China’s SAFE writes $500m ticket to Blackstone

The State Administration of Foreign Exchange (SAFE), which manages more than $3 trillion of China’s foreign exchange reserves, is helping Blackstone towards its $13 billion hard cap for its latest real estate opportunity fund.

The Blackstone Group is progressing with its march towards a $13 billion hard cap for its latest global opportunity fund with a reported $500 million commitment from China’s State Administration of Foreign Exchange (SAFE).

The Wall Street Journal reported that China’s foreign currency management arm has agreed to become an investor in Blackstone Real Estate Partners (BREP) VII, joining a long list of institutional investors including the Florida State Board of Administration, which recently committed $300 million to the vehicle. The commitment has edged Blackstone closer to its $13 billion hard cap.

SAFE manages more than $3 trillion of foreign exchange reserves, $1.2 trillion of which are in US treasuries. It is led by Yi Gang, deputy governor of the People’s Bank of China, who doubles as administrator of SAFE. According to a 2011 annual report, its foreign exchange reserves reached $3.181 trillion by the end of the year – a rise of $333.8 billion on 2010.

As PERE previously reported, Blackstone has raised at least $4 billion this year alone, according to people familiar with the situation. BREP VII, which focuses primarily on opportunistic real estate investments in the US and Canada, already has invested 10 percent of the capital it has raised. Fundraising began in April 2011, and it held a first close on $4 billion just four months later.

Other limited partners include the New Jersey Division of Investment, the Pennsylvania Public School Employees’ Retirement System, the Teachers’ Retirement System of the State of Illinois and the State of Wisconsin Investment Board. Additionally, the National Pension Service of Korea committed $300 million to BREP VII as part of a strategy to increase its exposure to opportunistic investments.