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Blackstone breaks its own fundraising record

Blackstone has raised a record $8 billion for its newest real estate debt fund.

Blackstone Real Estate Debt Strategies IV (BREDS IV) is the largest real estate credit fund ever raised.

“This fundraise reflects the significant demand for capital in the real estate debt markets and the continued confidence in our business from our limited partners,” said Jonathan Pollack, Global Head of the Blackstone Real Estate Debt Strategies.

JONATHAN POLLACK

“The breadth and scale of our global real estate platform allow us to see a wide range of opportunities while bringing Blackstone’s expertise to every investment decision. We look forward to providing creative and comprehensive financing solutions to our borrowers.”

Blackstone Real Estate Debt Strategies has $26 billion of assets under management, and Blackstone Real Estate has a total of $167 billion of investor capital under management as of the second quarter of 2020.

BREDS IV will have flexible capital to lend around the globe, and will deploy a variety of investment strategies, including lending, liquid securities, structured solutions to financial institutions, and corporate credit.

Simpson Thacher represented Blackstone in the establishment of BREDS IV.  The team included partners Peter Gilman and Michael Wolitzer.

One of the world’s biggest alternative asset managers, Blackstone has raised $65 billion since 2015. According to PERE, last year seven other managers reported five-year totals of $10 billion or more, including four that raised more than $16 billion.

According to CBRE’s midyear market outlook, property repricing has been moderate and confined to riskier assets. Distressed selling also has been limited.

Many investors expect property values to drop significantly based on depressed rental income, but some sellers are taking assets off market rather than making significant price reductions.

CBRE’s preliminary forecast is for a 14 percent drop in capital value in 2020 and a 3.4 percent increase in 2021.

Owners who are unwilling to sell at discounts will have to extend holding by a few years—an option not fully available for close-ended funds. A wave of fund expirations in 2021 may possibly motivate fund managers to sell.

Well-located, fully occupied office properties and prime logistics facilities continue to trade well, according to CBRE.

Transactions of single-tenant properties are increasing—a trend also occurring in other world markets like Paris, Boston, Japan, Australia, Germany and Korea, where purchase-for-occupancy or sale-leaseback options offer the potential to minimize risk for both the landlord and tenant.

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