Blackstone’s BREDS III raises more than $2bn

Several recent sizeable commitments from LPs have helped Blackstone’s real estate debt business to reach a second close on its third fund.

Blackstone has raised $2.05 billion in a second close for its Blackstone Real Estate Debt Strategies (BREDS) Fund III, according to documents filed with the Securities and Exchange Commission, reports PDI sister title Real Estate Capital.

Commitments into the debt fund so far include $100 million each from the Pennsylvania Public School Employees Retirement System, the Illinois Municipal Retirement Fund and the New Jersey State Investment Council (NJSIC).

The fund held a $1.3 billion first close in January and Blackstone is seeking a total of $4 billion. The previous fund, BREDS II, closed with $3.3 billion of commitments, but with $4 billion in total capital including two separate accounts.

The fund series invests in transitional assets and mezzanine loans in the US and Europe, though Blackstone is looking to expand its reach as it hires additional investment professionals in Hong Kong, Australia, Mexico and Canada. BREDS II is delivering about 10 percent in net IRR, while its predecessor posted 12.5 percent returns. 

The BREDS platform was launched in 2008 and is headed by global chairman Michael Nash, who was previously head of the US real estate principal investment team at Merrill Lynch. Jonathan Pollock, the former head of commercial real estate at Deutsche Bank, joined the platform last year and has since been named BREDS’ global head.      

Blackstone raised $26.5 billion for real estate during 2015. In addition to its debt funds, the firm has launched eight global real estate funds, known as BREP. The latest, BREP VIII, closed in October at $15.8 billion.