Blackstone scores fourth-largest RE secondaries raise on record

Blackstone Strategic Partners has closed on the fourth largest real estate secondaries fund ever raised.

Strategic Partners Real Estate VIII and its related vehicles reached a $2.6 billion final close, according to a statement. The fund, launched in April last year, is around 37 percent larger than its predecessor, according to affiliate title Secondaries Investor data.

Ares Management’s Landmark Real Estate Partners VIII, which closed on $3.3 billion in 2018, remains the largest real estate fund raised to date, according to Secondaries Investor data. Partners Group retains the second spot having raised $2.9 billion for Partners Group Real Estate Secondary 2017, while Goldman Sachs Asset Management pulled in $2.8 billion for Vintage Real Estate Partners II in 2020.

There was a record $12.4 billion of real estate secondaries activity last year, up almost $2 billion from 2021’s previous banner year, according to data from Ares. Real estate secondaries transactions accounted for 2 percent of the overall $44 billion of secondaries volume in the first half of this year, according to a report from Greenhill.

The real estate market continues to face headwinds, which buyers are pricing in. Secondaries pricing for funds in the asset class saw a drop in the first six months of the year from 78 percent of net asset value for the full year 2022 to 71 percent of NAV, Greenhill’s report shows.

There are, however, opportunities to be had. Buyers favored exposures to data centers, healthcare, logistics, industrial real estate and, selectively, multifamily residential, the report said.

The record amount clocked by the real estate secondaries market in 2022 was a drop in the ocean, Paul Parker, a partner in the Ares Secondaries Group said at PERE’s Europe Summit this year. There is around $900 billion in NAV held by global institutional investors in private real estate funds across value-add and opportunistic strategies, Parker explained. About $220 billion of that is held in funds that are eight years old or older.

“You’ve got a lot of funds which are approaching that point where they’re going to have to get extensions; you’ve got managers wrestling with LPs that are getting somewhat fatigued, they want their money back, they thought that was the business plan… and so they’re looking for that right solution,” Parker added.

Strategic Partners has closed on over $27 billion across its final closes this year, having raised a record-breaking $22.2 billion for Strategic Partners IX as well as $2.7 billion for its inaugural GP-led focused fund, Strategic Partners GP Solutions.