Blackstone held a $8.4 billion first close for its diversified European real estate fund, Blackstone Real Estate Partners Europe VI, during the second quarter of 2019, according to the firm’s earnings call Thursday.
The New York-based private equity real estate giant has now raised most of the $10 billion target for its sixth fund in the opportunistic European fund series. The fund has received commitments from a diversified institutional investor base that included US public pension New York State Common Retirement Fund, insurance company Cathay Life Insurance and endowment University of Houston System, according to PERE data.
In an earnings call in April, Blackstone’s chief operating officer and president Jon Gray said the firm expected to raise the majority of BREP Europe VI’s capital in the coming weeks. Blackstone did not indicate when a final close would be held.
Gray also announced during its latest quarterly earnings call that the firm has closed on a total of $63 billion across its four flagship funds, which include its corporate private equity, global real estate, European real estate and private equity secondaries investment vehicles. Blackstone now estimates it will raise $67 billion across the four funds, revising the previous estimate of $65 billion made during the Q1 2019 earnings call.
The firm’s ninth global opportunistic real estate fund, Blackstone Real Estate Partners IX, has now entered its investment period, according to Gray. The fund has $19.5 billion to deploy during the period, which began in June and extends to December 2024, according to investment records released by the firm.
Gray also told investors to expect additional real estate fundraising activity from the Blackstone Real Estate Debt Strategies series and the life sciences platform, which expects to launch a fund in 2020. Blackstone acquired platform Clarus in October 2018 and started Blackstone Life Sciences. Blackstone Real Estate Debt Strategies IV launched in 2019 and has received a $100 million commitment from the Illinois Municipal Retirement Fund, according to PERE data.
Across all asset classes, fundraising from retail investors continued to be a focus.
“We expect 2019 to be a record year for retail fundraising at over $25 billion, sixty percent of which will come from bespoke products specifically designed for retail investors.” Gray said.
Blackstone’s real estate investment trust product, BREIT, raised $2 billion from retail investors during the second quarter, according to Gray. The REIT has grown to $8 billion over the last two years and contributed to the 24 percent year-on-year growth in Blackstone’s real estate core-plus strategy, which now stands at $39 billion. The firm previously set a goal to increase global core-plus assets under management to $60 billion over two to three years from the $32 billion it reported during its 2018 investor day event.
However, real estate realizations fell year-on-year by 23 percent. Blackstone realized $511 million during the second quarter of 2019 compared with $664 million during the same period in 2018. Net realizations across all asset classes fell approximately 11 percent to $527 million from $591 million during the same time frame. Chief financial officer Michael Chae attributed part of the year-on-year decline to “market turbulence late in 2018.”
Real estate assets under management grew 28 percent to $153 billion from the $119 billion reported in the second quarter of 2018, according to quarterly financial documents. Meanwhile, total AUM across all asset classes increased 24 percent year-on-year to $545 billion from the $439 billion recorded for the second quarter of 2018.