Blackstone confirmed that it has completed a $2bn first closing earlier this month for its successor real estate debt fund, Blackstone Real Estate Debt Strategies (BREDS) II, and remains on course for a final $3bn final close.
Speaking at yesterday afternoon’s analyst call to present its first quarter results to analysts, Steve Schwarzman, chairman, CEO and co-founder at Blackstone said: “In April we had a first closing on our new debt strategies drawdown fund of $2bn and are targeting a final close of $3bn, which is way below the demand for this product.
“We capped the fund at this amount in order to match its size with the current market opportunity.
“Including the April close, our real estate debt strategies platform is now $9bn in total, up from zero in 2008, and as I mentioned, we could have made it significantly larger.”
At the end of March, Blackstone’s first debt strategies fund had $2.83bn of capital committed, $690.94m of available capital and a total net internet rate of return (IRR) of 13% on an annualised basis since inception on total invested capital basis after management fees, expenses and carried interest.
Through capital recycling, Blackstone is still deploying from the 2008 fund which was expected to cease once the first closing of the successor fund completes.
Blackstone’s debt strategies drawdown fund appreciated 2.7% for the quarter and 10.8% over the last 12 months to the end of March.
The European BREDS team is focused on originating loans where the senior ends to where the equity is deemed fit to begin – which translates approximately from circa 50% to 80%-plus LTV.
Joe Pedlow heads the five-strong European team. Globally, BREDS has more than $4bn real estate debt investments in its debut commercial real estate debt fund, raised back in 2008, with just over $3bn deployed in mezzanine and the balance in CMBS.
Blackstone’s opportunistic investments rose over 6%, or $2.4bn in total appreciation, across all its global real estate strategies.
“In terms of fundamentals it is more of the same,” continued Schwarzman on the analyst call, “with ongoing improvement across all sub-sectors, largely on the back of limited new supply, and moderate economic growth, BREP VII Global Fund, which started investing in the third quarter of 2011, and the largest such fund in the world, has already achieved a net IRR of 32%.”
Blackstone’s expects a first close of more than $1bn of capital for its maiden Asian real estate fund.
Across the entire real estate platform, global assets under management rose to $59.74bn by the end of the first quarter, which included $5.69bn in dedicated European funds.