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Monday, 04 February 2019

Blackstone Reaches $17.3Bln of Commitments for Latest Opportunity Fund

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Commercial Real Estate Direct Staff Report

Blackstone Group has completed raising $17.3 billion of a targeted $20 billion on behalf of its latest opportunistic real estate fund, Blackstone Real Estate Partners IX.

The New York investment manager has raised that capital from institutional investors and expects to raise the remaining $2.8 billion or so from retail investors, from which it raises capital through its private-wealth solutions group. While it has set a $20 billion cap on the fund, indications are that it will be oversubscribed.

"Demand in the market exceeds the capacity limitations we've placed" on the funds, explained Jonathan Gray, the company's president and chief operating officer, who spoke on a conference call with analysts last week.

Blackstone had $472 billion of assets under management under various strategies, as of the end of last year. That was up 9 percent from the previous year. Real estate represents $136.2 billion of that and was up more than 18 percent, due in large part to the capital raised on behalf of Partners IX.

Besides its Real Estate Partners series of opportunistic funds, it also operates an open-end core-plus strategy, Blackstone Property Partners, which has $35.2 billion under management, up 30 percent from last year. The strategy was launched only five years ago.

The company also manages a non-traded REIT, Blackstone Real Estate Income Trust, which raised $773 million in last year's third quarter. Since its inception in 2016, it consistently has raised more capital than any other non-traded REIT.

The company's opportunistic funds increased in value by 9.8 percent last year, while its core-plus operation appreciated in value by 10.7 percent. During the fourth quarter, the opportunity funds' value increased by 0.6 percent. Gray contrasted that with publicly traded REITs, which had declined by 7 percent in value during the fourth quarter.

That, he said, might pose an opportunity for cash-rich investors, like Blackstone, which has $112.9 billion of dry powder, or capital ready to be invested, with $40.6 billion of that earmarked for real estate.

"Reduced valuations in the public markets could lead to more large privatizations," he said.

Last year, the company bought Gramercy Property Trust, an owner of net leased industrial properties, in a deal valued at $7.6 billion. That deal was done through the Blackstone VIII fund, which had raised $16.1 billion nearly three years ago. It also bought an apartment REIT in Spain.

Among the investors to the Real Estate Partners IX are the Minnesota State Board of Investment, which committed $300 million; New Mexico Investment Council, which committed $100 million; the Teachers' Retirement System of Louisiana, which committed $50 million; Los Angeles Water & Power Employees' Retirement Plan, and three major Korean pension funds: the National Pension Service, Korea Investment Corp. and Korean Teachers' Credit Union. Each had invested in previous Blackstone funds.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.



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Additional Info

  • Syndicate to Realpoint: No
  • Subject: Institutional Investment (INS), Opportunity Funds (OPPY)
  • Company: Blackstone Real Estate Advisors
  • Private: No
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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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