Blackstone's RE Reappearance
The firm’s real estate fund closed with €3.1 billion in capital, following James’ “on the sidelines” investment thesis.
June 29, 2009
After reducing its real estate investments during the first quarter of this year, The Blackstone Group now appears ready to re-enter the sector, closing its latest real estate fund, Blackstone Real Estate Partners Europe III, with about €3.1 billion in committed capital.
The New York-based private equity firm said its target for the fund was €2.5 billion in capital.
During Blackstone’s first quarter conference call last month, Steve Schwarzman, chairman and chief executive officer of The Blackstone Group, said the firm reduced its average real estate portfolios by an average of 19% during the first quarter of the year. This was after Blackstone already reduced its carrying values of its real estate portfolios by an average of 30% in Q4 08.
Real estate investment funds have suffered significantly over the past six months, signaled by the lodging sectors’ RevPAR falling by 17.7% in the fourth quarter last year, Schwarzman said. Schwarzman described the firm’s real estate holding as differing from other portfolios in that it has very few near-term debt maturities. Two percent of the firm’s debt will become due over the next two years, Schwartzman said.
Tony James, Blackstone’s president and chief operating officer said the firm’s approach to real estate investments is “we’re on the sidelines until we see things bottom out. Or the debt markets crack a little bit more.”
Blackstone’s first real estate fund closed in 1992 with $338 million in capital. The firm’s real estate investment unit launched in 1997.
Blackstone stock traded at $10.87 per share as of midday Monday. Calls placed to Blackstone were not returned by press time.
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