Private equity titan Blackstone reported what it dubbed “the best results in our 36 years of history”, with distributable earnings more than doubling in the third quarter to $1.6 billion, as the Manhattan-based firm also shared some fresh milestones regarding its fundraising in Asia and around the world.
In an earnings call late last week, Blackstone said its corporate private equity funds and opportunistic real estate funds appreciated by 49 percent and 36 percent respectively over the last 12 months, with the group’s 16 perpetual vehicles generating nearly half of total inflows.
“This remarkable performance is the result of the way we position investor capital towards areas of the economy with superior secular growth, coupled with our world-class portfolio management capabilities,” said Steve Schwarzman, Blackstone’s chairman, CEO and co-founder. “Real estate, for example, nearly 70 percent of our portfolio, is concentrated on the fast-growing logistics, rental housing and life sciences office sectors, compared to less than 10 percent a decade ago.”
For Blackstone’s third Asia property fund, Real Estate Partners Asia III, president and chief operating officer Jon Gray said the firm has closed on $4 billion and expects to raise $9 billion, with that result being announced just days before reports emerged that cross-town rival Warburg Pincus had also raised record amounts of cash for its first-ever Asia-focused real estate fund.
Asia Industrial Focus
Blackstone has already raised 30 percent more capital for its Real Estate Partners Asia III than it did for version two of the strategy, which had bagged $7.1 billion in capital commitments at its final closing in 2018.
This year Blackstone has deployed much of its cash cache into industrial assets in Asia, particularly in India, where it has been a pioneer in the country’s rollout of REITs.
In September, the firm completed the $40 million purchase of a North Delhi warehouse from local developer TARC, with that deal following just a few months after Blackstone had bought out Warburg Pincus’s Embassy Industrial Parks joint venture in a deal reportedly valued at $700 million.
The fund manager has also stuck with industrial in Hong Kong, buying a workshop in the city’s Fanling area for $36 million in July to form part of an emerging data centre hub. That New Territories pickup came after Blackstone had purchased a Kowloon industrial tower for $65 million in April.
Just today, reports emerged in the Australian media that Blackstone is in talks to acquire close to a half stake in Australia’s Dexus Logistics Trust to expand its industrial holdings Down Under.
The earnings call made no mention of Blackstone’s failed $3 billion buyout of developer Soho China, cancelled last month after running into trouble with mainland regulators.
Blackstone said its overall cash inflows totalled $47 billion in the third quarter and $148 billion over the last 12 months, nearly half of which went into its perpetual vehicles.
“Our real estate core-plus business remains the largest driver of perpetual capital, as well as fee-related earnings at the firm,” Gray said. “In less than eight years, AUM has grown to nearly $100 billion across six vehicles, roughly the size of our opportunistic real estate business.”
The third quarter was Blackstone’s biggest ever for deployment, with $37 billion invested and an additional $30 billion committed to pending deals. The largest commitments were to rental housing, transport infrastructure, logistics and sustainability-linked businesses.
Funds Flow to Asia
While Blackstone seems certain to keep its crown as king of the fund managers, fellow New York player Warburg Pincus plans to make a fight of it in the region with its first Asian real estate fund.
As first reported by PERE, and confirmed by an industry insider contacted by Mingtiandi, Warburg Pincus is nearing a final close on the fund at the hard cap of $3 billion, or double its original $1.5 billion target, after less than 12 months of fundraising.
“This is a major milestone for Warburg Pincus,” the insider said. “Their real estate team has previously focused on platform deals such as ESR and ARA. The significance here is that they have officially moved into hard assets.”
The fund will focus on “new economy” sectors like data centres, multi-family residential and logistics and has received over 50 percent of its commitments from institutional investors in Asia, PERE said, citing four sources.
Pawara Laothamatas provided reporting for this story.