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Blackstone Real Estate Fund Raises $13.3B

Blackstone has closed its latest global real estate fund, Blackstone Real Estate Partners VII (BREP VII). The fund raised $13.3 billion over the past 13 months from more than 250 investors globally. The largest category of investor in the fund is U.S. public pension plans, funding the retirements of state and local employees. Approximately 35 percent of the fund’s capital has already been committed or invested in a wide variety of asset classes and geographies.

Commenting on the closing, Jonathan D. Gray, the global head of Blackstone’s real estate business, said, “We are extremely appreciative to our investors for their strong support of BREP VII. We believe the current environment provides a highly attractive opportunity to generate favorable returns for them. In addition, we think that the experience and global reach of our team uniquely positions us to capitalize on this opportunity.”

Blackstone’s real estate unit manages more than $50 billion in equity as of the end of the third quarter. BREP VII is the largest opportunistic real estate fund ever raised.

Blackstone remains extremely active in investing in all property types. Last week an affiliate of BREP VII along with Gramercy Capital Corp., Square Mile Capital Management LLC and SL Green Realty formed a joint venture for the recapitalization of a 31-property, 4.5-million-square-foot office portfolio in Southern California. Following the recapitalization, Blackstone is now the majority owner of the venture.

The portfolio comprises 59 buildings, located in various submarkets including Los Angeles, Orange County and San Diego. It includes assets such as the LA Corporate Center in Monterey Park, Skyview Center in Los Angeles, 350 South Beverly Drive in Beverly Hills and Carmel Valley Center in San Diego’s Del Mar Heights.

Blackstone has invested approximately $85 million into the portfolio to de-leverage and establish significant leasing and capital reserves. Equity Office Properties, a Blackstone affiliate, will assume full responsibility for the portfolio’s management and leasing, adding to its existing 11.2 million square foot portfolio in Southern California.

The firm has also invested heavily in the industrial and retail sectors in recent years. In June, it finalized its deal to buy the Central U.S. portfolio from Australia’s Dexus Properties Group for $770 million.

In January, it teamed up with DDR Corp. to purchase 46 shopping centers from the EPN Group. In 2011, Blackstone picked up Centro Properties Group’s 585-property U.S. shopping center portfolio in March and a 36-shopping center portfolio from Equity One Inc. in September.

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