Firms & Funds

Blackstone raises $2 bln for real-estate debt

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Stephen Schwarzman, private equity, Blackstone Group, Tony James, energy, oil and gas
Stephen A. Schwarzman, Chairman and Chief Executive Officer of The Blackstone Group, speaks during an interview with Maria Bartiromo, on her Fox Business Network show; "Opening Bell with Maria Bartiromo" in New York February 27, 2014. Italian fashion house Versace is selling a 20 percent stake to U.S. private equity firm Blackstone for 210 million euros ($287 million), aiming to fund new shops and build on a recent recovery in sales before an eventual stock market listing. REUTERS/Brendan McDermid - RTR3FSHQ
Firm: Blackstone Group

Fund: Blackstone Real Estate Debt Strategies III LP

Target: $4 bln-plus

Amount raised: $2.1 bln

Blackstone Group’s third real estate debt strategies fund disclosed more than $2 billion in commitments from 40 LPs for investments in mezzanine and structured loans, with Pennsylvania Public School Employees’ Retirement System as an early backer.

PSERS committed $100 million to Blackstone Real Estate Debt Strategies III LP, which is targeting net returns of 9 percent to 11 percent generated from a mix of bridge/transitional lending, whole loan syndications, global lending, construction loans, and legacy loans, according to an investment memo to the pension system.

The loans would provide a source for quarterly payments to LPs, according to an analysis of the fund by Courtland Partners Ltd, an advisor to PSERS.

“BREDS’s role in providing debt capital continues to benefit from robust transaction activity and a shift away from traditional banks to specialty lenders … for certain lending activities,” according to a letter to the retirement system from Steven Novick, COO of Courtland Partners.

Blackstone plans to raise $4 billion for the fund, with no cap disclosed to LPs as of late last year, according to the memo.

BREDS III lists a date of first sale of December 22, with commitments of $2.05 billion, already ahead of the $1.7 billion drawn in for Fund II.

Fund II generated a 9.1 percent yield as of last November, with an IRR of 9.31 percent as of June 20, 2015, according to PSERS. The school employees’ system committed $100 million to Fund II in 2013.

Fund III’s executive lineup includes:

  • Michael Nash, senior managing director and global head of Blackstone Real Estate Debt Strategies, according to the PSERS investment memo. Nash, who joined Blackstone’s real-estate unit in 2007, brings more than 28 years of debt investment experience in the sector.
  • Jonathan Pollack works as senior managing director and chief investment officer of BREDS. His background includes 17 years of commercial real estate and structured finance experience. He joined Blackstone last year after working as global head of Deutsche Bank’s commercial real estate unit.
  • Jonathan Gray is global head of real estate and a member of the board of directors at Blackstone Group.

Action Item: PSERS investment memo: http://bit.ly/1RwSXpI

Photo courtesy of Reuters