The New Jersey Division of Investment has resolved to invest in The Blackstone Group's latest real estate fund. As revealed at the New Jersey State Investment Council's 21 July meeting, the pension plan will commit $300 million to Blackstone Real Estate Partners (BREP) VII.
BREP VII is a global opportunistic real estate fund that currently is targeting $10 billion in capital commitments. The vehicle will focus primarily on US and Canadian markets across a range of real estate and real estate-related investments. Its overall strategy is to acquire high-quality assets by targeting large, complicated situations where competition is limited.
The rationale for the size and timing of New Jersey’s commitment was addressed in documents put together by the Investment Council. Those documents stated that investors that commit “$300 million or more to the fund will receive a management fee reduction of 25 bps to 1.25 percent.” In addition, the document pointed out that “investors participating in the first close of the fund will receive a management fee waiver for four months,” equating to a savings of roughly “$1.25 million based on a $300 million investment.”
Furthermore, the pension plan’s due diligence team – made up of the state's Division of Investment and its real estate consultant, The Townsend Group – determined that Blackstone is in the process of hiring Park Hill Real Estate Group to serve as placement agent for the fund. While not a major determining factor, it does provide New Jersey with some assurance that Blackstone will meet its stated fundraising goals.
News of the New Jersey commitment follows last month's announcement that the Pennsylvania Public School Employees’ Retirement System had approved a commitment of up to $300 million to BREP VII.