America’s biggest landlord is getting ready to build up its portfolio in Asia as Blackstone Group prepares to raise at least $5 billion for a new real estate fund focused on the region, according to a story in Reuters today citing individuals familiar with plans for the vehicle.
The new Pan-Asian fund, which is said to be on the way in the next 12-16 months, could boost the US alternative investment giant’s existing bets on warehouses and shopping malls, the sources said, with China, India, Southeast Asia and Australia being likely geographic targets.
Time for a New Asian Fund
Blackstone closed on its current $5 billion fund Blackstone Real Estate Partners (BREP) Asia, in December of 2014, and the capital from that opportunistic fund is now 70 percent deployed, according to sources cited in the Reuters report.
The investment firm used that fund, which at the time was the largest ever real estate fund devoted to the continent, to invest in a variety of assets including Australian offices and Japanese homes. BREP Asia earned an IRR of 17 percent through the third quarter of last year, according to the fund manager’s most recent financial report.
In China, the fund invested in the SCP retail platform, which Blackstone sold to Vanke in July for $1.9 billion. The US firm also has invested in a warehouse development joint venture with Vanke on the mainland.
In October 2015 the New York-based firm announced a final $15.8 billion close on its latest global real estate fund, Blackstone Real Estate Partners VIII.
As Blackstone raises cash for the new investment vehicle, there should be a number of potential targets in region for the new mega-fund. Just this month, Blackstone was mentioned as a potential competitor for China’s CIC in the race to acquire the $8.6 billion Singaporean warehouse developer GLP. The investment firm has also been linked to potential acquisitions in Korea and mainland China.
Could India Be a Growing Target for Blackstone?
Blackstone, which has been among the biggest western investors in China’s real estate market has lately begun turning more of its attention to India, with investments in projects in the subcontinent.
The investment house founded by billionaire Stephen Schwarzman is said to be planning to list two separate office REITs in India, and in early October, the firm purchased a mall in southern India’s Tamil Nadu state from a local developer for $67.5 million. Blackstone’s retail portfolio in India now boasts five malls totalling 315,870 square metres.