Blackstone (NYSE: BX) announced Tuesday the final closing of Blackstone Real Estate Partners X, its latest global real estate fund (BREP X). The total capital commitments for BREP X are $30.4 billion, making it the largest real estate or private equity drawdown fund ever established.
The real estate giant’s three opportunistic strategies (Global, Asia, and Europe) currently have a total capital commitment of $50 billion. During the past 30 years, Blackstone has provided a 16% net IRR on over $100 billion of committed money in the BREP global funds.
“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. “This record-setting fundraise reflects the trust we have built with our limited partners, and we are grateful for their continued confidence as we enter a compelling investment environment.”
The firm said that its portfolio has transitioned away from assets that face headwinds, such as traditional office and malls, and is now 80% concentrated in logistics, rental housing, hotel, lab office, and data centers.
“We believe the current market is tailor-made for Blackstone Real Estate. We have made some of our best investments in periods characterized by the market volatility and dislocation we see today,” added Ken Caplan, Global Co-Head of Blackstone Real Estate.
The recent fortune, however, is a complete turnaround for the company’s recent mishaps. In the face of mounting office market headwinds, Blackstone recently liquidated two 13-story buildings in Southern California at a 36% loss–selling the properties it bought for $129 million for just $82 million.
Furthermore, it is noteworthy that the recent so-called largest real estate drawdown fund comes after months of Blackstone restricting withdrawals from its funds. In December, the firm announced that its $50-billion Blackstone Private Credit Fund had reached its pre-set withdrawal limit for the first time, just weeks after its $69-billion real estate fund also exceeded its limitations for the quarter.
In March, observers were surprised when Blackstone transferred a $308 million loan on the 1740 Broadway property.
While the action does not necessarily imply that Blackstone will lose the building, some experts believed that Blackstone’s likely exit from 1740 Broadway foreshadowed future withdrawals by other landlords from the pandemic-ravaged office market.
“We are working diligently to find a solution that is in the best interests of all parties involved, including our investors and lender,” a Blackstone representative said.
In 2014, Blackstone’s EQ office company paid $605 million for Vornado’s 26-story, 600,000-square-foot tower.
“That number was bananas — slightly more than $1,000 per square foot for a 1950-vintage building in the West 50s that needed a lot of work,” a source told the New York Post.
A Blackstone insider, however, described the 1740 Broadway matter as a “isolated situation” that had no bearing on the company’s opinion of the Manhattan office market. Indeed, the Blackstone-owned EQ Office recently completed the acquisition of a 49 percent share in One Manhattan West from Brookfield and the Qatar Investment Authority.
Information for this briefing was found via Sedar, New York Post, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
