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Blackstone closes record $10.9bn fund

The private equity firm said it had closed its ninth real estate fund and the largest fund ever raised as it promises to take advantage of the current market dislocation.

The Blackstone Group has closed its ninth real estate fund with capital commitments of $10.9 billion (€7 billion).

Blackstone Real Estate Partners VI (BREP VI) is the private equity firm’s ninth dedicated real estate vehicle and will focus on global opportunities. New-York based Blackstone is also targeting $3 billion for its third European real estate fund, according to media reports.

Jonathan Gray, senior managing director and co-head of Blackstone’s real estate group in New York, said in a statement the current credit crisis had created “attractive investment opportunities for this capital,” while Chad Pike, senior managing director and London-based co-head of Blackstone’s real estate group added: “With this fund we will be able to enter new markets and expand Blackstone’s global investment activities.”

Blackstone was recently voted North American Firm of the Year and awarded Global Deal of the Year in the 2007 Global PERE Awards, most notably for their $39 billion acquisition of Equity Office Properties in 2007. It also won the North American Exit of the Year as well as North American Fundraising of the Year categories.

Gray recently told real estate professionals at an industry conference that on the day Blackstone purchased Sam Zell’s portfolio, it immediately began disposing of the assets at record-breaking prices – moments before the credit markets cratered.

Blackstone – which went public in June last year – has more than 225 separate investments in North America and Europe with a total transaction value of approximately $132 billion since 1992.

Co-founder Stephen Schwarzman said during the company’s annual earnings report last month the current market dislocation would create “enormous future opportunities for firms like ours to buy assets cheaper as assets are re-pricing lower as investors flee. I predict this cycle to be no different.”

Blackstone president Tony James added at the time: “This is less than an ideal time to sell assets and fortunately we don’t have to. The flip-side is gains will be modest until market conditions have stabilized. “

Blackstone has raised a total of $25.7 billion in real estate funds since the firm’s inception in 1985.