AUGUST 21, 2013

Blackstone plans to launch fourth European fund

by Andrea Waitrovich

The Blackstone Group has plans to launch a fourth European fund with a $5 billion fundraising goal, according to reports from Bloomberg, Financial Times and Reuters.

The firm declined to comment on fundraising plans.

Blackstone’s third European fund, Blackstone Real Estate Partners Europe III (BREP Europe III), closed in 2009 with €3.1 billion ($4.1 billion), exceeding its €2.5 billion ($3.35 billion) goal.

The European opportunistic fund series typically primarily invests in the office, industrial and hotel sectors. BREP Europe III capitalizes on platform investing, public-to-private transactions, distressed situations, and corporate and government divestitures in $15 million to $150 million acquisitions.

The firm has been successful in fundraising for many of its opportunistic real estate strategies. In October 2012, Blackstone Real Estate Partners VII closed with $13.3 million in equity commitments, and Blackstone Real Estate Partners VI closed in 2007 with $10.9 billion in equity commitments.

Blackstone Group is currently raising capital for its Blackstone Real Estate Partners Asia. In June, the fund held a $1.5 billion first close.

In related news, Blackstone has been actively expanding its business. It has been buying and selling properties, particularly in the United States.

In the United States, Blackstone plans to shed some of its hotel assets. The firm hired JPMorgan Chase & Co. and Morgan Stanley to explore a $4.5 billion sale of its La Quinta hotel chain. Blackstone bought the hotel chain in a $3.4 billion deal in 2006. Also, Blackstone plans to sell Hilton Worldwide; the firm bought the hotel chain for $26 billion in 2007.

Outside the hotel sector, Prudential Real Estate Investors purchased seven Southern California office buildings from Blackstone for approximately $400 million. Blackstone also sold 1888 Century Park East, a class A property in West Los Angeles, to the California Public Employees’ Retirement System and CommonWealth Partners for $305 million.

Although Blackstone is shedding many U.S. properties, the firm is still active domestically in the real estate sector. Blackstone agreed to buy 80 U.S. apartment properties from General Electric Co. for about $2.7 billion.

In Asia, Blackstone Real Estate Partners Asia made a $322 million offer for Hong Kong–listed property and construction company Tysan Holdings, marking one of the fund’s first investments. The firm made its first real estate purchase in Singapore through a S$220 million ($177 million) deal with SEK, a German Investment.

In Europe, the firm sold its 50 percent stake in the Broadgate office complex for more than £1.7 billion ($2.66 billion). The seller is rumored to be GIC, Singapore's sovereign wealth fund. The asset was purchased through BREP Europe III and Blackstone Real Estate Partners VI. In addition, Blackstone made its first deal in Spain. Blackstone also is reportedly in negotiations with Goldman Sachs to buy a marginal stake in Rothesay Life, a European pension insurance operation.

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