Blackstone is raising capital for its first-ever core-plus real estate fund, according to sources familiar with the matter.
The private equity giant, traditionally an opportunistic real estate investor, is expected to raise at least $1bn (€742bn) for the open-ended Blackstone Property Partners fund.
Blackstone has already moved into the core-plus sector this year through three transactions: the £300m (€379m) acquisition of Alban Gate in London, a 49% stake in One Market Plaza in San Francisco for $600m, and $968m entity-level investment in the Edens Investment Trust in the US.
Interest in these investments have been partially sold to pension funds, such as the State of Wisconsin Investment Board and the Virginia Retirement System.
According to a private placement memorandum (PPM), these holdings will not be included in the new fund, but they do provide an indication to prospective investors as to how the fund might invest.
Blackstone Property Partners will invest directly in office, industrial, retail and apartment properties in the US, but it will also be able to make entity-level investments in real estate operating companies.
The fund will be seeking returns between 9% and 11%, with leverage expected to be at around 50%. Blackstone will be making a $35m co-investment.
It will face competition from other open-ended core-plus funds with track records.
Blackstone declined to comment.