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Blackstone set for Euro fund close in January

The New York-based firm is planning a final close of its latest European real estate vehicle in the New Year, according to a director of the firm speaking at a conference in London today.

The Blackstone Group expects to close its latest European real estate fund early next year, according to a managing director at the firm.

Douglas Kirkman said that Blackstone expected to hold a final close of the vehicle in January during a panel discussion at the IMN European Real Estate Opportunity & Private Fund Investing Forum in London today. A spokesman for Blackstone declined to comment.

In the same discussion on investors’ future plans, Morgan Stanley’s chief operating officer for the bank’s real estate fund of funds platform, Paul Vosper, said the fund was likely to shift focus to Western markets during the credit crunch before pushing further east and south.

Blackstone is currently raising its third real estate fund focused on the region, Blackstone Real Estate Partners Europe III. During an earnings call In August, Blackstone president and chief operating officer, Tony James, said the firm had already raised €3 billion for the fund, which is the firm’s 10th real estate fund overall and follows on the back of Blackstone Real Estate Partners VI, which closed in April on $10.9 billion – the largest amount ever raised for a dedicated real estate vehicle.

At the time James said Blackstone was focusing on distressed real estate assets and distressed sellers of real estate. According to Pennsylvania Public School Employees’ Retirement System, BREP Europe III has a hard cap of €3.5 billion and will make typical investments of between $15 million and $150 million in UK and Continental Europe properties.

BREP Europe III's predecessor fund closed on $1.8 billion focusing on France, the UK and Germany. It made a big bet on the hospitality sector, with some 60 percent of the capital going into hotel investments. Just four percent went into debt. However, according to the Pennsylvannia document, Blackstone expects significant opportunities to arise in distressed debt given current market credit dislocations.

The document added that previous Blackstone funds are on target to deliver 2x equity investment to investors.