Blackstone has raised $30.4 billion for its Blackstone Real Estate Partners X fund, making it the largest closed-end investment vehicle ever in the real estate or private equity sectors, the company announced on Tuesday.
The final close for the tenth rendition of its global real estate strategy (BREP X) sees Blackstone bringing in around 50 percent more than it raised for its Blackstone Real Estate Partners IX, which closed on $20.5 billion in 2019, with the company attributing the achievement to its ability to provide attractive investment returns for its customers, with the BREP series having delivered internal rates of return of 16 percent over the past 30 years.
“In every market cycle we have delivered for our customers by using our insights and advantages to concentrate their capital in investments poised to deliver strong returns,” said Kathleen McCarthy, global co-head of Blackstone Real Estate, who added that the fund raising reflects the trust that the firm has built with the limited partners who back each vehicle.
For this latest variation on its three-decade old strategy, Blackstone, which stands as the largest owner of commercial real estate worldwide, says that it is shifting its focus to new asset classes to reflect market shifts already in place when the firm began formally raising funds less than one year ago.
Offices are Out
In announcing the final close of BREP X, Blackstone says that its real estate division has moved away from asset classes like traditional offices and malls as they face increasing challenges from shifts in the economy.
Instead the company, which has $326 billion of investor capital under management globally, is focusing on higher yielding sectors with around 80 percent of its portfolio now concentrated in assets such as logistics, rental housing, hospitality, lab offices and data centres.
“We believe the current market is tailor-made for Blackstone Real Estate,” said Ken Caplan, global co-head of Blackstone Real Estate. “We have made some of our best investments in periods characterized by the market volatility and dislocation we see today. Furthermore, sector selection has never been more critical as we witness the bifurcation of performance within real estate, which is favoring our high-conviction themes.”
In a presentation to the Commonwealth of Pennsylvania State Employees’ Retirement System in May of last year, Blackstone said that its BREP IX fund had achieved a net IRR of 47 percent with nearly $14.6 billion in capital invested.
The company said that 91 percent of that vehicle had been invested in logistics, residential, hospitality and life sciences.
In addition to its BREP X strategy, by the end of September 2022 Blackstone had raised nearly $8.1 billion for its Blackstone Real Estate Partners Asia III, which is targetting $9 billion in total equity.
Across its three opportunistic strategies, which also includes Blackstone Real Estate Partners Europe, Blackstone says it now has $50 billion in fresh capital commitments.
One-Year Fund Raise
After filing its Form D to register BREP X with America’s Securities and Exchange Commission on 4 May last year, Blackstone raised $24.1 billion for the vehicle by mid-July, according to an official update to the regulator. The company plans to commit $300 million of its own capital on top of the cash raised from its limited partners, according to a Wall Street Journal report citing sources familiar with the capital raise.
While Blackstone did not name its limited partners, public filings show that among the major investors in BREP X is the California State Teachers Retirement System (CalSTRS), with the second-largest pension manager in the US committing $500 million to the vehicle soon after it was established.
Kicking in another $300 million is the Teacher Retirement System of Texas, which also signed onto the Blackstone strategy by the end of June last year. Making $75 million contributions are both the Teachers’ Retirement System of Louisiana and the Arkansas Teacher Retirement System.
The Oklahoma Teachers’ Retirement System pledged $100 million to the fund, according to a disclosure.