Blackstone Closes On Record $8B RE Debt Fund
Blackstone Group has closed on an $8B real estate debt fund that will lend to investors looking for pandemic-era deals in commercial real estate around the world and buy real estate debt securities.
Formally called Blackstone Real Estate Debt Strategies IV, or BREDS IV, the company says that it is the largest fund of its kind ever raised.
“There’s an expectation that there will be a greater opportunity in real estate debt than there has been,” Jonathan Pollack, global head of Blackstone Real Estate Debt Strategies, told The Wall Street Journal. He notes that the coronavirus pandemic indirectly pumped up interest in the fund, as rock-bottom interest rates increased the lure of commercial real estate returns.
Real estate investment funds of all kinds have raised about $38B during the second quarter of 2020, spiking from about $20B during Q2 2019, according to Institutional Real Estate Inc., which reported that 11 of the 26 funds it tracks have raised more than $1B during the quarter.
As of Q2 2020, Blackstone Real Estate Debt Strategies currently has $26B of assets under management, and Blackstone Real Estate has $167B of investor capital under management.
"So we see meaningful growth potential for the business from here, particularly as it relates to perpetual capital platforms," Blackstone Chief Financial Officer Michael Chae said during a presentation at the 2020 Barclays Global Financial Services Conference, in mid-September.
"Large scale, high-quality [real estate] assets that are the best positioned in the sector with secular growth, rising tenant demand and yield generation in this ultra-low rate environment, we think will increasingly lead to both compressing financing costs for assets like that, and then ultimately, that will be reflected in cap rates and the value of these types of assets," Chae said.