PERE 30: Blackstone leaves the competition behind

Thanks largely to its current fundraising effort, the New York private equity and real estate giant has increased the distance between itself and its closest competitors. Meanwhile, most of the remaining legacy firms have fallen out of the ranking, opening the door for several new players and returning firms.

 The Blackstone Grouphas cemented its place as far and away the biggest capital-raiser in this year’s PERE 30 ranking, thanks largely to the $10 billion and counting raised over the past year for its latest fund. 

With $29.1 billion in capital raised since January 2007, the New York-based private equity and real estate giant has puts a vast amount of space between it and the next closest firms in the PERE 30 ranking. Indeed, Blackstone’s five-year equity haul exceeds that of the second place and third place firms – Morgan Stanley Real Estate Investing, with $12.67 billion, and Goldman Sachs Real Estate Principal Investment Area, with $12.12 billion – combined.

Blackstone officially launched Blackstone Real Estate Partners (BREP) VII in April 2011 and held a first close on $4 billion in equity just four months later, attracting capital from investors such as the New Jersey Division of Investment and the Pennsylvania Public School Employees’ Retirement System. Other LPs, including the Teachers’ Retirement System of the State of Illinois and the State of Wisconsin Investment Board, came onboard later, boosting the amount of capital to $6 billion by year’s end. By the time the fund holds its final close, BREP VII could be the largest closed-ended real estate fund ever, eclipsing the firm’s previous global effort, which closed on $10.9 billion in 2008. Indeed, that would be the case should Blackstone reach its hard cap of $13 billion.

Meanwhile, a number of legacy platforms that were hurt by the global financial crisis and subsequently acquired or wound down – including Lehman Brothers, Citi Property Investors and KK daVinci Advisors –are no longer present, thanks to the elimination of large 2006 vintage funds that now fall outside the ranking’s five-year fundraising window. The only remnant of such firms still in the PERE 30 ranking is Bank of America Merrill Lynch, which is hanging in on the strength of its ill-fated $2.65 billion Asian Real Estate Opportunities Fund that closed in 2008.

The exit of these legacy platforms from the PERE 30 has opened the door for several new players to emerge in this year’s ranking and a few other firms to make a reappearance following an absence of a couple of years. The first-time members of the PERE 30 are Brookfield Asset Management, CIM Group and Northwood Investors, while returning firms include AEW Global, JER Partners and DRA Advisors.

Despite the tough environment for fundraising, particularly in the second half of the year, some established firms did find success with new funds over the past five quarters. Two of the biggest fundraisers over the past five quarters also happen to be the two biggest climbers in the PERE 30. Angelo Gordon & Co closed its latest opportunity fund, AG Realty Fund VIII, on $1.265 billion, which propelled the firm some 11 spots in the ranking. Starwood Capital Group, which is in the middle of marketing Starwood Global Opportunity Fund IX, moved up nine spots on the strength of $1.4 billion in equity raised so far. Lone Star Funds and The Carlyle Group also experienced incremental bumps in the ranking thanks to successful final closings last year.

Looking at the PERE 30 as a whole, some $178.396 billion in total equity was raised by the top 30 firms during the current five-year fundraising window. That was a relatively small decrease from last year, when $183.77 billion was raised, but it is a notable decline from 2010, when $207.76 billion was raised. The cutoff for capital raised in order to make this year’s ranking declined from $2.48 billion last year to $2.21 billion this year. For the complete ranking and overviews on the fundraising activities of the PERE 30, click here.