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Illinois Municipal commits $200m to Blackstone

The state’s municipal retirement plan approved two commitments of $100 million each to Blackstone’s first Asia-focused fund and its latest real estate debt fund.


The Illinois Municipal Retirement Fund board of trustees has approved up to $200 million in commitments to non-core real estate investments managed by The Blackstone Group.

A spokesman for the $30.05 billion retirement plan revealed that, on Friday, Illinois Municipal approved a $100 million commitment to Blackstone Real Estate Partners (BREP) Asia and $100 million to Blackstone Real Estate Debt Strategies (BREDS) II. The pension plan is an existing investor in its firm’s latest global opportunity fund, BREP VII.

The New York-based private equity and real estate giant is anticipating an initial closing of more than $1 billion for BREP Asia, its first Asia-focused fund, this quarter. BREP Asia, which is targeting a total of $3.5 billion in commitments, has a primary focus on mainland China, India, Australia and Japan.

In March, the New Jersey Division of Investment agreed to commit $500 million to BREP Asia. The real estate fund commitment, the largest in that pension plan’s history, will account for approximately 14 percent of the fund’s ultimate target.

Meanwhile, BREDS II, Blackstone’s latest value-added real estate debt fund, seeks to generate 13 percent returns primarily by purchasing and originating performing loans. According to documents from the Pennsylvania Public School Employees’ Retirement System, which committed $100 million to BREDS II in January, the vehicle will pursue “equity like returns while taking debt-like risk” and yield nearly half of its total return through current income. Potential investments may include junior mortgage debt, mezzanine debt, whole loans, participations, commercial mortgage-backed securities and preferred equity. 

BREDS II held a first close of $2 billion in April. In 2011, Blackstone raised $2 billion for a predecessor vehicle now known as BREDS I, which has generated a 13.3 percent net internal rate of return to date. 

Illinois Municipal’s asset allocation calls for 6 percent of its portfolio to be invested in real estate. As of April 30, just 2.8 percent of the portfolio was allocated to real estate, therefore the pension plan will continue to strategically balance and diversify its portfolio to meet its allocation target.