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Investment giant Blackstone has closed on its Strategic Partners Real Estate VIII fund, raising a total of $2.6B. The fund specializes in real estate secondaries — stakes in other private, generally less liquid real estate investment funds.
The new fund will take advantage of the fact that many investors in such property funds are looking for a way to cash out but can't always do so via conventional distributions.
“We are seeing in the direct [real estate] market that assets are not getting sold and this flows into your portfolio,” Blackstone Senior Managing Director Mark Burton told The Wall Street Journal. “A lot of institutional investors are saying, ‘I’ve got to find other ways to create distributions.’”
Although liquidity has been a challenge for private real estate funds since interest rates began rising last year, the size of the real estate secondaries market had already been growing robustly over the last few decades, according to Blackstone Strategic Partners Global Head Verdun Perry, as reported by PE Hub.
In 2000, the worldwide secondaries market did around $1.3B in deal volume, Perry said, while this year he expects a total volume of around $130B.
The latest Blackstone fund to focus on real estate secondaries is also its largest. Its previous such fund, Strategic Partners Real Estate VII, closed in the summer of 2020 after raising $1.9B.
Blackstone declined to comment beyond its press release when reached by email Thursday.
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