Fundraising

Blackstone closes record $10.9bn real estate fund

The private equity firm’s ninth real estate fund – the largest ever private equity real estate fund raised – will take advantage of current market dislocation.

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

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”.

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 by the readers of sister magazine Private Equity Real Estate in the 2007 Global PERE Awards, most notably for their $39 billion acquisition of Equity Office Properties in 2007. The firm 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.

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 – 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.

The firm is targeting $3 billion for its third European real estate fund, according to media reports. Blackstone has raised a total of $25.7 billion in real estate funds since the firm’s inception in 1985.