Blackstone has raised $4.5bn (€4.02bn) for its Blackstone Real Estate Debt Strategies (BREDS) III fund, according to a source familiar with the fund.
The new fund, the latest in a series seeking to capitalise on the slowdown in the traditional lending markets, has a global remit and will focus on large portfolio transactions.
The company declined to comment.
The management fee is 1.5% on invested capital only, according to a New Jersey Division of Investment memorandum from January, which proposed that the State Investment Council allocated $100m to BREDS III.
BREDS II, which is partially realised, had generated a 10% net IRR with limited legacy issues and no realised losses by September last year, according to the New Jersey memo. It generated income of around 9%.
Investment in BREDS “typically produce immediate current income and nearly 100% of the projected returns are expected to come from current income”, the memo said.
BREDS III will also provide “complementary exposure to the division’s existing debt investments”, it stated.
New Jersey’s “current debt investments are focused on midmarket properties, and BREDS III will focus on portfolio transactions and larger assets”
Its exposure to debt-related real estate is currently 0.55%, below its 0.8% target.
By investing in Europe, Asia, Australia and Latin America, BREDS III will also “[increase] the division’s diversification in those regions,” the memo said.
To reduce foreign currency exposure, “the fund will generally hedge the outstanding principal balance of non-dollar denominated loans”.
