real estate debt in the coming year. But PERE’s preliminary fundraising data for 2023 suggests the appeal has yet to translate into aggregate capital commitments to any significant degree, with capital raised for debt funds down 42 percent year-on-year.

Fundraising success is increasingly evident in 2024, however. As revealed by PERE today, ACORE Capital has closed ACORE Credit Partners II on $1.4 billion in capital commitments. Per PERE data, this makes it the largest real estate debt fund and the joint fourth-largest real estate fund closed so far this year. Warren de Haan, chief executive officer of the San Francisco-based real estate debt manager, said investor interest in the fund came from all over the globe, including from “pockets of the world where we had been calling on for years, but all of a sudden they were very interested.” Read more in our coverage.

Trending topics

Helping, not replacing, humans

Artificial intelligence has raised many questions for private real estate professionals – including whether certain roles may be replaced in the future. One organization that is not concerned with this issue is Dutch pension investor APG Asset Management which has developed a “digital colleague” called Samuel – an AI tool with both search and decision-making capabilities – that was the subject of PERE’s October 2023 cover story. But while Samuel is essentially a suite of analytical tools, he is certainly not set to replace humans, Huib Vaessen, head of research and analytics real assets at the firm, said during a fireside chat at the PERE Network Europe Forum in London last week. For example, Samuel helps to generate robust debate among employees and to upskill and educate junior members of the team, he said. “Because we have standardized metrics for everything… People feel more invited to join these discussions,” Vaessen said.

Looking for a home in Europe

With its favorable demand tailwinds and a positive rental growth trajectory, residential is top of the real estate menu for many investors in Europe. On an investor panel at PERE Europe, global institutions said they wanted a higher weighting to residential in the region, but factors including low yields have thus far limited exposure to the sector. For example, Cheryl Maher, managing director for real estate investments at CPP Investments, said the investor is “very, very underweight” to residential, but due to the heavily regulated nature of the sector on the continent, investing outside of the non-regulated UK market is difficult for the Canadian pension. But for Frida Olsson, portfolio manager for alternative investments at Swedish public pension fund AP4, building a residential portfolio across Europe with a mix of different regulatory environments was an appealing proposition. Read more in our coverage here.

Data snapshot

Troubled asset sales on the rise

Distressed sales rose significantly in the first quarter of 2024, representing 3.9 percent of total US transaction volume, according to MSCI’s US Distress Tracker. Retail accounted for 8.9 percent of troubled asset sales during the quarter, while distressed deals in the apartment sector reached $1 billion over the same time period.

People

Those who Wandle are not lost

Angus Dodd, formerly chief executive at Quintain and co-head of European real estate at Lone Star, has launched a new London-based firm called Wandle Real Estate Partners, which will focus on real estate underwriting, investment management, development management and capital raising, according to the firm’s website. Partnering with Dodd in the new venture is Peter Sockett, previously development and construction director at London-based property company Precis Advisory, and Robert Widrig, who previously was investment director at senior living operator Guild Living and investment manager at Legal & General Capital. Wandle is sector agnostic but expects to work across living sectors, mixed-use and life sciences, according to React News.

Investor watch

In negative company

Following a dismal 2023 performance where real estate returned -12.4 percent for the year, the asset class once again was a negative performer for Norges Bank Investment Management in Q1 2024, according to its its latest quarterly update. But while real estate was the only loss-producing asset class for the world’s largest sovereign wealth fund in 2023, property was neither its only negative performer nor its worst performer in the first quarter. Apart from equity investments, which generated a 9.1 percent return, the returns for all of NBIM’s other asset classes were negative: -0.5 percent for unlisted real estate, -0.4 percent for fixed-income investments and -11.4 percent for unlisted renewable energy infrastructure.

This week’s investor meetings

Tuesday, April 23

Wednesday, April 24

Thursday, April 25

Friday, April 26

Today’s letter was prepared by Evelyn Lee, with Charlotte D’Souza, Miriam Hall and Christie Ou contributing.