The Blackstone Group has completed the first round of fundraising for Blackstone Property Partners (BPP), its first dedicated core-plus real estate vehicle. The New York-based investment manager collected $1.7 billion during the initial close in mid-November, approximately four months after officially launching the fund in July, according to a person familiar with the matter. Blackstone officials declined to comment.
Limited partners in the first closing included the Texas Permanent School Fund, which committed up to $100 million in September; Arizona State Retirement System, which also pledged $100 million in September; Oklahoma Police Pension and Retirement, which agreed to invest $30 million in September; and Virginia Retirement System, which earmarked $100 million to the vehicle, according to documents from those pension plans.
In conjunction with the first closing, Blackstone has identified the first two deals for BPP, which is focused on acquiring stable commercial real estate properties in the US and Canada. The firm has agreed to buy 1740 Broadway, a 601,000-square-foot office building in Manhattan, from Vornado Realty Trust for $605 million. The transaction, which Vornado announced last month, is expected to close by year’s end.
Blackstone also plans to buy an office portfolio in Manhattan and is expected to complete that acquisition in January. PERE understands that the two transactions together will account for a total of $1.3 billion of the fund’s $1.7 billion of equity.
With the first closing now completed, BPP is expected to have quarterly admission dates for new capital commitments going forward, similar to other open-ended core funds. The next closing is anticipated to occur on March 15, according to the source. Because Blackstone already has deployed much of the capital that it has raised for BPP, it also is offering limited partners the opportunity to co-invest alongside the fund.
The commingled fund is part of a larger global core-plus strategy for Blackstone, which officially launched the platform at the start of the year and named senior managing director AJ Agarwal as head of the new business. The firm also has raised an additional $1 billion in equity for separate accounts, which have included both deal-specific vehicles as well as Europe-, Asia- and globally-focused accounts. Blackstone is expected to amass a total of $4 billion in capital for the core-plus strategy by early next year.
Blackstone struck its first core-plus real estate deal last December, paying $718 million for a 29 percent stake in shopping center owner Edens. Through a separate account called Blackstone Edens Investment Partners, it raised the capital for the transaction from investors that included the State of Wisconsin Investment Board and the North Carolina Department of State Treasurer. Additionally, it has made a handful of other core-plus purchases this year, including the July acquisition of 125 Old Broad Street in London from Brookfield Property Partners for £320 million.