CalSTRS backs Blackstone’s first global core-plus fund

Blackstone has secured $500m (€468m) for its new global core-plus real estate fund from the California State Teachers’ Retirement System (CalSTRS).

The fund manager is seeking to raise $1.8bn for Blackstone Property Partners International, according to a CalSTRS document.

Blackstone declined to comment.

It is the second fund dedicated to so-called core-plus real estate – typically high quality, income-producing properties that have potential to be improved – but the first to target markets outside the US.

Blackstone has made core-plus investments outside the US before, but only on behalf of separate accounts and one-off deals.

In 2014, it bought Alban Gate in London before selling a stake to the Virginia Retirement System. Earlier this year, it won a global core-plus separate account mandate from the New Jersey Division of Investment. 

Blackstone’s first core-plus fund, the multi-billion dollar Blackstone Property Partners, was launched in 2014 and has been buying US assets, including an 80-acre residential portfolio in New York. 

CalSTRS already has $500m invested in this fund, having recently increased its commitment.

According to the $188bn pension fund, Blackstone is looking to raise $1.8bn for the international core-plus fund.

It follows soon after the relevation that Blackstone is seeking to raise €7bn for its latest European opportunity fund – for which the San Francisco Employees’ Retirement System (SFERS) will discuss today whether to commit €100m.

CalSTRS has also committed capital to three other real estate funds that invest outside the US.

It has committed £75m (€107m) to Brockton Capital Fund III and has set aside £50m for co-investment opportunities.

According to CalPERS, Brockton Capital is targeting a total capital raise of £800m with around 50% of the capital coming from investors based in the US.

The leverage component on the fund cannot exceed 60%. The investments made for the fund so far have included office buildings in London and light industrial assets across the UK.

Brockton Capital declined to comment.

CalSTRS has also committed €100m to Niam Nordic Fund VI, a value-add fund targeting real estate in Sweden, Finland, Norway and Denmark.

The pension fund has also allocated $35m co-investment capital to invest alongside PAG Real Estate Partners, a closed-end fund focused on value-add strategies in Asia. The commitment by the pension fund could be increased in the future to reach $100m.

CalSTRS has closed on two direct real estate investments in the US: a $194m investment in an industrial complex in Dallas managed by Principal Real Estate Investors; a $200m investment in DWNP Holdings, a master-planned mixed-use community in Cambridge, Massachusetts managed by Divco West.