US private equity firm Blackstone Group has forged the largest-ever fund dedicated to property investments in Asia by holding a final close on Blackstone Real Estate Partners Asia II (BREP II), at around $7.1 billion of capital commitments.
Blackstone’s second opportunistic real estate vehicle in Asia hit its hard cap, according to a statement by the firm. Manhattan-based Blackstone is the world’s biggest commercial landlord, managing some $120 billion of global real estate assets out of a total $450 billion asset portfolio.
The new fund includes commitments from Blackstone and its affiliates, and was announced on the same day that Blackstone revealed it had closed a $2.3 billion Asian private equity fund.
New Fund Size Shatters Records
Blackstone has been among the most active investors in the Asia Pacific real estate scene, building a sprawling portfolio of apartments, offices, shopping malls and logistics properties across the region. The company has committed at least $5.7 billion to properties in Japan, $5.1 billion in India, and $4.5 billion in Australia, along with significant investments in China, Singapore, South Korea and other geographies. China, Japan, India, Australia and Southeast Asia are expected to be likely targets of the new strategy, according to reports.
“We are deeply grateful for the ongoing trust of our limited partners and continue to see exciting opportunities to deploy capital across the region,” commented Chris Heady, Blackstone’s head of real estate for Asia in a statement.
Blackstone closed on the first fund in the series, the $5 billion BREP Asia, in December 2014. The alternative investment giant was reported to be preparing the follow-up vehicle in January of last year, and was said to have reached a first close at more $5 billion in October.
The new fund is the largest Asian real estate vehicle in history, breaking the previous record held by its predecessor by a wide margin. “The size of this fund… gives us flexibility to pursue a range of opportunities and commit capital with speed and scale,” said Ken Caplan, global co-head of Blackstone Real Estate in the statement.
US Pension Investors Crave Asian Properties
A collection of state- and city-level pension investors in the US are understood to have backed the new fund, including the New York State Teachers Retirement System (investing $200 million), the Virginia Retirement System ($150 million), the San Francisco Employees’ Retirement System ($100 million), the Teachers’ Retirement System of the State of Illinois ($100 million), the Illinois Municipal Retirement Fund ($100 million), and the South Dakota Investment Council ($300 million), according to reports by industry publications PERE and IPE Real Estate.
PERE also reports that Ivanhoé Cambridge, the real estate arm of Canada’s second-largest pension fund manager Caisse de depot et placement du Quebec, committed $300 million to BREP Asia II.
Blackstone has also announced the final close of its first Asian private equity fund, Blackstone Capital Partners Asia, with roughly $2.3 billion of commitments. Related commitments from Blackstone’s global buyout fund bring the total to at least $3.8 billion of equity to invest in the region.